Part 1 of this Amazon business (AMZ) series touched on Grainger’s current profit woes. So, why have legacy channel players underrated AMZ for 20 years? In this second installment in the series, we take a look at the new lenses we need to better assess the threat of Amazon’s future business effects.
My favorite example of a channel player underestimating Amazon is Barnes and Noble (B&N). B&N unveiled a web site in 1999 that was going to crush what they referred to as “Amazon dot bomb,” according to Barron’s. But by April 27, 2017, the company had announced their fourth CEO in four years, and 645 stores were down 9% for 2016. Meanwhile, on May 8, 2017, Barron’s targeted AMZ shares to hit $1100 (+20%) in a year. Continue reading 63. Envisioning Amazon Business Effects by 2019, Part 2
Watch for the next four essays posted here, entitled Grainger v. Amazon. This will be a four-part series devoted to examining the impact of Amazon on the distribution industry upon the often unshakable Grainger.
On April 18, 2017, W.W. Grainger (WWG) management reported a 22% decrease in year-over-year earnings, along with an acceleration in branch closings. WWG stock peaked at $258 around March 1st and closed on May 5th at $189. WWG is and has always been a well-run company; Its steady innovations have powered great numbers and increased dividends for 45 years straight. But, damage control requires executives to downplay being Amazoned (the impact of Amazon on the distribution industry), while cheering plans to build on their unique strengths. Continue reading 62. Amazon Business Series: Grainger v. Amazon, Part 1
The critically acclaimed book turned Hollywood movie, Moneyball, tells the story of the Oakland Athletics baseball team and their industry-changing approach to winning more games per payroll dollar than any other team in history. How did they do this? By being the first team to use analytical insights in distribution to increase profit instead of traditional player valuations.
The movie has strong messages, and you might be surprised to find they can be applied to your distribution business. Below are YouTube links to a few of the most important scenes, plus some discussion questions. Watch the clips and add your own questions to spur management team discussion that will help you go beyond tradition and into the brave new world of analytics. Continue reading 61. Discussion Exercise: Lessons to Be Learned from Moneyball