Estimated Read Time: 8 Minutes
Like my new shirt?
Never mind the goofy pseudo-modeling pose. The shirt is your basic garden-variety light blue polo shirt. A dad uniform staple. It might be like the forty-seven-eleventh one I’ve owned that looks pretty much like this one. But this particular shirt is quite special to me for a reason no shirt has ever been. I wanted to give it a try for what I think is an interesting reason. You might find it interesting too…
Amazon’s New Label
It’s Amazon’s private-label brand “Amazon Essentials.” It’s a decent enough shirt. Seems to be well-made. Fits fine, washes like it should, comfortable. It has a neck hole, a torso hole and two arm holes. It won’t dazzle on a fashion show runway, but it won’t ruffle any feathers or offend anyone either. It’s an easy target for a lazy “gotta choose my shirt” morning before I head to the office.
And it was 15 bucks. Delivered via Prime. Well within 24 hours after the order was placed. Which took 30 seconds, but only because I was momentarily distracted.
The quality, price, service, delivery performance, order interface, etc. was all very Amazonian. (Amazonesque?...Amazonish? Whatever.) The alternative of going to an actual store—even if I knew exactly where to go—was a losing proposition by the time I even grabbed my keys to drive myself there.
How Long Will It Take?
The interesting part to me, though, wasn’t the 100% satisfaction I experienced. We’ve all come to expect that! It’s the question that pops into my head: How long will it take for them to do this…
While it’s true Amazon is doing this already to some extent, I’m talking about totally in-house imprinting on private label blank goods, fulfilled Prime style. As a promotional products distributor, can you honestly compete with that?
Granted, it will cost them a shirtload of cash to capitalize their operation to include the imprinting of apparel. I know I’m leaving out lots of operating costs and fixed and variable overhead as I’m doing this, but let’s have some fun with some numbers!
Fun with Numbers: Amazon & the Promo Industry
- Let’s suppose it would take $1 million to invest in the state-of-the-art equipment to imprint stuff. Ah, hell, let’s make it $2 million.
- And let’s outfit every one of Amazon’s U.S. and Canadian fulfillment centers with that equipment. That’s two million bucks times, uh, let’s see…128 U.S. plus 7 Canada...that’s 135. Let’s add the 43 future U.S. facilities and the 3 planned for Canada…hmmmm…181…gives us $362 million.
- 362 million one dollar bills placed end-to-end would span 35,000 miles, or 1.4 times around the earth’s equator. That’s a big number and a deal-breaker, right? Hold on.
- Amazon’s current annual revenue is $178 billion. The distance covered by dollar bills in this case is over 17,000,000 miles, which is nearly 700 times around the world.
- That $362 million investment represents a shade over two-tenths of one percent of Amazon’s annual revenue.
- Let’s eliminate the pesky zeroes after the decimal and make it a tangible fraction: Two-tenths of a percent is $20 for every $10,000. Apply that factor to your income and just let that soak in while we do some more math.
- To remember the first seven digits of pi, count the number of letters in each word of this sentence: "How I wish I could calculate pi." This yields 3.141592. Voila! It doesn’t have anything to do with what we’re talking about here, but it’s a pretty cool parlor trick. I’m not sure what the trick is for remembering the sentence in the first place though. But I digress.
- So Amazon clearly has the war chest to do this. But what about space? Let’s set aside 10,000 square feet for each imprinting operation. The 101 billion square feet presently occupied by their 135 currently-active U.S. and Canadian facilities means the average fulfillment center is over 770,000 square feet—more than 13 football fields. So the 10,000-foot allotment makes up just 1.3% of the space of an average facility.
- The 101 billion square feet is equivalent to the floor space of 1,500 Pentagons.
- 101 billion square feet is a 30” wide sidewalk spanning the Pacific Ocean between Amazon’s Seattle headquarters and Ho Chi Minh City, the largest city in Vietnam. Where my shirt was made.
- An adult walking non-stop at an average pace of 3.1 miles per hour would walk that sidewalk in 100 days. No sleep, no food, no rest, and no…um…adding volume to the Pacific Ocean.
- Our industry’s annual revenue is $23 billion. That’s a lot. Amazon spent $25 billion last year. On shipping. That’s slightly more than a lot.
- The $682 million we’ve arbitrarily earmarked to set up Amazon’s imprint shop is about what they spend on shipping in 10 days, on average.
- Apparel represents a significant piece of the industry’s pie. Stats vary, depending on who’s counting and what’s being counted—low- to mid-30’s as a percentage feels about right. Taking the middle number of 32.5%, that’s nearly $8 billion worth of pie.
- The arrow in Amazon’s logo stretches from A to Z. The word apparel begins with the letter A.
There will be other players emerging also. Walmart’s revenue is 2.8 times that of Amazon’s, for instance. Just sayin’.
It’s really not a matter of if, it’s a matter of when—and how quickly it will go down. Where will you be when that happens? Somewhere safe, I hope, or you’re gonna get your shirt handed to you.
Dave Miller is VP of Sales & Marketing at Bruce Fox, Inc. and has been a blogonaut for a couple of years. He has been with Bruce Fox since 1990, four years before a certain online bookseller was founded.