Morgan Stanley: Retailers are turning to Facebook, Instagram, and Google to ward off the 'Amazon effect' (AMZN, FB, GOOG)
Mike Segar/REUTERS
With Amazon moving to conquer every area of shopping — it's now reportedly gearing up to expand its private-label offering to take on the supermarkets — traditional retailers are desperately to online media giants in a bid to ward off "the Amazon effect," according to a research note from Morgan Stanley.
Morgan Stanley's research analysts had conversations with a number of retailers, brands, startups, and tech companies at the Shoptalk conference in Las Vegas this week about the methods they are using to take back market share from Amazon.
Increasingly, retailers are turning to Facebook, Instagram, Pinterest, and Google, Morgan Stanley found.
Facebook and Instagram
Morgan Stanley said more and more retail companies are recruiting consultancies and agencies to help position their Facebook and Instagram accounts as online shopping channels.
"Dynamic Product Ads, company pages with pictures/info about SKUs (stock-keeping units) that link users to brands' websites, and on-platform 'Shop Now' buttons are all being emphasized," Morgan Stanley noted.
Apparel brands in particular are seeing Instagram as a "replacement for magazines," according to Morgan Stanley.
Morgan Stanley notes that 20,000 retailers, both large and small, are now selling on Pinterest, via its "Buyable Pins" tool. Pinterest isn't yet charging retailers to use Buyable Pins, but it's likely it will do so further down the line.
"In this way Pinterest is acting like a personalized magazine with direct transaction potential," Morgan Stanley writes.
As Pinterest works to improve its recommendation algorithm, Morgan Stanley thinks it will become an even more important channel for retailers in the future.
With Google introducing Shopping ads into its Image search results just this week, the company is improving its ad offerings to retailers.
Morgan Stanley notes that digital marketing consultancy RKG, which was in the beta trial for those product listing ads, said they were a "source of strength for its clients" in the first quarter of this year and that "incremental" retailer ad spend was being placed there.
Meanwhile, Morgan Stanley also discussed Google's new local inventory ads product, that lets users see which products are available in their nearest store directly in the search results. However, Morgan Stanley thinks it will be difficult to scale because it's going to be tricky to catalog in-store inventory online.
Will any of this have an impact on Amazon?
Minimal.
Amazon's pace of innovation is relentless, with Morgan Stanley noting that the company has rolled out its Prime Now ultra-fast deliver service to 27 US metro areas. Amazon is once again changing the game of retail and Morgan Stanley implies it's difficult for retailers and brands to keep up, let alone stay ahead:
We see Prime Now as AMZN's next level of behavior modification, and a way in which they are (again) resetting the hurdle for eCommerce delivery expectations. That is, just as Amazon's success over the past decade has made 2-day delivery the benchmark for eCommerce, Prime Now has the potential to further increase consumers' expectations around speed and convenience. This type of innovation is what enables AMZN to continue to expand its edge over traditional retailers...even in 2016.
NOW WATCH: Here’s what scientists think aliens could actually look like