This Startup Shows Us the Future of Amazon’s Plug&Play Delivery & Fulfillment Services

Tuft & Needle -yes, another mattress startup, but bear with me- is the avantgarde in another big future growth sector for Amazon:

Besides Logistics, AWS and Prime Amazon is increasingly expanding its marketplace into a multi-facetted platform. For Amazon, marketplace increasingly means ‘technology and infrastructure as a service’

Tuft & Needle are going further today by doing a lot of things right now that are hinting at the future of the whole Amazon ecosystem.

Mashable:

Starting with a forthcoming showroom near Amazon’s Seattle home base, Tuft & Needle plans to launch 30 locations across the country by 2020. Each storefront will prominently feature the Amazon logo emblazoned under Tuft & Needle’s own brand—and be stocked with Amazon gadgets to bolster the experience.

Tuft & Needle

The thinking behind this is perfectly encapsulated in this quote:

“We view Amazon as the most powerful force in the future of retail, and instead of resisting it like many other brands, we are fully embracing our relationship with them,” Tuft & Needle co-founder Daehee Park said. “If this works for Tuft & Needle, other retail categories can learn from this experiment to plug into Amazon and overtake their own incumbents.”

Tuft & Needle already runs three existing stores and is building another one right now. Mashable:

Each of the Tuft & Needle stores will offer two-hour Prime delivery, a policy the company found boosted sales by 50 percent when it was tested in Phoenix.

Amazon’s help isn’t free. Tuft & Needle will sell their wares exclusively through Amazon Prime (though the company says you can still buy them without a Prime membership if you forgo the shipping). Customers can read Amazon reviews on bedside tablets, seek help from an Amazon Echo shopping assistant, or make a one-click purchase by scanning a barcode attached to each product in the Amazon app.

Tuft & Needle

Tuft & Needle currently brings in around 25% of its revenue through Amazon.

Recode on Tuft & Needle:

Tuft & Needle hasn’t raised venture capital, and has largely built its business off of profits, execs say. Now, the company is trying to add differentiation by not only building its own retail stores so customers can try before buying, but also by bringing some of the best of the online world to them — even if some of it feels a touch gimmicky. […]

Tuft & Needle is adding the tablets, Echos and QR codes to the store without Amazon’s involvement. But it will need the e-commerce giant as an official partner if it’s going to be able to have its mattresses qualify for two-hour delivery through Prime Now.

Amazon is building a business around providing an ecosystem for companies (brands, in this case) so they can outsource everything that does not directly touch their core competencies:

“We focus on what we’re good at,” he added, “and plug in Amazon technology for the rest.”

Or, as CB Insights analyst Zoe Leavitt put it:

Technologies like Amazon Go only make sense within such a licensing/franchising context.

Another aspect to this story is the fact that Tuft & Needle profited as a startup from Amazon Launchpad. Launchpad brings startups, and thus aspiring new brands, early on into the Amazon world. Once in, once experiencing sales through Amazon, it is not that far a step go deeper.

Expect more new brands to emerge, grow and evolve within the orbit of Amazon.

For Amazon, this means more exclusive brands on the Marketplace.

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  1. […] This Startup Shows Us the Future of Amazon’s Plug&Play Delivery & Fulfillment Services […]

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