Is it a bird? Is it a plane? No, it’s Superman! What the world saviour from planet Krypton is to the league of superheroes, Amazon is to online retail. Is it a retailer? Is it a marketplace? Or is it a world-dominating system? Whatever the answer might be, there’s no name closer related to the concept of online retailing and more positively rated than Amazon. This is the challenge for all other retailers. An apparently hopeless battle – David versus Goliath – for market shares and customers.
What does that mean for all non-Superman online retailers? The good news is that they can still lead a successful existence as Batman, The Flash, or Wonder Woman. So there are indeed ideas how to coexist with Amazon.
In an interview with Handelskraft, Adrian Hotz, founder of Adrian Hotz E-Commerce-Beratung and editor of www.insideecommerce.de, explains how the Amazon ecosystem attracts customers and what retailers can learn from this. He will host a session on this topic at our Handelskraft Conference 2016, so you can get the whole insights on Thursday, February 18.
Amazon is enjoying supremacy in e-commerce and has already surpassed its more direct competitors establishing a worrying monopoly within the online business sector. In your opinion, what are the main factors which explain its success?
The classic brick and mortar retail is outclassed by Amazon in every respect. Product selection, availability, price, as well as customer service. Where else could you find a certain spice that is gluten-free, lactose-free, and without added sodium or artificial colouring any faster? On Amazon you can find the perfect product with only a few filter functions and have it delivered on the same day for free. Amazon is also extremely customer-friendly when it comes to returns and complaints. All other conditions being equal, Amazon customers are always better off than customers of brick and mortar retailers – merely because of Amazon’s customer service and goodwill in case the customer doesn’t like the product. Honestly, I don’t know any company that is more customer-friendly than Amazon. That’s Amazon’s crucial competitive advantage which also allows for further growth. Amazon Prime is one essential success factor in this, and also one of the best customer loyalty programs in the history of retail.
The firestorm set off by Amazon addresses a lot of questions but also opportunities for online and brick and mortar companies. What are the main challenges for retails and industry? How can they take advantage of not being the leaders?
I’ve just recently been to NRF, the large retail exhibition in New York. One major topic there was what classic retailers can do against Amazon’s dominance – and there was no answer. After leaving the event, all over the city you could see the Amazon Prime couriers delivering products within one hour. This will be the biggest challenge for retailers. In my opinion sameday delivery, as it is already offered in Cologne, will be the challenge for brick and mortar retail. Small online retailers won’t be able to keep up with this and brick and mortar retail will be shorn of one major USP – availability. In Cologne I can currently order products at a value of 20 euros free of charge until 12 a.m. and have them delivered between 6 and 9 p.m. on the same day. A trip to the city wouldn’t be any cheaper and much more exhausting. Amazon’s same day delivery will be the final nail in the coffin of classic retail.
Could you give us an overview about the session for the Handelskraft 2016?
I will try to answer four questions in my presentation:
- How is e-commerce developing in the era of Amazon’s supremacy?
- What is Amazon and how does Amazon work? (Basic question: Is it a marketplace, a retailer, or a world-dominating system?)
- Which challenges does Amazon pose to retailers and manufacturers?
- How can companies coexist with Amazon?
Which other companies have the chance to compete with Amazon? Could you give us one or two examples of companies that, in your opinion, are implementing innovative or revolutionary concepts?
Amazon isn’t limited to retail. Amazon is an ecosystem that permanently develops further business models, for example its own logistics. In the first instance, Amazon is of course the biggest online retailer in the western world. If you total the marketplace turnover and Amazon’s own retailer’s turnover, Amazon generates every second euro of German online sales. Amazon is also the largest provider of cloud storage in the world. From A like Airbnb to Z like Zalando, more than one million companies host on AWS. Among them being Tinder, Dropbox, or Amazon’s competitors in the field of streaming services like Netflix. In this, Amazon is no retailer, no logistics provider, no streaming service. Here Amazon has become an infrastructure of the internet. As an ecosystem Amazon can simply offer customers much, much more than a simple retailer. To compete with this ecosystem is a huge challenge. Currently I don’t see any company that would realistically be able to compete with Amazon. Besides I think that only companies like Google, Facebook, or Apple would possibly have the chance for this.
We would like to know what are your expectations for the Handelskraft Conference 2016?
Great networking, interesting exchange, and a fast Tesla-ride 😉
If you don’t want to miss Adrian Hotz’s session “Alles Amazon, oder was? Ideen zum Überleben mit Amazon” as well as many other interesting presentations on topics like “Die Magie der Retouren” by Oliver Dahms and many more industry experts, you can book your ticket to the Handelskraft 2016 here!