I confess to being infatuated with Amazon. As a business observer, what I find compelling about them is the boldness and freshness with which they interpret their marketplace, competition and customers; and then translate those interpretations into compelling business strategies and tactics.
What is fascinating to me about Amazon is less about what they sell than how they sell. With a wide and varied set of conventional and boldly unconventional business strategies, they have come to account for more than 5 percent of the $1 trillion in annual sales done over the Internet.
They have grown with conventional aggressive growth strategies such as acquiring competitors like Zappos.com, Diapers.com, Soap.com and BeautyBar.com. They also employ subtler and more systemic strategies and bold and unconventional strategies.
One of their more unconventional strategies early on was to embrace “coopertition.” This is the practice of engaging and cooperating with competitors. In the early days of the site, they linked directly with major retailers like Target and J.C. Penney, allowing shoppers to bundle orders. Today, they operate a robust Amazon Marketplace that allows companies of all sorts, including many automotive manufacturers, distributors and retailers to sell through their site.
On the vertical integration front, Amazon has invested in everything from conveyer technology to the purchase of robot maker. These sorts of technologies accelerate the speed at which Amazon can assemble customer orders, in some cases reducing cycle times to 20 minutes from click to ship. And on the delivery front, they now offer same day delivery in about 25 top markets.
On the product diversification front they regularly find ways to market products that seem to defy logic for selling on the web. They recently teamed with Nissan for the launch of their new Versa, providing a $1,000 Amazon gift card to the first 100 buyers to order the vehicle through Amazon. In connecting the auto manufacturers with consumers, they created a channel model in which car dealers didn't have to be in the middle of their transactions (a dream come true for many consumers).
USA Today recently reported that Amazon is planning a bulk retail service called "Pantry.” It would make it viable for members of its Prime shipping program to purchase such products as cleaning supplies, canned and dry goods, paper products and other bulky commodity items from Amazon. These items are more commonly bought at warehouse club retailers like Sam’s Club or Costco. The products would then be shipped in a box with a maximum weight limit.
The result of all this bold thinking and innovation has spawned a seemingly endless stream of myths and urban legends about Amazon.
By now, everyone has been exposed (if not overexposed) to Amazon and the story of drone deliveries. In an interview with 60 Minutes at the end of 2013, CEO Jeff Bezos unveiled a futuristic and seemingly impossible scenario where drones would be used as a means of delivering purchases within 30 minutes of ordering.
Many people claim it was nothing more than a massive public relations stunt and that the FAA will never allow such a practice. But there is a significant number of consumers convinced that a drone will be delivering their products within a few months.
The point is that Amazon doesn’t do stuff the same way as everyone else. And the rest of us can learn much from them. I hear so many aftermarket people say, “people are not going to buy auto parts on the Internet.” I’m sure that there were a lot of travel agents saying the same thing about airline tickets in the 1990s. I’ll wager just a few weeks ago there were plenty of car dealers saying, “No self respecting manufacturer would offer a car for sale on Amazon and besides, who would every buy one there?”
Amazon will continue to fascinate me as long as they continue to seek bold and creative ways to grow and improve their business. And I will continue to watch and look for what I can learn from them.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
