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Amazon Secures First Sites For UK Launch Of ‘Go’ Format

According to property sources quoted by The Grocer, the online giant has now secured sites of around 5,000 sq. ft. in “key” locations across central London. Whilst the stores are said to be in high-footfall areas, they are not the “obvious highest rent prime pitches.” [more]

• Patently a serious move in the UK’s most densely populated area…
• …and better for NAMs to be on board, than not…
• …with direct access to evidence of progress…
• …rather than having to rely upon second-hand feedback.
• i.e. a no brainer.

Amazon 'patents' a new definition of a shop...

Amazon's latest patent, aimed at preventing alien showrooming in store (!) could be another nail in the coffin of a traditional shop.

In fact Bezos' patent, combined with his Whole Foods snack, raises some fundamental questions:

What is a shop? (Sales outlet?, showroom?, sales aid?)

• Maximum assortment (needs to offer everything, even long-tailed SKUs, selling less than a SKU/month...)
• Online can offer ‘infinite’ selection (‘Amazon 300m items…’)
• Tesco cull 90,000 SKUs to 60,000 SKUs (Cull 1), enough is not enough?
• Tesco discovery of 80/20: 80% sales via 20% SKUs, what really counts instore?
• Sales/sq. ft. (Standard £1,000/sq. ft.) but should we include all sales of the SKU by the retailer, including their ‘show-roomed’ sales, providing they capture these sales on their online facility (but every little blocking of 'alien' sites helps...)
• Redundant space: ‘large space redundancy’ (can franchisees produce adequate returns even with a mix of rental and share of sales?). If not, instore theatre has to generate £1k/annum/sq. ft. or the store performance goes down to say £750/sq. ft./annum, thereby diluting value of the real estate…
• UK mults own a high proportion of their stores, and are locked into the space (because 2% depreciation per annum means 50 years of the same (in this retail climate?)

This just shows how the fundamentals are being challenged…(by Amazon)

Who in the supplier or retail company is doing this degree of fundamemntal and open-ended thinking?

Not being an experienced retailer, Bezos does not know what does not work, and goes on to make it work…while expert retailers continue to search for the tram-tracks…

Amazon-Whole Foods, a small step with a big pay-off…

Moon-landing

Yesterday's agreement to buy Whole Foods for $13.7bn marks a drop-in-the ocean step-change in grocery retailing everywhere…

More details here, but the immediate knock-ons include:

• A synergistic foot in Bricks & Mortar food retail for Amazon…
• With lots to offer Whole Foods but even more to gain
• More of a challenge in terms of online execution…short term (no sweat for fast-learners)…
• …but meanwhile, every little helps

Amazon Zaps the Checkout

In another first, Amazon Go have developed a new, more convenient way of shopping.

Users with the Amazon Go app on their phones simply check into a store equipped for the system, put their phones away, shop to their hearts' content, then leave when they're finished. No waiting to pay.

As each item is picked up and held (or stored in a bag) by the shopper, the price is automatically added to the shopper's Amazon account and is deducted from the user's bank account when he or she leaves the store. The store gets the same info plus a copy of the item's SKU number for inventory management and accounting purposes.

Whilst this will cut cost and no doubt increase their sales, the real impact of this lateral leap by Amazon Go will be felt at supermarket checkouts…

In other words, whilst traditional stores have laboured for years at speeding up the process, encouraging self-scanning, and in effect making the same hole deeper as in traditional thinking, Amazon have eliminated the process in a move that will of necessity be copied by the multiples, or for speed, will be leased from Amazon…

Walmart chase Amazon, catch up not guaranteed...

News that Walmart are accelerating their roll-out of warehouses, robotising logistics, randomising warehouse shelf- placement, speeding up delivery and devouring a host of e-startups all points to the fact that they have simply applied to enter a race with the advantaged innovator...

However, satisfied users of Amazon's service already take for granted infinite choice, 1-click ordering, 100% availability, 1-day (Prime-free delivery) and no-quibble returns.....

In other words, Amazon's entry requirements need to be met before Walmart can start running...

However, they will add interest to the race, and provide suppliers with a little more choice in what was beginning to seem like a 1-horse contest.

Suppliers that want to optimise online, also need to start with these Amazonian entry-standards, or move back to the sidelines...

Amazon and the need to second-guess

From our first tentative online steps, many of us have grown comfortable in our reliance on Amazon as a simple, transparent source of anything that can be legally sold to consumers, secure in the ease of 1-click ordering, confident that the door-bell ring signals the timed arrival of exactly what was ordered, with the option of returning an impulse whim almost as easily as making a purchase, and yet again seeking 10 friends to re-bore with our enthusiasm...

Whilst the price may not have always been as low as other sources, the extra convenience more than made up for the difference...

In a similar way, Unilever's recent purchase of Dollar Shave Club awakened many of us to the possibility of buying essentials on a regular basis, in order to maintain minimum domestic stock-cover, causing some of us to ponder 'if only Amazon offered a similar service' it would not only fill a personal gap, but it would most likely blow other subscription-models out of the water...

Well, Amazon's Subscribe and Save offering could fulfil that wish...but not according to an article in the New York Times.

Essentially, building on their dynamic pricing model whereby the price you pay depends on time of ordering, supply and other variables, the resulting price fluctuations - in some cases up to 170% differences, according to NYT article - Amazon are uncharacteristically going against general consumer perception that subscription means 'same price until next year'.

Whilst Amazon give the option of cancelling/modifying the repeat order, thus meeting the letter of the 'contract' with its loyal users, the very essence of Amazon-consumer relationship is based on never having to think about the 'machinery', much less second-guess our basic assumption re the contents of the tin...

Subscribe and Save, in its present form, thus provides an opportunity for a competitor to do it better...

Amazon elevates delivery to a new level by leasing 20 Boeing cargo planes

News that its US Prime members will benefit in terms of delivery speed and availability from Amazon’s decision to in-source its bulk transportation came as little surprise to observers following its experiments with drone delivery and pre-assembly of anticipated orders.

This latest move reinforces Amazon’s determination to be a global source of anything that can be legally sold to anyone, anywhere, anytime, in any way required by the consumer.

In other words, plane-leasing should not be expected to remain a US initiative for long…

By taking more control of fulfillment, and removing middle men, the company is reducing costs from the supply chain, eliminating duplication-inefficiencies and offering virtually 100% availability via its infinite online shelving.

In the process they are setting industry standards in terms of 1-Click ordering, ever-shortening delivery times, and ‘no-quibble’ returns, in an industry that is stumbling along in their wake…

Moreover, Amazon have managed to persuade loyal users to pay for and become Prime Members, thus triggering another steady revenue stream…

When you think about it, leasing a few Boeing cargo planes is but another step on a very comprehensive journey by an ultimate practitioner of customer-centricity...

Can anyone really afford to be outside this unique business model…?

Jet.com: the new 'Aldi' of eCommerce?

A new US-only website, launched in July, Jet.com is offering another option for price-sensitive online shoppers: simply visit its site and it will guarantee the lowest prices across some 10 million items.

The site also offers a variety of tricks Jet.com shoppers can use to save even more, including filtering by “smart/cheaper” items, opting for a different form of payment for extra savings, accepting combined packs, slower delivery, or even agreeing not to return an item in exchange for a discount.

In other words, Jet.com are aiming at Amazon's market, but betting that online shoppers will be willing to trade high service levels for lower prices...

The business model works on a combination of a $50/annum membership fee and a real-time trading system that suggests economies such as 'combinable' products, new shipping options and price updates - cheaper! - as the shopper packs the basket, all resulting in lower prices (can you imagine the impact on B&M shopping if this facility could be incorporated into self-scanning in the aisle?).

Incidentally, given that Mr O'Leary plans to make Ryanair the Amazon of travel, aspiring to go the Jet.com route might make a better fit, and represent less of a culture-shock!

More on Techcrunch

Amazon's Profit - a rounding error for Apple but proof of potential for the Stock Market

Amazon’s surprise second quarter profit of $92m, on revenue of $23.19Bn, a net margin of only 0.39% clearly leads the stock market to believe that the company is beginning to flex its latent profit muscles, adding $40bn to their market capitalisation, making them bigger than Walmart…

Reports in the New York Times confirm Amazon’s unchanging formula: 
It is the leading e-commerce company, and e-commerce is going to be really big. Its dominant position will allow it to undercut competition and bring home large profits. In the most extreme case, it will control the delivery pipeline of goods into homes, kind of the way cable companies once controlled the flow of entertainment... 

The stock market have obviously bought into the Amazon profit story, allowing the company to provide steady but minimal profits, re-investing surplus in innovations and experiments that normal companies can only dream about…

…Allowing Starship Amazon to continue on its mission of selling anything to anyone, anywhere, anytime, in whatever way they want to buy, forever?

BTW, in case you ever need reminding of their scale, Amazon have just opened a new multi-million pound fashion photography studio in London's Shoreditch as its fashion business continues to grow, and will produce half a million fashion images a year.

At 46,000 square feet (Asda-size), it houses 22 individual photography bays, a large state of the art editorial suite, video editing facilities, a creative fashion library, and office space for Amazon’s growing team of fashion creatives.

Please continue to watch this space...

'Amazon Calling' - a new email delivery service to wake up corporate providers

News that Amazon have launched an email and calendar management service could be a surprise, but not a shock for wide-awake NAMs...

Aimed at the corporate sector in competition with Google and Microsoft, this has to be another example of Amazon checking through categories where complacency and the resulting pricing may provide an opportunity for simplicity and efficiency to gain a toe-hold.

Whilst we used to say that the major mults would eventually provide a means of satisfying our every need, Amazon are actually making it happen...

Apart from early adopters that may like to check out Amazon's Workmail now, the real issue for NAMs is where will Amazon strike next...?

In other words, why not check out if your, as yet untouched, category exhibits any of the Amazon-appeal criteria like complacency, inefficiency and the resulting pricing that may raise its profile with this 'virtual conglomerate'...and prepare for the inevitable...  

Royal Mail: the real threat of Amazon going it alone on parcel delivery

News in The Guardian that Royal Mail shares slumped by 8.4% on Wednesday after the newly privatised postal service warned that its profits would be hit by Amazon launching its own delivery service should have been a no-brainer....

Royal Mail said its parcel growth rate would decline from 4%-5% to 1%-2% for at least two years because of Amazon’s decision.

Amazon launched its first same-day delivery service in the UK last month. The new service, called Pass my Parcel, promises to deliver parcels on the same day ordered to hundreds of newsagents across the country.

However, anyone taking a cursory glance at Amazon’s history will realise that Royal Mail, by focusing on the fact that Amazon are simply taking over delivery of their own traffic, are missing the real agenda…

Those with long memories will recall how a series of postal strikes helped the growth of fax-machines... And once the public had become accustomed to the use of alternative written communication, the transition to emails became so inevitable...

Like home-location ‘tie’ of land-line was made redundant by mobile technology, so too the increasing complexity of sending parcels via traditional carriers will become a driver for the growth of a simpler model...

With so much practice, it is surprising that Royal Mail still sees the introduction of Amazon’s own parcel delivery service in terms of the loss of one of its major customers and the 6% hit to Royal Mail’s parcel volume sales.

Anyone who has tried to run the pricing/volume challenge of parcel despatch at the local post office and fared equally badly using alternative providers (see BBC for details of the 16-page Royal Mail guidelines) will realise that the increasing complexity has to present an open goal for Amazon to introduce the parcel-delivery equivalent of 1-click ordering and no-quibble returns when they decide to enter the market for domestic and corporate deliveries…

Apart from making some savings, Amazon have to be taking on their own-delivery to learn the process...

This has to be the ultimate agenda, and NAMs might usefully factor this inevitability of this threat to ALL parcel delivery into their online strategies… 

The NozamA approach to shipping from home?

Forget packaging and waiting in lines. Shyp picks up your items, packs, and sends them anywhere in the world using the lowest cost, most reliable option.

Although currently limited to San Francisco and New York, the idea fulfils a real need and is scalable…

The only issue is that with a slight tweak, Amazon could reverse its model, and take the business.
Given its geographical density of distribution, the addition of collecting has to represent further economies for amazing Amazon…

Hat tip to Andrew Sullivan

Superdrug: the super hurdles to super online... Why anything less can’t hack it

Marketing Week reports that A.S. Watson is launching an innovation lab to improve its digital strategy and accelerate ecommerce growth as part of a £37m investment.

Called eLab, the new unit will drive its online strategy globally. The team will comprise of 80 digital specialists based out of mainland China, Hong Kong, Milan and London.

The group-level unit will advise A.S. Watson’s brand teams on strategies related to digital marketing and e-commerce, across all its categories. It will also maintain a platform which will serve as the backbone of its online outlets in the various country markets.

However, before NAMs decide to leap aboard, it might be worth checking out how the company measures against the Amazonian hurdle rates that have to be a basic online requirement:
- 1-Click ordering
- No-quibble returns as easy as ordering
- Delivery: the three-step basics: Anticipatory shipping, Near-home collection, Geographical penetration

All else is detail…

See the three KPIs in practice here

The Amazon KAM - A new way of Managing Major Customers?

News of Amazon’s latest issues with publishing giant Hachette and its authors, reveals the extent to which Amazon can affect markets in its aim to bring cheaper books to the public.

The row has come to a head because Amazon and Hachette have failed to agree new terms under which the online retailer can sell the publisher’s books. Amazon in turn is reducing its stock of Hachette titles and blocking pre-orders, which are vital to secure early sales and nudge a book up the charts.

For a good summary of the detail and implications, see Graham Ruddick’s latest treatment in The Telegraph.

Nothing like Amazon has happened before in terms of scale and influence. So perhaps it requires a different approach in terms of account management?

Obviously, Walmart is big and increasingly global, but Amazon has the capability of straddling the globe - albeit next day delivery might present some problems in the Amazonian jungle -, without the need for the same degree of ‘bricks & mortar’ infrastructure that would be required by a ‘walmart’ hoping to achieve the same coverage and access to consumers…

In fact, it could be said that Amazon is heading towards a 50% share of anything that can be sold anywhere, to anyone, at least…, and perhaps we should budget with that in mind?

This means that the traditional NAM/KAM model could be inadequate.

Traditionally, as you know, as in-house champions of their accounts, NAMs were seen as business managers of a customer-business-unit, often within a global context for that customer, charged with maximising sales and optimising long term profitability of the account, without compromising the company’s dealings with the customer in other countries, and with very little consideration of the impact on other  customers.

It was the job of senior management to ensure that each major customer received its fair-share of the action.

Amazon needs to be managed differently….

Whilst a company should never try to hold back a major customer’s growth in order to limit its share of the company’s business – in the current flat-line environment any growth should be cultivated – perhaps the role of the Amazon KAM & NAMs should be to not only enable Amazon to reach its full potential, but also be the in-house ‘educator’ to ensure that Amazon’s online disciplines and KPIs are applied to any other customers aspiring to compete online. In other words, Amazon standards should be used to raise the company’s total game, and to assess how trade support is apportioned among other members of the customer portfolio.

Amazon have found a way of growing in a flat-line environment and perhaps it is time for us all to learn how to optimise this new future...

Finally, it hopefully goes without saying that the Amazon NAMs should have an open-line dialogue with their Board-colleagues to ensure that immovable trading limits are set, and strictly maintained, as Amazon approaches what could be 50%+ of the company’s business… 

Walmart playing catchup with Amazon? Seriously?

News that Walmart are introducing personalised web pages based upon shopping behaviour for personal shoppers, represents a major leap for the Global No 1, but in reality is a mere step for online....

In other words, Amazon have set some fundamental KPIs for any player hoping to be taken seriously in the online game:

• 1-Click: this smooth ordering process becomes addictive, especially compared with aspiring rivals. Walmart allegedly say they are reducing online ordering to 1 page.....
• Returns: regular users know that returning unwanted goods to Amazon is easier than ordering
• Delivery: try tracking your next Amazon order, and be astonished at the high numbers of deliveries by your driver and intense geographical density of their distribution, en route to your address...

Without matching these basic KPIs, other 'online' retailers are simply playing catchup, and I mean playing...

PS: For online rivals that match the KPIs, why not try Amazon's anticipatory shipping...?

Still think the global retailers are ignoring Amazon?

                                                                                       Pic: via Jayaram Vengayil, via Fabio Ferraro

Amazon ponders Netflix-like service for ebooks

According to a Reuters' report, Amazon is considering a new e-book subscription service called "Kindle Unlimited," that aims to replicate popular video-streaming models for the digital books market.

An Amazon test-page spotted by tech blog Gigaom but since taken down, touted a service that for $9.99 a month, would grant unlimited access to more than 600,000 titles

More than enough insight for pro-active NAMs to think through and anticipate another breakthrough disruption by Amazon..?

In other words, in a spare moment, think about the most needs-based and boat-rocking innovation that could possibly be made in your category and conduct a what-if on Amazon finding a way...

M&S 'online' results vs. the real KPIs in online retailing

Shareholders will obviously indicate their feelings re overall year-end results via the M&S share price, but M&S online performance deserves some consideration by NAMs.

Essentially, at yesterday's AGM, the biggest problem this time around was M&S’s online channel, through which sales tumbled by  8.1 per cent despite a much-heralded relaunch and claims that customers think it’s really, really great, according to The Independent.

The key issue here is the hurdle-rate represented by Amazon for any retailer hoping to compete online:

First, one has to experience the ease of 1-Click ordering to appreciate how clunky other sites are by comparison. In fact it has become so easy, I have personally had to remove the Amazon link from my desktop, in the vain hope that having to ‘re-search’ the site via Google will cause me to reconsider the extent of my real need each time…

Secondly, given my background in the family Mom ‘n’ Pop store, I had become concerned at family members’ apparent lack of conscience in deliberately over-ordering three dresses from Amazon, trying them on, keeping one and returning two, ‘no problem’…

To test the process I deliberately ordered a book I did not need, and found that the returns facility was easier than 1-Click…  

However, the real clincher for me was Amazon’s distribution process:
In April, I took delivery of a package from Amazon. It was due between 1230 and 1330 on Wednesday, so at 1130 I did a parcel-check to find that my Amazon driver ‘Leo’ was currently four streets away on delivery 30, and still had 33 deliveries to make before reaching me at 1245…

In other words, this is what M&S - and any other retailer - is up against, in attempting to compete with Amazon, especially in clothing…

Anything less will simply become another apology at next year’s AGM…

Amazon Prime Pantry virtually boxes its way into the supermarket ring...

The new service allows Prime loyalty club members fill up to a 45-pound virtual box with four cubic feet of groceries and get it shipped for a flat rate of $5.99, offering users an expanded selection of items that they usually pick up in grocery stores.

To help you stay within that weight limit, a virtual Amazon cardboard box will show you how much room is left, filling the box as you order. While you could easily fill a Prime Pantry box with your favourite treats, the programme is especially attractive for customers who want to stock up on heavier and bulkier items that don't usually ship free of charge.

Prime Pantry seems designed to help Amazon solve the problem of customers who need smaller items that would otherwise be prohibitively expensive to ship. It would potentially eliminate a need to go to the local grocery store, though a spokeswoman said delivery is only guaranteed within four days.

Although the new US service obviously poses a threat to traditional grocers and will no doubt be fast-forwarded in terms of delivery times and roll-out, the real innovation appears to be the virtual box that fills as you shop, and measures purchases by weight & volume, rather than price....

Another breakthrough for Amazing Amazon, or at least a worthwhile watch?