Distracting Stats v Strategic Profit Intent
Amazon is secretive, even deceptive. For instance, it trumpets amazing stats in press releases that can distract us from seeing their strategic goals. Maybe this is part of the plan. Why spark early competitive responses?
Consider AMZ-Biz. The last official numbers we saw for sales, resellers, and buyers were at year-end 2016. Wouldn’t you brag on growing 20% per month?
So what final profit streams is AMZ-Biz envisioning? How about fees from:
- Reseller sales and use of Fulfillment by Amazon
- B2B advertising, including videos (Pay to Play)
- Last-mile delivery platform fees (Shipping with Amazon)
- And, if startups don’t eventually offer clones of top-profit SKUs, then AMZ will
Here’s how it works.
Step One: Achieve Winner-Take-All, Marketplace-Platform Value
In digital marketplaces value exchange reaches a tipping point and then snowballs as more buyers attract more sellers which attract more buyers. Digital value grows exponentially, while operational costs drop. When you get to a critical mass, competitors simply can’t follow. If you need some examples, just look at Facebook, LinkedIn and AMZ’s B2C Marketplace starring 100MM Prime buyers.
AMZ-Biz resellers are presently curating and dynamically pricing millions of B2B SKUs because Prime customers, who are mostly millennials, want their AMZ B2C shopping experience at work too. And, AMZ web services is inventing free, effective, cloud-based spend-management tools for big corporate buyers.
Step Two: Monetize Platform Activity and Clickstream Data
Imagine that by 2020 every B2B buyer uses AMZ-Biz for long-tail needs and price-checking on commodities in parallel with their primary vendor contracts. In addition, 5G bandwidth is available in some areas and rapidly rolling out to others to permit downloading of multimedia informercials to all screens 24/7.
Marginal producers and startup clones are stealing share from top brands by being on AMZ with compelling content. So, top brands begrudgingly join the AMZ content management war, and they all pay to play. Won’t AMZ advertising fees soar while traditional channel publication and trade show fees plunge?
In addition, AMZ knows from customer clicks and ever-better algorithms which customers are most likely to want whatever new product a producer wants to take to market.
The pull marketing option for factories now emerges! Factories can offer 10 to 90 second infomercials for a fee to the most likely end-customers with reward points for watching (an AMZ patent). If customers want more, factories can provide it 24/7.
Startups with micro-niche products or commodity clones won’t need established channels. AMZ markets and distributes for them in a week! Pull marketing is faster and costs less than push marketing programs through legacy channels.
If big brands will lose sales and channel advantages, why don’t they get started immediately to create their own vertical marketplace consortium to out-niche AMZ-Biz? Do they not share these secrets?
What About Exploding AMZ-Biz Deliveries?
Some of AMZ’s last-mile delivery experiments will get traction. Both delivery costs and hours-to-deliver will drop. And, Amazon will get a fee.
For more on the effects of AMZ and how to craft your proactive response, attend my one-day seminar series starting this fall.