Last year, 2013, Amazon, at $74.5B revenue, became the 4th largest retail business in the US, surpassing #5 Target, ($73.3B); on their way towards eclipsing #3 Kroger ($96.8B), #2 Costco ($105.2B); and given certain growth projections, even eclipsing #1 Walmart ($469.2B) in the next 10 years. If you include the “marketplace” portion of Amazon’s business (selling other retailers merchandise for a fee), they are already #2 behind Walmart – the combined value of retail and marketplace, is over $125B annual sales.
Amazon has raised the bar so high every retailer on the planet is now trying to catch up or leapfrog them. The game now is to out-Amazon Amazon. To determine how to out-Amazon Amazon, it’s helpful to look at what Amazon has gotten right.
Let’s use Amazon’s founder Jeff Bezos’ own words to describe what Amazon has gotten right. First, how should we look at Amazon itself – and make comparisons:
First bit of guidance is don’t try to replicate Amazon, put your own “unique twist” on how they serve their customers.
Amazon’s first “get right” starts with the digital customer experience. We’re all familiar with Amazon’s website – personalization, ease of use. But, what about new means of digital customer interaction, especially mobile? Amazon is already number one in mobile commerce. Overall Amazon has 163 million unique visitors per year, 125M of those visitors are using mobile. So, not only does Amazon provide one of the best digital experiences, it has already taken that experience into a mobile context.
The digital experience Amazon provides is backed up by selection. Because, Amazon offers merchandise digitally, they can offer wider variety. But, variety can be confusing. They complement the variety by IT tools – categorization and search. They make it easy for people to find what they want. Add in Amazon product reviews to help customers select quality, and ease of selection is further enriched.
The power of Amazon’s selection capabilities could be powerfully demonstrated over the next year with their expansion into grocery. Amazon Fresh – now offered in Seattle, Los Angeles and San Francisco – is rumored to be rolling out to the 40 largest US markets this year. For just one product area, broccoli, Amazon will offer 65 different varieties. No one can offer that kind of selection – along with the education about broccoli that is sure come with it.
Ever had something go wrong on Amazon? Most of us who have used Amazon have, what happens then? Unparalleled customer care! Amazon aims everything at making your experience go so well, that when things go wrong, as things inevitably do, they still come out shining.
Almost all of us have personal Amazon stories – and, almost all are remarkably positive.
How can Amazon do these things?
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Unlike most retailers where you are anonymous, Amazon knows you. This is especially true if you’ve joined Amazon Prime. Knowing you, along with their “customer is always right – we’re here to please mentality” gives you the most outstandingly consistent, great service in the industry. There is the old saying, “knowledge is power” – in this case, they know you, and they use that knowledge to give the power to their customers!
Amazon, then provides their killer offer, value. Again, a Jeff Bezos quote says it all.
Further, Bezos says, Amazon is focused on its customers, not its competition or Wall Street or short-term profitability — a tricky proposition to communicate to investors who are, typically, worried about precisely those things. He’s asking investors to look to the long run – and to the ultimate Amazon truth that if you do what’s right for your customers, the business will prosper. Other retailers complain about Amazon “getting a bye” on profitability – but, Amazon, has carefully maintained value for their customers is paramount – and evidently, given Amazon’s stock price, others agree. And, we as consumer agree even more.
If there’s a weakness in Amazon’s approach to retailing, it would be that all products are delivered – right! In the society of NOW, Amazon is tomorrow or the next day. However, don’t be deceived by today’s Amazon delivery – look to the future – drones. Drones? Really?
Think of drones as a metaphor of the lengths Amazon will innovate to make delivery an advantage for them. Much of Amazon’s investment over the last few years has been building logistical capability. Last year they added 20,000 people and 8 fulfillment centers (they now have 52 in the US). Amazon’s goal, using drones, more fulfillment centers, more transportation capacity – one-day delivery in the near future, within the day delivery in the next few years. How do you feel about delivery now?
To summarize, these are the key “get rights” from Amazon retailers will be laser focused on:
- Exceptional Digital Experience – in every possible digital touch point with customers – web, mobile, social.
- Amazing Selection – offering more than anyone else (even 65 varieties of broccoli).
- Unparalleled Customer Care – again, making every experience with Amazon delightful, even when things go wrong.
- Giving Value to Customers – providing the best prices, but also in offers such as Amazon Prime, soon Amazon Fresh that extend that value into convenience, and “free” shipping, special offers, etc.
- Articulating Value to Shareholders – asking them to join the journey of serving customers in the best way possible.
- Free Shipping, Fast Delivery – working on innovation and investing in making delivery/shipping a non-issue, and even an advantage.
Personally, I’m looking forward to seeing Amazon drones filling the skies with things people want and need.
