第1回:Amazon effect: Amazon effect partially in USA in retail, delivery services and how it forces others to innovate to survive

AMAZON is an unusual and amazing and controversial company. Amazon has impressed investors by diversifying into virtually every corner of the retail industry, cloud computing, Virtual voice activated as Artificial intelligence enable voice controlled assistant, steaming service, altering how consumers buy products and putting big pressure on many brick-and-mortar stores. The former bookseller accounts for more than half of every new dollar spent online in America. It is the world’s leading provider of cloud computing. It spent $4.5 billion for its streaming service which just behind Netflix $6 billion and almost double compare to leading cable channel HBO spending of $2.5 Billion. Its own-brand physical products include batteries, almonds, suits, speakers, microwave oven linked to a virtual voice-activated assistant Alexa that can control, not just lights; it is capable of controlling everything from basic smart plugs, Robot vacuums, kitchen appliance, door lock to garage door. Since the beginning of 2015 its share price has jumped by 173%, seven times quicker than in the two previous years (and 12 times faster than the S&P 500 index). It exceeded market capitalization of some $1 trillion in September 2018, it is one of the most-valuable firm in the world. Today Amazon is now worth that more than USA’s some biggest retailer such as Walmart Target, Best Buy , Nordstrom , Kohn, JCPenny, Macy’s and Sears Combined. 52% od American own Amazon prime more than 49% of people who own landline phone. Also we are also hearing, how it pay its warehouse stuff very low salary, force them to work without any break or even force them; not go to bathroom, destroy mom and pop store and competitor and all to gain market share and provide customer cheaper prices items.
So, what is Amazon goal and how it is achieving it?

  1. Amazing customer service and telephone support: In my experience, compare to any other industry retail, utilities, financial institution, health care etc) , Amazon has the best customer service. One example: during the busiest time of real which X-mas (December 24) , I supposed receive my son milk drink from Amazon.  First of All, this milk drink is package which sell $44 in Walmart, but I bought it $35 in Amazon. So it was cheaper and that make me decide to order. My Amazon Apps shows that the package arrived on December 24 , evening. Normally the delivery person left it in backdoor or front door. However, it was not there. I called Amazon and the waiting time is almost zero minute. Then I told the person that I could not find my package and my son drink it every day. In Amazon rules, if any package does not arrive even the system shows, it arrives, need to wait 24 hours, before Amazon re-fill or make re-fund. However, the customer service person, place immediate order to re-send another package by 24 Hours. While I was talking to the customer service associate  , I found that actually the package was delivered but the place is not the same place that I was always receive. The package was left in my post box. I told the customer service associate that I received the package, but she told me that still I will receive another package as gift and I also get $5 coupon for any future purchase. This shows that Amazon empowered its employee to take decision that support customer immediately. We do not get this level of prompt service and decision making except in Amazon.
  2. Find almost anything: I wanted to buy   Ochaduke(お茶漬け) however  nearest Japanese supermarket is about 35miles from my house , I found it Amazon. My friend to buy some seed for which only can be found in South east Asian country; but he found it Amazon. It shows not everything; but we can find most of thing in Amazon whether it cheaper or rare. My wife like Amazon than Walmart or other retailers
  3. Easy to use Apps: The mobile app which I use most, is very user friendly and easy to use. It also read and scan any barcode item, and tell me what is the price in Amazon.
  4. Amazon Prime Service: The membership is about $119 per year. If you are prime member, most of the item we buy in Amazon , the shipping process is free. It does not matter, if I buy $1 candy or $500 sofa; as long it is in under Prime, it is free shipping charge and most if the time ; come in two day or 48 hours. Also Prime include steaming movie, TV show, music service, some free cloud service.
  5. Alexa smart speaker which now included in many Amazon gadget: Many maker made smart speaker but amazon beat them when it come regarding artificial intelligence. It can recognize the even the person who speak is not native and has accent and respond to the question.
  6. Fire Tablet:  Amazon make good table with very cheap price and those table come with lots of Amazon App ( Alexa, Prime Video, Shopping, Amazon Drive, Amazon Music ) . My wife and kid have been using the tablet and I bought 8 inch table with $60.

From above, Amazon just want to make it customer hook up 24 hours with it and directly, indirectly make them buy things. In the history of retailing, no other company or individual come up with so many innovation that can be used in many aspect of our life. It makes the life very difficult for other retailers in both on line and offline to compete with amazon in terms of price, customer service, speed, user experience. Toys R US declared bankruptcy and closed store across USA in 2018.  Sears which was largest retailer in USA until 1989 ,is already closed to Bankruptcy.
What its completer doing in response?
Hybrid shopping ( order online, pickup or return in store) : All major  like Wal-Mart , Target, Best Buys are now providing online order and in store pick up. Walmart is a great example of this. When you look at Walmart’s website, it looks a lot like Amazon and other major online retailers, but there is a small difference. For the products that are fulfilled by Walmart, you can see if they are available at any of the locations near you. If they aren’t, you can still place an order and have the item shipped to your local Walmart for pickup free of charge.
Valued Added customer service :The Pharmacy retailer such as CVS , Walmart, Walgreen provide online refill, enhance customer service for customers which can not provided by online. CVS , Walgreen provides drive through pharmacy  services.
Best Buy’s Geek Squad is army of specially trained tech support experts who could be hired to mount TVs and install other appliances at a customer’s home. But sometimes, people needed help before they bought big and expensive gadgets. So it started an adviser program that allows customers to get free in-home consultations about what product they should buy, and how it should be installed. The service started as a pilot program 2016 and is now being rolled out nationwide in 2018.
Price match or better deal than Amazon
Offering a better deal in-store could be a double-edged sword, but it can drive traffic to brick-and-mortar stores and creates an opportunity to engage with customers in a more meaningful way. Price matching with Amazon online prices will keep price-conscious customers from shopping elsewhere. Knowing that they can count on getting the best price available from one company gives the shopper confidence to not look elsewhere and creates brand loyalty. BestBuy , Target takes advantage of this strategy and implemented it to combat Amazon  competition by matching prices in store with Amazon.com price.
Increase online presence:
Wal-Mart acquired online retailer Jet.com, women’s clothing company ModCloth and men’s clothing seller Bonobos, India’s number one online shopping site Flipkart. These e-commerce acquisitions allow Wal-Mart to compete with Amazon in critical categories like shoes and apparel. Target Acquired Same-Day Delivery Platform Ship to Bolster Fulfillment Capabilities.
Wal-Mart has Market Place where 3rd part seller can sell third product which helped Wal-Mart to become number 3 online retailer behind pure online retailer of Amazon and eBay.
Embrace Artificial intelligence and Could
To compete with Amazon Alexa voice controlled assistant’s included devices, , Wal-Mart is working with Google Home to the same effect. In addition, Wal-Mart and Microsoft engineers will collaborate to migrate a significant portion of walmart.com and samsclub.com to Azure, While Wal-Mart is doubling down on its e-commerce presence to better compete with Amazon, Microsoft has been working on a technology that would eliminate cashiers and checkout lines from stores. Microsoft’s technology aims to help retailers keep pace with Amazon Go which is e commerce giants cashier less shop format.
In my opinion is the competitor winning. In my opinion what the competitor doing is not enough. These days people do windows surfing including me. Most of the time, we find better price in Amazon or the item we are looking for can’t find in physical store or they have so bad customer service that the sales associate does not know what they have. It is tedious to find items in a big store size like Walmart and also to carry around and carry it to home especially big product which does not fit in sedan or small car.
What they need to do :
Provide services and help people find what they need:
Introduce in-store services that online merchants can’t match. Product curation and personal styling services are some of the things other retailer could offer.
Go beyond commodities:
Stock up on merchandise that customers won’t find anywhere else. Competitor  retailers need to focus on stocking more locally produced items or uniquely distributed ones, so Amazon aren’t competing on price directly.
Be competitive with pricing
Price matching is a common tactic that brick-and-mortar stores use to convert customers who’d otherwise shop online. It’s a decent strategy, but it can also kill profits as Amazon which does not have brick motor store make more money and they can undercut competitor price . So need ne creative by working with vendor, remove middleman, improve logistic system
Enhance your presence
Make the site super user friendly, easy to navigate, have excellent search algorithm or easy to find things.
Data Analysis Data analysis and Data Analysis:
This is the Amazon one or most critical strength, they have been collected huge user data and analyzed with so fast and so effect and improve their system based on user behavior every day that computer has difficulties to catch up. Now Walmart and others are targeting with Google and Microsoft to analyze their data. Unless someone come up with better data collection and analysis and feedback system, it is difficult to compete with Amazon.
By Mohammad Murshed Kaji 2018.12.31