239. Amazon Erodes Old Brands, Invents New Ones

“Behemoth”: A Must-Read Book

This is the third in a series of blogs that riff off of chapters from: “Behemoth: Amazon Rising” by Robin Gaster.

In Chapter 8  – “Amazon the Anti-Brand” –  Gaster posits that AMZ’s:

  1. Infinite shelf space for all brands
  2. Search (by generic category) with search filters and reviews.
  3. And, its Exclusive Brand Accelerator services with infrastructure-for-fees.

All allow new brands – from any plant worldwide – to quickly create interactive access to end-users. And, the total fees for their new, AMZ, end2end channel are less that the costs of trying to crack and push goods through traditional channels. 

These factors also change shopping decisions. Evermore Prime buyers go to AMZ first to search. Whether we use generic phrases (water heaters) or a specific brand’s SKU, the clones are there with – content, reviews, low prices and trackable FBA – to win orders. Can Old-Brands win the digital-content challenge coupled with a better omnichannel experience?  

Brand Values In Decline Before AMZ    

National brand values rose to a peak in the US how long ago? Consider:  

  1. By ’95 the global quality revolution allowed any brand’s most profitable SKU to be perfectly cloned (and made in China) for less.
  2. Costco’s Kirkland brand sells more out of 750 stores than the entire sales of Kraft-Heinz!
  3. Kia vehicles arrived in the US in ’92. Their reputation has gone from last to JD Powers’ – “most reliable” – in ’16.

The “Augmented Product” Is Now the Augmented Value-Channel

Search Google (images) for: “augmented product”. Distributors used to be able to differentiate their commodity products by wrapping them in:  

  1. Guaranteed, Basic-Service Excellence (metrics) for target customer niches
  2. Then, extra services (perhaps for unbundled fees)
  3. And ultimately, a co-created: sole-supply, integrated, automated replenishment solutions

These differentiators still work. But, now a fourth ring of “digital, value-channel experience” must be added.

AMZ Business will next offer (via AWS) an MRO procurement platform. All MRO suppliers will have to pay to use it to appease big, end-buyers on the other side of the platform. AMZ ultimately wants others to sell all goods through their marketplace to collect fees from all for infrastructure services.  

Conclusions:   

Don’t under-estimate AMZ’s (secret) ambitions and innovations. Do read, digest and discuss: “Behemoth”.

For more on “digital models” see my webinars 8 to 10.

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