Debunking the bunk on Amazon

Amazon fulfillment centreIf you know the enemy and know yourself you need not fear the results of a hundred battles. Sun Tzu

Please, can we all take a chill pill with regards to Amazon?

We are, as many keep saying, just at the entrée stage and not the main meal, yet already some of us are predicting Armageddon or should I say, Amazongeddon? Are they a transformative retailer – yes but over time.

Perhaps another way of saying this is that this is very much a “work in progress” and the full model that is Prime, Fresh, GO, Alexia and so on is still a few years away.

They are clear competitors and teachers if we can learn how to compete and in some cases collaborate.

And our best retailers can and will teach them as well, such is the nature of an evolving marketplace.

Just to take a moment and reflect on the reality of Amazon for Australian consumers.

Here is an earlier article I have written on this much-discussed topic.

Amazon is a data organisation with their web services engine (bigger than Google) their central weapon, products or rather the consumption of them as the great enabler – the very cog in the wheel that enables Amazon into our homes, part of our lifestyle and freely exchanging all forms of our lifestyle, preferences, behaviours tastes, aspirations and peccadillos into the ultimate predictive and saleable content commonly known as data.

Power will not come into this world or the future from buying and selling product per se, it will come from the ownership and value accretion of data.

Just ask the top five companies in the world including Amazon, Google, Facebook, Yahoo and Apple.

Just ask the 70 per cent employees of Amazon that are coders, not retailers, not merchandisers – good new fashion coders.

And of course it’s folly to dismiss their retail arm as it generates currently 70 per cent of their revenue, with 50 per cent of that being done by the heavy lifting that are the retailers directly and it’s there and will grow substantially – it is a very serious retail competitor as we know ( marry into their ecosystem and it’s a triple whammy) and it’s the Amazon weapon of choice to bring themselves into the lifestyles of their customer.

Online retail is predicted to be circa average 12.5 per cent by 2020. So even, allowing for growth predictions, then there is approximately 90 per cent plus (in the next few years) of customers who want the human experience in their shopping.

Underwhelmed by the online offer launched yesterday, expecting La Stupenda and all we got was the first chorus?

Give it time and this will occur.

For now the more important question is how to compete.

So a few business fitness tips.

Number one is to build a clear point of difference – what is truly unique about your business ? I know that everyone talks about this although many retailers candidly don’t have a real point of difference expressed from culture to delivery. Bezos and Amazon have been on a crusade since 1997. What is your crusade that is articulated into your point of difference?

Take a bike retailer for example who changes their business model from competing on price with Amazon on parts, and makes part of their revenue from installing and servicing the Amazon purchased parts. Whatever the example – re-think the classic “product down the pipe” approach as a starting point.

Starting questions should be: How do I adapt, using my capabilities and build on margin? How do I build my game rather than fixate on somebody else?

Number two: When was the last time you really invested in your business model, your customer, your point of sale, your physical environment?

Our advice – start with real insights work into your present and future customer, not demographics per se but deep personality (Limbic ) style methodologies.

  • Who are they? How do I discover “why” they come to our brand (what and how is easy)
  • What about your brand do they buy into and  the converse?
  • Are all the cues in your retail ecosystem marrying to this customers innate drivers?
  • What is their loyalty and how do we calibrate and build that ?

Number three: Have a plan that builds on this insight and develop a truly customer centric culture, methodology and deployment.

Number four: Be the very best retailer you can be – deliver and exceed every moment of truth with your customers, keep building great relationships with your customers and that never changes – just the rules of engagement, the skills, investment and the leadership focus required.

Brian Walker is founder and CEO of Retail Doctor Group and the Australian elected member of the global retail expert’s alliance Ebeltoft Group. Brian can be contacted on (02) 9460 2882 or [email protected].

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