If you had told me in 2002, eight loss-making years after the company was formed, that one day Amazon would become one of the biggest brand successes worldwide, I simply would not have believed you.
Amazon has always been something of a phenomenon. Even when it was in loss-making mode, it still attracted lots of buzz. But even the most diehard of fanatics must have begun wondering whether the company would make it:
-how much longer were people going to believe in Jeff Bezos’s optimism?
-how much longer could they produce huge quarterly losses and still keep trading? Incidentally, that’s still a bit of a mystery to me!!
So, as I say, I would have put some serious money on the Amazon brand disappearing in the same way many others did in the first internet revolution.
All I can say is…was I wrong or what??
Looking at the business today, Amazon’s success is no surprise and it continues to grab the headlines for all the right reasons:
-the low prices on an ever-increasing selection of merchandise makes the Amazon value experience very appropriate for these recessionary times
-the consumer promise of service, speed and efficiency is a killer combination and has many people engaged and loyal to the brand
-the innovative thinking in technology, in distribution and in marketing have been differentiating and position the brand perfectly for the future
-the recent purchase of Zappos is sure to help crank up their overall service proposition to an entirely new level
With all of this going for them, it’s not surprising that when I look at the leading retailers in this country, Amazon is one name that automatically comes to mind– over the past 15 years, the brand has earned our respect and our trust and without doubt, they now have a seat at the top table.
What intrigues me about Amazon however, is thinking about where the business is headed. There appear to be no limits. But, it is only a matter of time before they become the major irritant to Wal-Mart and we all know that means a fight of gigantic proportions.
The fact that they are building a second Bentonville up there in Seattle simply reflects the fact that both companies are obsessed by low prices and superb supply chain logistics. But while these are noteworthy similarities, there are two huge differences between these behemoths – the internet and a thing called service. And on both dimensions, Amazon poses a remarkable threat. The online point is obvious but as the behavioral shift continues from “retail” dollars to “e-tail” dollars, the more Amazon is likely to benefit disproportionately.
In the area of customer service, Amazon also has advantages. Wal-Mart service is perfectly acceptable versus its current historical competition. But against an internet-only operator where the business model is different and where the service component is centralized, Wal-Mart may be at a competitive disadvantage. Amazon is already spectacularly good at service but they can now learn new lessons from the best in the business, Zappos, and apply them selectively and relentlessly across its business. Sound like an interesting battle?
If I was a betting man, I would say that Amazon has all the potential to be the world’s next leading retail force…not in the next five or even 10 years but after that, who can say?
And that ballsy prediction for Amazon is a far cry from a time when many of us questioned the viability of the business to even survive, never mind thrive.
Oh well, that’s why I don’t advise people on their investments!!
Simon Williams
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