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The Amazon Affair

Oct 19, 2016
The Amazon Affair

As seasonal stock lines the shelves and you wonder when the time to buy Christmas cards suddenly came around once again, retailers are set for the busiest season of the year.

Perhaps best prepared for this rush is Amazon, with Reuters reporting the US arm of the company is set to employ 120,000 seasonal workers this winter, a figure which is 20% higher than the same period last year.

This week we’re exploring everything Amazon, from how the company reached such dizzying heights, what marketers have learned from its growth and why retailers see Amazon as such a threat to their business model.

Humble Beginnings

Launched little over 20 years ago in 1995, the Seattle-based company was the brain child of Jeff Bezos and started out as an online book store.

Having graduated from Princeton and worked on Wall Street, Bezos quickly diversified Amazon’s product offering and began to sell everything from videos and DVDs to CDs, games and other electronics.

An interesting article by Business Insider has listed ’14 quirky things you didn’t know about Amazon’, among them the extreme growing pains suffered by the company as it struggled to keep up with demand over busy periods.

Bezos also apparently coined the phrase “two pizza teams”, whereby employees would be organised into teams of ten or less; the perfect size to share two pizzas. With the aim of creating small autonomous units that could work cohesively with minimal inter-team communication, Bezos ran a tight ship to deliver measurable results.

With the Wall Street Journal recently noting that Amazon reported its third consecutive record profit this summer, with revenue jumping 31%, the phenomenal growth and success of Amazon since its conception is hard to dispute.

What have marketers learned?

The success of Amazon is extremely influential for marketers, and there are a number of lessons that industry experts have learned from its rise.

A recent article by entrepreneur.com has argued that the success of Amazon Prime in particular ‘should be an inspiration to every digital marketer.’ Among the lessons marketers can take is the importance of keeping your message simple, so that the benefit of the product can be clearly and easily communicated to the customer.

Another lesson is the importance of incentives. For econsultancy this is an important draw for Amazon customers, and contradicts the idea that customers are no longer interested in brand loyalty in the internet age.

econsultancy argues that while signing up to Amazon Prime may not be cheap, this hasn’t deterred almost 45% of U.S customers from joining the scheme. In turn customer loyalty gives ‘an extra incentive to shop with Amazon. Loyalty programs are powerful, especially when offered by trustworthy brands.’

The Amazon Threat?

The seemingly unstoppable growth of Amazon, which only looks set to continue with the expansion of Amazon Prime Now and launch of Amazon Echo, has perhaps unsurprisingly been seen as a threat by many.

For Marketing Tech News, the ‘unrivalled brand awareness, superior eCommerce platform and shipping offering’ of Amazon is central to its success, and is something that as yet competitors are finding difficult to replicate.

It is argued that ‘eCommerce fashion brands need to differentiate themselves and make customers really enjoy shopping with them enough to build a strong affinity with their brand. This means creating an experience that rivals the convenience of Amazon so that shoppers stay loyal to them.’

Fashion retail is not the only sector cautiously watching the success of Amazon. According to a recent LinkedIn article by Jon Nordmark, CEO of self-service innovation platform iterate.ai, ‘Amazon’s percentage of product search DOUBLED in 3 years (almost). Today, 55% of all shopping web searches start at Amazon. A fraction of that starts on Google.’

With new offerings such as Alexa proving popular among consumers even in the early stages, Amazon seems to be moving quickly in the realm of new technologies and has left others flailing. 

Nordmark claims that ‘Amazon seems to beat Google and the entire retail community to the punch on a number of fronts’, and it is this capacity to move quickly that is providing a challenge to traditionally dominant brands.

Only time will tell if other brands can keep up to the Amazon storm sweeping the internet-connected world, but for now marketers and retailers are focused on learning the lessons of its success.


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