Amazon makes their move

2011 will long be remembered as the year of the Amazon. Left for dead in 2001, ridiculed as a relic of the dot com era, Jeff Bezos and co hit their stride this year as mobile and retail collided.

The backstory

If you’ve been following Amazon over the past 5 years you’ve seen the way they operate — really enhanced by their acquisition of Zappos in 2009. Simply put, they get retail. I’m not talking about “getting” in the normal sense of the word, I’m talking about the fact that simple retail is simply a commodity where the lowest price (and great delivery services) will win 9 out of 10 times. If I’m a committed brand user – say of Kleenex-brand facial tissues – and can have it delivered in a timely manner without thought, my grocery store loses. Same goes for most other similar items.

They learned lessons while building up an incredibly efficient and industry-killing book retail practice. The biggest being that the book buying experience is like buying salt – a commodity. The research may be a combination of tactile fondling and social persuasion but once we’ve made up our minds, it now becomes a simple equation nestled somewhere between purchase price and delivery date.

Mobile – the retailers kryptonite

The elusive bridge between digital and the tactile world is something Amazon has been trying to cross for some time. There have been many a pundit that figured Amazon would have to open up physical retail stores – or at least catalogue stores – in order to compete with the likes of WalMart and Zellers. Mobile certainly put an end to that debate before it started.

Amazon has been a physical bookstore killer but, perhaps a nuisance at best to other retailers until the combination of smartphones and companies the likes of Redlaser started to emerge over the last 18 months. All of a sudden Amazon wasn’t the underdog anymore.

Granted, this was as much about Amazon being in the right place at the right time as it was the other retailers not understanding their space in the new new retail world. Mobile moves at such an incredible pace that there is a distinct advantage to companies like Amazon that can adopt mobile and make it a core tenant of its strategy without uprooting the entire company or adopting a “digital first” or “mobile first” approach. It was already a part of the company’s DNA.

Incumbents scramble

I don’t think that anyone would have predicted TechCrunch to publish an article that focused on how physical retailers could fight back against Amazon but they did. The significance of 2011 for Amazon can be summed up by retailers needing to “act fast and start providing a unique experience for customers or risk being left in the dust by Amazon.” The problem is no one has an answer to the question of what a unique experience is that will fight the lowest price or most convenient delivery options or largest inventory advantage Amazon has.

Coupons and discounts – where everyone seems to focus – are business-killers, not Amazon killers. Retailers like Best Buy are dying as a result of having to match or undercut the likes of Amazon. This isn’t a sound long-term strategy – it engenders zero customer loyalty, marginalizes the brand and does nothing to dispel the “showcase for Amazon” moniker these companies have been labeled with.

Amazon understood that the consumer revolution was going to happen with or without their participation and it was going to happen on a mobile device, in every situation on the planet. All of a sudden Amazon had a chance to be in every retail store without having to unlock a single door.

The future store window

The Kindle Fire has been touted as the first real competitor to the Apple iPad and has sold between 5 and 7 million devices in the 3 months since its launch. I’m sure Amazon is pleased with the numbers but this isn’t about beating the iPad as a tablet, this is about building the future of the store window. If retailers are bloodied because of how disruptive the simple barcode scanners have been they had better catch their breath, stitch up the gushers and get ready for the death blows.

Amazon’s reign as the worlds most powerful retailer is about to be upon us. Ironically, as everyone searches for reasons and ways to fight Amazon, they are missing the bigger picture: Amazon will win because of the power that mobile has brought to the consumer – not to the retailer.

About the author

Rob Woodbridge

I'm Rob, the founder of UNTETHER.tv and I've spent 14 years immersed in the mobile and pervasive computing world. During this great time I've helped some of the most innovative companies grow their business through mobile. If you are in need of a mobile business advisor or coach, connect with me here to get things rolling.

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  • Amazon is winning, I think, in part because Jeff B is relentlessly focused on the long term, as opposed to most of his high tech competitors. He said as much in a recent interview in Wired:  http://www.wired.com/magazine/2011/11/ff_bezos/all/1
    “…if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow—and we’re very stubborn. We say we’re stubborn on vision and flexible on details.”

    Disclaimer: I’m in the cult of Jeff (own a B&W Kindle and a Fire)
    -Oren (mobileindc.wordpress.com)

  • @twitter-17027442:disqus Bezos is a business guy through and through. There are few like him with the vision to do what he is doing. Jobs, Branson and Bezos are rare people – who else is out there changing behaviours and destroying the old guard?

    While I carry an iPad around, I think my kids will read about Bezos in business books for what he is about to do – let alone what he’s already done…

  • Stephen Smith

    Thought of this article over the weekend as I bought a 32″ TV.  Plan was to buy it at Amazon ($399), but check it out in-person at Best Buy ($499).  Cracked open Amazon’s price-checker app and now the TV was $379 (interesting).  Asked Best Buy to match.  They said their cost was $399 and could only go down to that.  So…bought it at Best Buy.  $20 was worth the return convenience if that became an issue.  So there is a win for “brick and mortar”, except, unless I was being lied to, the only thing that made money on was the HDMI cable I bought.

  • Hi  @e4017b3ec455fb9685e3a4cc9ba40b29:disqus , not sure that is a win for Best Buy…they went from a 20% profit to, according to them, 0% profit. What kind of business do they have where they are always on the defensive. I call it out of business if they don’t figure out how to battle Amazon and make it about something other than price.

  • Stephen Smith

    I agree.  I was being sarcastic.  That is why I specifically pointed out that they made money on was the HDMI cable.

    Anyhow, good article.  I enjoyed it.

  • I’m a student of the literal web 🙂 Thanks Stephen.

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