Amazon (AMZN) may be hiding an ace up its sleeve according to Hedgeye Retail analyst Brian McGough.
Right now, Alibaba dwarfs Amazon in the number of customer transactions it does a year. One of the reasons is Alibaba’s “Tmall,” which is essentially a virtual mall. Here’s Tmall’s unique innovation (that we ultimately think Amazon will imitate). Consider a company like Ralph Lauren that’s selling its products on Tmall. Ralph Lauren has its own branded page on the Tmall website. It has the look and feel of a Ralph Lauren website. But it’s actually Tmall, quietly operating these branded pages and fulfilling all the orders.
“That’s where I think Amazon is going,” according to McGough.
In other words, expect to see new, product-branded pages partnered through Amazon.
According to McGough:
“Amazon has started this partnership with Nike (NKE). I used to work at Nike. I’m telling you right now there is no way Nike is going to go full force on Amazon with a $160 shoe with a user-interface that hasn’t changed over the past ten years. The fact is that user interface is a disaster.
So now we get to a point where Amazon is going to switch over—this isn’t part of consensus narrative, this is part of mine, and I’ve got a very good reason why I think it’ll happen.
Nike is going to be the pilot for a redesigned user interface on Amazon. You’ll go over to Amazon and you’ll see this beautiful, Nike-esque branded interface where you can actually go and buy a relatively high priced shoe. This is the death of Foot Locker (FL)”
In the end, McGough thinks this will be a bigger deal for Amazon, than it is for Nike. Amazon will be able to approach companies underinvested in e-commerce and offer them a similar partnership model to Nike.
“If there’s one bull case on Amazon I could point to right now,” says McGough, “aside from the fact that it’s Amazon, that’s out of consensus, that would be it.”
Watch the full clip above for more.