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.
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.
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.