Capitalism Is Restoring Balance to the Retail World
I love shopping on Amazon. The convenience, selection, and pricing all make for quite the inviting shopping avenue. I’m not a big fan of Alexa but as a retailer I love Amazon. But Ivan Mazour at the The Next Web writes about selling through Amazon as some kind of deal with the devil where you end up screwed in the end.
Trouble arises when retailers put all their metaphorical eggs in their Amazon shopping cart. In selling through the Amazon marketplace, a retailer surrenders all access to the people buying their products. This iron-tight grip on the customer means a retailer can’t even contact or market to people who have bought their products — what hope do they have of creating any sort of meaningful relationship out of this scenario?-- Ivan Mazour, The Next Web
Trump notwithstanding, the fear of Amazon is way over blown. They’re not really doing anything different than what Walmart did in the 1970s and 80s. They’re harnessing superior supply chain and data management skills to put smaller less efficient competitors out of business. They’re simply applying the same time-honored principles to the new venue of online shopping.
It was inevitable that online shopping would spawn their own versions of Walmart and Kroger. And customers are no more losing “connection with their customers” by selling via Amazon than they would be if they sold through Walmart. Yes, they lose some of that customer relationship but they also lose a ton of responsibility that allows them to be lower cost producers.
Are retailers losing some of their customer relationship by selling through Amazon? I suppose so, but how is that any different from the historical precedent of selling through a bricks-and-mortar retail chain? It’s not. In fact, selling via physical stores was probably even more insulating.
I read a book written by Walmart’s executive vice-president of marketing a while back in which he described how Walmart’s view of their suppliers was forced to change as they grew larger. For many reasons which I don’t have time to get into, they increasingly had to take a less adversarial view and treat their suppliers as partners. This meant sharing information and making sure their suppliers also made a decent profit margin.
If Amazon hasn’t come to this realization yet, they soon will. They will realize that it’s in their own best interest to parter with their suppliers and share data when it makes sense. This will yield less product shortages and higher profits for all.
All the hysteria about Amazon smacks very familiar. In the early 1990s, all the rage was writing about how mega-chains like Walmart and Best Buy were taking over the world and putting all of their competition 6-feet under. They put a real hurt on catalog retailers and stole a lot of their market share.
It took a few decades, but real competition to the mega-chains finally came. I see Amazon more as restoring balance to the retail world which had drifted too far in favor of the bricks-and-mortar side of the equation. It helps to apply a little historical perspective.
Now available in iBooks —> The Tesla Bubble
Trump notwithstanding, the fear of Amazon is way over blown. They’re not really doing anything different than what Walmart did in the 1970s and 80s. They’re harnessing superior supply chain and data management skills to put smaller less efficient competitors out of business. They’re simply applying the same time-honored principles to the new venue of online shopping.
It was inevitable that online shopping would spawn their own versions of Walmart and Kroger. And customers are no more losing “connection with their customers” by selling via Amazon than they would be if they sold through Walmart. Yes, they lose some of that customer relationship but they also lose a ton of responsibility that allows them to be lower cost producers.
Are retailers losing some of their customer relationship by selling through Amazon? I suppose so, but how is that any different from the historical precedent of selling through a bricks-and-mortar retail chain? It’s not. In fact, selling via physical stores was probably even more insulating.
I read a book written by Walmart’s executive vice-president of marketing a while back in which he described how Walmart’s view of their suppliers was forced to change as they grew larger. For many reasons which I don’t have time to get into, they increasingly had to take a less adversarial view and treat their suppliers as partners. This meant sharing information and making sure their suppliers also made a decent profit margin.
If Amazon hasn’t come to this realization yet, they soon will. They will realize that it’s in their own best interest to parter with their suppliers and share data when it makes sense. This will yield less product shortages and higher profits for all.
All the hysteria about Amazon smacks very familiar. In the early 1990s, all the rage was writing about how mega-chains like Walmart and Best Buy were taking over the world and putting all of their competition 6-feet under. They put a real hurt on catalog retailers and stole a lot of their market share.
It took a few decades, but real competition to the mega-chains finally came. I see Amazon more as restoring balance to the retail world which had drifted too far in favor of the bricks-and-mortar side of the equation. It helps to apply a little historical perspective.
Now available in iBooks —> The Tesla Bubble
RSS Feed