Everyone wants to be the next Amazon.com (NASDAQ:AMZN). Unfortunately, these hungry gladiators typically have weak knees and hollow skulls. As vanquished contenders pile up, the leading online retailer keeps getting stronger.
The sticky marvel of Amazon's Prime memberships has combined with the growing number of sellers selling through virtual Amazon.com storefronts to transform the seemingly mature company into a growth stock again. This makes it perpetually harder for any legitimate player to threaten Amazon's throne.
I get it. I'm a huge fan of Amazon.com. However, what if an unassuming blast from the past is taking a bold step in cyberspace?
Falling into the Gap
Gap (NYSE:GPS) is unlikely to make any short list of potential Amazon-slayers. Gap was hot in the 1990s, when its denim and khakis sold briskly, but it's been the poster child of ineptitude since then.
|
Fiscal |
Comps |
|---|---|
|
2000 |
(5%) |
|
2001 |
(13%) |
|
2002 |
(3%) |
|
2003 |
7% |
|
2004 |
0% |
|
2005 |
(5%) |
|
2006 |
(7%) |
|
2007 |
(4%) |
How is it possible for a retailer to post an annual increase in same-store sales just once over the past eight years? One would think that the combination of inflation and sandbagging would help at least create the illusion of growth more often than it did. This year is off to an even worse start, with comps off by 11% through the first quarter.
So how dare I mention Gap in the same breath as Amazon? Well, the company is in the process of integrating its four primary websites -- Gap, Banana Republic, Old Navy, and Piperlime -- into a single shopping experience.
The integration will provide more one-stop convenience, including related breaks in shipping costs when a buyer wants to pair up jeans at the Gap with a Banana Republic handbag, an Old Navy swimsuit, and a pair of Piperlime pumps.
The "4 Stores, 1 Checkout" approach is compelling, especially because Gap is tempting buyers to load up their virtual carts as much as possible and still pay just a flat rate of $7 for shipping. Piperlime orders, as always, ship for free.
Even Amazon can't touch that, becuase most of the apparel on its site is sold through third-party merchants who don't participate in the Prime subsidized-shipping program.
It all checks out
There are certainly broader online retailers out there. Overstock.com (NASDAQ:OSTK) has its fingers in clearance items in several categories. Department stores, from discounters like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) to conventional chains like Macy's (NYSE:M), offer wider lines than even the four Gap brands combined.
That isn't the point. Gap's sheer genius ois that each of its four online stores caters to a somewhat dissimilar audience. The deal hunter at Old Navy isn't likely to be visiting Piperlime for designer footwear. Someone looking for Gap basics is unlikely to walk into a Banana Republic. There's naturally is some overlap among the four brands, but integrating the sites grows the audience exponentially for the combined storefront. In other words, you'll get a lot more holiday shopping done through Gap online this year than last year. And who'll be footing the bill for all that? You, Fool.
Gap rang up $15.8 billion in sales last year, more than the $14.8 billion put up by Amazon.com. The key distinction here is that just $903 million -- or less than 6% -- of Gap's overall sales came from its websites.
Amazon will lap Gap in sales this year, so I'm not suggesting that Gap will become a threat simply as its online sales become a larger part of the revenue mix pie. This can only become toxic if others follow suit.
What if Limited Brands (NYSE:LTD) takes the baton? What if shopping for a romantic night out means you can buy Bath & Body Works lotions, a Henri Bendel party dress, Victoria's Secret lingerie, and a White Barn aromatic candle in a single click?
Amazon doesn't need to worry. It shouldn't even be breaking a sweat. However, if Gap is successful, other rivals would start stacking their troops on top of each other's shoulders. It may not be much, but a revolution has to start somewhere.
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