Apple has decided that instead of putting a dent in all that cash by buying back stock and increasing their dividends that instead they will instead make it's largest acquisition ever by acquiring Beats Electronics. Last year Beats Electronics revenue was estimated to be around $1.3 billion so with the $3.0 billion price tag for the acquisition Apple definitely paid up for the company.
Many of the critics of these move question why Apple would target Beats over other music companies such as Pandora. From my perspective though, I completely understand the move and I think they will generate a positive return on their investment. I view Apple as a marketing company that masquerades as a technology company. When it comes to the headphone market Beats does not produce quality headphones according to the experts, but no one can deny that they have not done an excellent job of marketing. The person behind that marketing vision is the music mogul, Jimmy Lovine, who is the number 2 at Beats Electronics. Apple and Steve Jobs has always had a love affair with music and with Jobs gone Lovine could become that guy who brings in a great new marketing vision that surrounds the music side of Apple's business.
So they paid $3 billion all to acquire Lovine? Of course not, but I think that played a major factor in targeting the acquisition of Beats. In the future I can envision Lovine completely gutting the current iTunes and iRadio platforms. With Apple's revenues sliding downward every quarter on the music side they need a visionary to come in and figure out how to market Apple's music to compete with the likes of Spotify, Pandora and to a lesser extent last.fm.
As far as what other benefits from a marketing perspective this acquisition can provide Apple is as follows:
- Selling the stylish headphones in the store pairs nicely with the equally as stylish Apple products.
- Including the beats headphones in all future iPhone sales, or providing a premium iPhone package that includes the headphones at a discounted rate.
- Capturing the enormous profit margins that the headphones generate.
Back in April I read this article about the over-saturation of outlet malls in the U.S. Historically, outlet malls were cheap real estate space compared to the traditional mall retail space. As this graph below shows though this is no longer the case.
Now at this point, you are probably asking yourself how does this relate to internet marketing? The answer is simple. With the rising retail space cost and growing popularity of online shopping major department stores are now planting their outlet stores on the World Wide Web in addition to their traditional physical outlet store fronts. In the near future, I would have to imagine the popularity (and profitability) of the online storefront will take center stage for major department stores such as Nordstrom's and Neiman Marcus.
To me this is a very interesting trend. The outlet malls have existed for decades but the major department stores never participated in this arena. I would assume because they wanted to maintain their 'exclusivity' feel. It has become apparent though that with the growing outlet rental space cost, this WWW retail space has become a revenue area that is too large for the department stores to ignore. They are no longer above selling their products in this area and as a-matter-of-fact they have decided to jump into the pool head first by creating physical outlet store fronts as well as online outlet store fronts.
Nordstrom's Rack and Neiman Marcus Last Call are the stores major outlets now.
From what I can tell both companies are selling exactly the products that are sold in their flagship stores. It will be interesting to listen to future quarterly conference calls to hear what percentage of revenues these store fronts are generating for these two companies. If these are the exact products I think these stores are going to a major advantage over a number of retail clothing companies such as J.Crew. The reason is because while J.Crew also has physical and online outlet store fronts they are offering lesser grade products made specifically for the outlet environment. To me this is alright if you are willing to sacrifice quality but I personally believe that lessens quality of the product in the flagship stores and hurts the brands perception from it's customers.
This latest trend seen in the online marketing world is just another example of the power of the online shopping experience and online marketing!
The stigma of Pinterest when the site first gained popularity was that is was only for females. I followed the crowd for a while on that theory before I finally when to check it out for myself. What I found out is that, in my opinion, it is an online shoppers dream come true.
The real beauty of Pinterest is not the obvious aspect where you store a beavy of ideas you come across while searching the web. The real beauty lies in the ability for your pins that are linked to an online store to become real-time coupons. For example, I have a pair of shorts from Macy's pinned and when the item when on sale Pinterest notified me with this email:
From an e-commerce perspective Pinterest is brilliant. I can't remember how many times I have either completely forgotten where I found an item online I liked or did not want to buy the item at the current price. It's clear that the savvy online stores understand this as they make pinning an item/image from their page very user friendly. An example of this can be tied to my blog post from last week about Bonobos. On there website you can simply click the Pinterest logo and move it onto one of your boards.
