…is a just-published book. I concur with the reviews at (naturally) Amazon. I will add more thoughts in this and a few blogs to follow.
What’s Outstanding about “Behemoth”?
This well-written tome offers a factual review of all that Amazon has done (and currently is) including the author’s own investigative findings. Then, by connecting both generally known and new dots, he articulates fresh observations and plausible future scenarios.
Chapters I will review in forthcoming blogs cover:
- Gaster details five phases with Amazon currently being in phase 4.0. The 5.0 guesstimates are compelling.
Key observations: resellers have no other total, value/cost marketplace to be on. Competitors can’t catch up. (Virtual) manufacturers can now instantly create a more effective direct-to-end-user channel v. what traditional brands have via independent distribution channels. But! Only for most net-profitable, whole-good SKUs that fit into Amazon’s expanding (to 5.0) end2end infrastructure.
- Amazon Retail. Gaster offers forensic math to conclude that: Amazon had a negative operating margin of (16.4%) for 2019. AMZ hides this loss by conflating it with fees from: Prime, advertising, etc. The loss may also be burdened by aggressive expensing and depreciation of infrastructure investments.
Distributors – with cost-to-serve analytics at the line/SKU level – already know how unprofitable small, web-ordered spot buys are.
Gaster concludes that Amazon Retail will be slimmed down to profitability while aggressively growing reseller sales and profitable fees.
- Amazon’s “anti-brand” effects. Ever improving – search tools, reviews and infomercials – allow new brands (that are targeting best brand SKUs) to succeed while traditional brand power wilts. How do you remarket traditional brands on Amazon?
- Amazon Business? “A hidden $18B annual run rate business”. Gaster’s view: AMZ is happy to let resellers and exclusive brands (factories selling direct through AMZ) to grow SKU availability and sales. AMZ is focused on integrating into big, end-buyers’, internal, procurement software to allow resellers to do the rest. Compounding innovations will see AMZ-BIZ sales exceed $30B by 2023.
- The Innovation Challenge. All AMZ innovations are ultimately aimed at winning more Prime accounts and sales. How AMZ innovates is freshly and more deeply covered. AMZ has changed everyone’s buying expectations and continues to offer us more. Legacy channel-players must respond; or; lose share to both AMZ and the few factory-distributors that can reinvent omnichannel value.
Buy, digest and discuss Behemoth!