Mario's Corner - October 2017.  

4 Strategic Areas Where Amazon Has Excelled.

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I have never been a big fan of Amazon.  The reason is that it has destroyed physical retailers and therefore, has hurt towns and cities across America.  However, I do admire Jeff Bezos and think he has done a great job of making his vision a reality.  


It is difficult to believe that Amazon Inc. (its corporate name) was founded in 1994 and has been around for only 23 years, since it seems to have dominated the retail landscape for much longer.  It has surpassed Walmart recently in market capitalization and has become the fourth largest company in the world.


I believe there are four key strategies that Jeff has pursued that have allowed him to become the world's third-richest person after Bill Gates and Warren Buffett.  


1.  Provide the best Customer/User Experience while, at the same time, maintain the lowest prices-  The Holy Grail of any internet site is to provide the best User Experience in terms of navigation and ease of use.  Amazon has done an incredible job of allowing people to navigate its site and then permitting them to check out as quickly as possible.  


Some of the innovations that have allowed Amazon to become the best in these areas are the following: the "one-button-checkout," streamlined delivery practices that allow Amazon to lower its prices, a relentless pursuit of employee efficiency, and leveraging its Washington lobbying (including the purchase of the Washington Post) to permit it to offer customers the ability to purchase products without paying taxes.  Although this last tactic is no longer used, it was a crucial factor in the growth of Amazon in its early years.


​2.  Embracing new technology and quickly adapting to changes - I already alluded to the fact that Amazon has embraced technology to streamline its supply and delivery chains.  Some examples of this obsession are the use of robots in its warehouses to move inventory and experimentation with drones to deliver product to customers.  However, a little-known fact is that Amazon also has a subsidiary, Amazon Maritime Inc., that enables it to manage its own shipments from China to the United States, thereby lowering is logistical expenses.  It also owns generators and wind farms that allow it to keep its operations going even when there is an electric grid issue.


Another area where Amazon has excelled is in the data storage space.  It has a subsidiary, Amazon Web Services, that sells on-demand computing cloud services.  This service allows users (both individuals and companies) to run virtual computers.  More importantly, it allows Amazon to have a decentralized technology system that can remain online even if existing physical locations were to be damaged.  


Once Jeff saw Google and Apple pursuing Artificial Intelligence, he drove Amazon to create a device that would allow Amazon to become a leader in this space. Although Amazon had to play catch up, the Amazon Echo and its virtual assistant, Alexa, have since become the leaders in this field.


3.  A relentless focus to succeed in the areas where Amazon competes - Jeff has always been driven to succeed in every area Amazon enters.  Thus, he started Amazon as an on-line bookseller and made it the best.  Amazon then expanded into other categories (music, appliances, exercise equipment) and, through its suppliers and partners, has made Amazon the best in all of these.


4.  A vision to become "The Everything Store" - This is a corollary to the previous strategy.  Jeff always believed Amazon could become a one-stop-shop for any product.  Now that he has built the largest virtual store, he has focused his energies in creating physical locations for the categories where Amazon is best-suited.  Thus, he has built Amazon bookstores and has acquired Whole Foods Market to conquer the food space category.  These physical locations also allow him to establish distribution locations where customers can pick up products they buy through Amazon.com.


I admire Jeff because I believe he will be able to accomplish anything he sets his mind to achieve, since he has done so repeatedly in the past two decades.


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Please do not hesitate to call me at 1 (617) 391-0347 or e-mail me at mariocastaneda@bluesailconsulting.com to give me feedback on this or any other subject.  I always like to hear from clients and readers.

 

Please contact us if you want to find out how we can help you create strategies to succeed in your own markets.

 

I look forward to seeing you here in November!

 

Warm Regards,

 

​Mario