241. Amazon’s Burgeoning Challenge To Legacy Channels

AmazonBusiness, Index

Must-Read Book: “Behemoth”

This is the 5th and last blog in a series that riffs off of chapters from: “Behemoth: Amazon Rising” by Robin Gaster. In “Chapter 7: Amazon Innovates”, Gaster does a superb job of summarizing how Amazon is innovating at an escalating (more than we can imagine) rate.

Chapter 7 Highlights

  1. All of AMZ’s – past, present and speculative – innovations are summarized
  2. An excellent analysis of AMZ’s: culture, principles, practices, and incentives.
  3. Turnover amongst AMZ innovation teams is high. But, alums are often grateful for the experience and leave to do startups. They are filling niches that AMZ is creating, but chooses not to pursue.
  4. Once an AMZ business become mature, are there “operation managers” who fine-tune what is and resist even incremental innovation? No! Everyone is expected to be both an innovator and an operator – continuously.
  5. For 2019, AMZ had $25.8B in free cash flow and $71.39B in cash after Q2, ’20. It’s all being bet on both near and long-term, tech-rich innovations

Distributors!

  1. AMZ is dictating the pace of buying-expectations change amongst your B2B millennial buyers.
  2. And, assume AMZ will seduce evermore Prime members to do more AMZ, digital-first: searches, research and price checks.
  3. Do B2B brands have a choice, but to use AMZ at least as a marketing, education channel? Then, what will the rest of their seamless, omnichannel solution be? How will legacy distributors fit into these new, digital-channel models?
  4. Equally excellent clones of best SKUs will increasingly appear in “Marketplace” with great: content, reviews, lower prices, and fulfillment by AMZ.
  5. Best customers will increase shopping your prices against AMZ offerings. Will you get angry? Or, get smart and fix your cross-subsidized product pricing? Will you then re-think your – selling, services-for-fees and even channel – models to win?
  6. What if you have to many “operators” and too few “innovators”? And, reps on commission who always fight for the status quo?
  7. The educational, transformational cure? Get and learn how to apply net-profit analytics (at the line/SKU level). It’s tough, and new insights threaten old beliefs. But, it’s key to winning at “eCommerce 2023”.

You don’t have to match AMZ. Just monitor what they are teaching your best customers to want. Then, change to deliver those new needs better than your frozen, legacy competitors.