Why is Amazon partnering with Sears again?

Discussion
Photo: Sears Auto Center
May 10, 2018
George Anderson

For most retail industry watchers, the demise of Sears Holdings has been more a question of when than if for many years now. That hasn’t kept its CEO, Eddie Lampert, from claiming that he has the right plan to make his company a retailing force once again. In fact, Mr. Lampert said yesterday at the company’s annual shareholders meeting that the company was “fighting like hell” to get turned around. Based on other news announced at the meeting, it may take an assist from Amazon.com to keep Mr. Lampert’s claims from looking either misguided or dishonest.

Yesterday, Sears announced it will deliver and install car tires ordered from Amazon at its Auto Centers. Sears will charge a “standard installation fee” for services booked on Amazon.

The service will be initially available at 47 Sears Auto locations in eight metro areas — Atlanta, Chicago, Dallas, Los Angeles, Miami, New York, San Francisco and Washington, D.C. The program is expected to be quickly rolled out to the more 400 Sears Auto Centers across the U.S.

“Amazon.com customers can expect terrific performance and reliability from DieHard tires and professional installation from Sears Auto Centers,” said Tom Park, president of Kenmore, Craftsman and DieHard brands at Sears Holdings. “We’re thrilled to expand our assortment of this iconic brand to include passenger tires on Amazon.com.”

The program marks the first time that Sears DieHard tires are being sold on Amazon. The brand’s jump starters and other products have been sold on Amazon since December. Sears began selling its Kenmore brand appliances on Amazon last July and now has over 250 products available.

News of the Amazon deal sent Sears Holdings’ stock up 24 percent in trading yesterday. The company’s share price, CNBC reports, has fallen about 70 percent in the past year.

DISCUSSION QUESTIONS: What do you make of the growing collaborative activities between Amazon and Sears? What is Amazon’s end game here?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Amazon could be testing the viability of these brands for an acquisition at a later time."
"Mr. Bezos does not tread into business agreements without some reasonable expectations of future accretive business benefits."
"I can’t help but see this as a wolf in sheep’s clothing situation. Amazon is playing nice with Sears before they gobble up what’s left."

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27 Comments on "Why is Amazon partnering with Sears again?"


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Max Goldberg
Guest

Sears grasps at straws while Amazon gets bigger. At this point, Sears is a rounding error vis-a-vis Amazon. As Amazon continues to grow, having the Die Hard, Kenmore and Craftsman brands can’t hurt. For Sears, this is a lifeline, but not enough to save company.

Mark Ryski
BrainTrust

In a word – desperation. I suspect that Amazon sees the Sears Auto Centers as a way to offer mechanical services to Amazon customers with very little downside. Sears will take anything it can get, and collaborating with Amazon gives Sears a small boost. But that’s all it is, a small boost. After everything Sears has been through (and continues to go through) it’s hard to see how this is anything but a Lampert lark. Sears has lost its credibility and this move won’t make much difference.

Phil Masiello
BrainTrust
Believe it or not, Sears.com still has about 1 million site visits per day. So, there is still something valuable in the website assets. Amazon has laid out its plans to own fashion, furniture, and appliances online. So it is not surprising that they started selling Kenmore appliances last year. Kenmore is still a viable brand in the consumer’s eyes. This new venture could be a good test for Amazon to get into a new category of Auto with an installation offering. This could also play very well into Amazon’s physical store effort. Amazon could be testing the viability of these brands for an acquisition at a later time. DieHard and Kenmore are solid brands that Amazon could use to increase their growth and develop categories that they are underserved. I think it is a smart move on Sears’s part to form this alliance before someone else does. I don’t think there is much hope for Sears viability as a retail brand any longer, but the brands and website they own, still hold some value… Read more »
Paula Rosenblum
BrainTrust

It’s a clever idea for Amazon, actually. I don’t think they have the ability to sell tires en masse without a specific place that has agreed to install them. For Sears … I can’t see this deal supporting the moribund company for long.

Kenneth Leung
BrainTrust

Tires are one of those products you can sell online and ship, but majority of the buyers will need installation service. Partnering with Sears is easier than negotiating with other network of independent tire centers. If it doesn’t work out, Amazon can always add additional networks once they prove they can sell enough tires to hit critical mass.

Ken Lonyai
BrainTrust

When I hear “Amazon and Sears” I think of Amazon like a cat, seemingly innocently playing with a mouse, right before it kills it.

Meaghan Brophy
BrainTrust

I had the same exact thought.

Neil Saunders
BrainTrust

Behind the irrational stock price rise, there must be some assumption that either Amazon will save Sears or that it may want to buy Sears. I don’t buy into either theory.

Amazon is simply partnering with a retailer that has something to sell and a service to offer — as it does with loads of other merchants. To be fair, in this instance Sears can add genuine value as its auto centers are not at all bad.

However, this venture does nothing to change the fact that Sears is broken economically, that its core retail business remains a hot mess, nor that it has very little idea how to extract itself from its difficulties.

Meaghan Brophy
BrainTrust

I can’t help but see this as a wolf in sheep’s clothing situation. Amazon is playing nice with Sears before they gobble up what’s left.

Bob Phibbs
BrainTrust

Even a stopped clock is right twice a day. Let’s remember these would be Amazon customers — not Sears. If this were 20 years ago Sears those brands would be relevant, but I expect most Millennials will not even know where one is. And if you look at the Sears Service Center reviews online, they typically are in the 1 and 2 star area. Sears is a brand announcing innovation: Shop My Way, Amazon tire fitter, but also Ship My Pants. Announcements mean nothing when the brand is so broken in so many ways.

Dick Seesel
BrainTrust

This is a better deal for Amazon than for Sears, so the jump in Sears Holdings’ stock price is hard to justify. It provides Amazon a brick-and-mortar partner in yet another product category where it can gain share, and adds the last of Sears’s key brands (along with Craftsman and Kenmore) to the growing Amazon portfolio.

If Eddie Lampert’s long-term aim is to monetize the few key assets of Sears Holdings, this will help him meet his goal. But it’s misguided to think that this deal somehow “saves” Sears as an ongoing retail entity.

Rich Kizer
BrainTrust

Well, it’s an effort! That being said, it’s a good idea to get people into the store while waiting. Wait a minute, you’re buying a tire? Unless you really know what you need and require in a tire, you might not make the right choice on Amazon. You need a specialist like the tire guy at Sears (in this instance), which brings us back to the mandatory trip to make the purchase in the first place. Why then Amazon?

Good move for Sears. Perhaps it will keep them in front of customers, and perhaps additional sales opportunities for the car like alignments and in-cabin air filters. And perhaps, with cleaned up waiting rooms and an attractive, well merchandised store to wander, customers may start to recreate their perception of Sears.

Lyle Bunn (Ph.D. Hon)
Guest

Sears has many assets from its in-house brands to sub-contractors of installation and repair to auto centers. It is unfortunate that monitoring strategies for this infrastructure has never been a core priority, but perhaps as the going has got tough, the tough will get going. Amazon and others should naturally build some of these strong Sears “bones” into their revenue and customer satisfaction plans.

Brandon Rael
BrainTrust

With the Sears collaboration, the clear advantages are for Amazon once again, as they gain another foothold within the automotive segment without having to invest significantly in real estate, inventory etc. While this may result in a small incremental increase in Sears business, the brand has been struggling with remaining relevant in the marketplace.

Sears has been struggling with their fundamental marketplace positioning, financial position, and overall story. This alliance will not address those fundamental issues which have been plaguing the brand for years now.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
1 year 4 months ago
Tire orders from Amazon do not represent the beginning of a turnaround at Sears. At the same time, history suggests that Mr. Bezos does not tread into business agreements without some reasonable expectations of future accretive business benefits. A cynical person might see the move by Mr. Lampert as a way to boost value in the DieHard brand to make it a more attractive asset for a future sale and to view Mr. Bezos’s action as simply picking through a rummage sale. However, in my view, the Sears assets and the various tie-ups between Amazon and Sears in the past year or so represent viable approaches to leveraging existing brand equity and improve use of real estate assets while adding to Amazon’s probes into options in the physical retail. Amazon understands the future of retail involves both online and physical stores. While tales on the death of the mall may be overly pessimistic, if not misplaced, Amazon may be exploring new ways of leveraging the Sears store network. At the same time, Mr. Lampert is… Read more »
Dave Bruno
BrainTrust

Until Sears can develop assortments and experiences that might entice add-on spending while people wait for their tires to be installed, his partnership only helps Amazon on their mission to extend their reach further and further into consumers’ wallets. If you add up all the non-Amazon store locations with a physical Amazon presence (in-store pickup of Amazon orders at Kohl’s 1,100 stores, Amazon lockers at hundreds of 7-Eleven stores, Amazon tire installations at 400 Sears locations, to name a few) and all the non-Amazon retailers with a digital presence on the Amazon Marketplace, you can see how ubiquitous Amazon is becoming — and we are helping them!

While I can understand why a struggling and desperate Sears would grasp at this straw, I really think it’s time for everyone else to stop capitulating to Amazon in the name of short-term revenues.

Paula Rosenblum
BrainTrust

Absolutely, Dave. Large retailers really do need to think about the things they do that ultimately undermine their own businesses. For SMB retailers, marketplaces are great. For a larger retailer, being on Amazon is sort of suicidal.

Ken Lonyai
BrainTrust

Yeah — I’ve said that with Alexa/Echo.

The retail brands selling the devices for a smidge of incremental revenue are opening the exit doors for their customers, but many BrainTrust members don’t see it.

Camille P. Schuster, PhD.
BrainTrust

The locations of Sears offers the potential for Amazon to provide mechanical services. In addition, Amazon would then have the potential for using those locations for pick-up delivery. For Sears there is the potential for changing its business model to one of offering services. A good experiment.

Richard J. George, Ph.D.
BrainTrust

Sears is where “America used to shop.” This latest partnership may provide some temporary relief, but by itself is not sufficient to refloat, much less turn around the sinking Sears ship. The potential positive for Sears is an aggressive online partner for its flagship brands. Unfortunately, this will not be enough to bring customers back to Sears’s struggling stores.

For Amazon this represents continued experimentation with the potential for continued success. Amazon wins. Sears gets a temporary reprieve.

Doug Garnett
BrainTrust

Sure looks like a match made of convenience. Sears, desperate for survival, is thrown a thin lifeline and grabs it. Amazon, knowing that only physical locations can ever build profit out of their retail-like business, takes advantage of a network of over 400 sophisticated, already tooled retail locations that are underutilized.

This makes complete sense for Amazon and continues their clear pattern building bricks access to offer customers.

It makes complete sense for Sears, but it isn’t a “fix.” This can be little more than a brief bit of sunlight before their collapse continues.

What Sears needs is someone who wants to make better use of their stores. While tires make complete sense for Amazon, the entire Sears store doesn’t.

Good for both companies grasping this opportunity, but the move doesn’t change any long-term fundamentals for Sears.

Ed Rosenbaum
BrainTrust

How many tires will Sears have to install to make this a viable arrangement? This might be another good move for Amazon. But it certainly will not keep Sears afloat.

Mark Price
BrainTrust
Mark Price
Managing Partner, Smart Data Solutions, ThreeBridge
1 year 4 months ago

Amazon is expanding retail outlets for their customers across a range of programs — Amazon Go, Whole Foods, and now Sears. I see this as a component to becoming a larger player in the auto industry, but also to open the doors to using Sears as a destination for Amazon deliveries and associated services.

Acquiring Sears would not be an expensive effort — the question is whether or not Amazon wants to deal with the legacy leases and real estate.

James Tenser
BrainTrust

The problem with buying automobile tires online is arranging for installation. Amazon has great prices but the logistics are complex for the consumer. The announced deal with Sears Auto Centers is an attempt at a partial fix for this problem. It’s only 400 locations nationwide, so it still leaves most geographies un-covered.
The Sears shops could probably benefit from some incremental volume in services, but it would only contribute a tiny boost to total company performance. For Amazon, this is yet another learning laboratory wrapped up in a publicity opportunity.

Ryan Mathews
BrainTrust

Everything Amazon does it does with one goal in mind — touch the consumer in as many ways and in as many places as possible.

Shep Hyken
BrainTrust

Good move for Amazon, and can’t hurt Sears. I get it. Sears needs an infusion of sales. Amazon may be exactly what the doctor ordered.

Ray Riley
BrainTrust

Begin selling tires, and eventually end up showrooming vehicles perhaps? I can’t see this being all about tires for Amazon. And for Sears, unless this is a final gasp for air, there must be more upside down the line.

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Braintrust
"Amazon could be testing the viability of these brands for an acquisition at a later time."
"Mr. Bezos does not tread into business agreements without some reasonable expectations of future accretive business benefits."
"I can’t help but see this as a wolf in sheep’s clothing situation. Amazon is playing nice with Sears before they gobble up what’s left."

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