The Amazon effect

[Team Leith Training]

It has been in the news a lot lately about the genius of Apple's Steve Job's et al.

But what about the Amazon?
One company which i believe has the ability to go head to head with even Ebay, in fact i tend to look for goods on Amazon before Ebay.

Their Kindle is smart, even providing an app to work on the Ipad. Yes i have this too.
But what about their marketing strategy, for example you even get an app to scan with your iphone to see if a book you're about to buy elsewhere is cheaper on Amazon. Perhaps the irony here is this is how i got a cheaper copy of Steve Job's bio.

The question is, what lessons can we learn from Amazons success? Are these one hit wonders, or are there lessons here business's?

 

[Alan]

I think you may have been watching too many TV adverts recently.

 

[Jeff FV]

Amazon have been so successful for a couple of reasons:

1. They were among the first to enter into eCommerce

2. They made it safe to buy online << people have confidence buying through Amazon. Its rare that anything goes wrong when buying with Amazon, but when it does, they don't faff around, they issue a replacement/refund quickly and with no fuss. Getting ripped off was always the big barrier to eCommerce. Amazon overcame this fear (in the buyer) and prospered. PayPal did much the same - they made it safe for me as a buyer - not only would the seller not flog my credit card details to a dodgy gang from rusiastan, they'd also be on my side if the goods didn't show up - again giving me confidence, resulting in me giving them my business.

3. They (Amazon) do it (eCommerce) really well - quick delivery, great customer service, customer reviews ( it all come back to confidence ...)

Jeff

 

[Alan]

What is amazing is that the majority of things listed on Amazon are sold by other retailers. I have been one of those in the past, yet the buying public have more confidence buying via Amazon than direct.

 

[Talay]

Amazon have been so successful for a couple of reasons:

1. They were among the first to enter into eCommerce

2. They made it safe to buy online << people have confidence buying through Amazon. Its rare that anything goes wrong when buying with Amazon, but when it does, they don't faff around, they issue a replacement/refund quickly and with no fuss. Getting ripped off was always the big barrier to eCommerce. Amazon overcame this fear (in the buyer) and prospered. PayPal did much the same - they made it safe for me as a buyer - not only would the seller not flog my credit card details to a dodgy gang from rusiastan, they'd also be on my side if the goods didn't show up - again giving me confidence, resulting in me giving them my business.

3. They (Amazon) do it (eCommerce) really well - quick delivery, great customer service, customer reviews ( it all come back to confidence ...)

Jeff

Just about spot on for me there.

I've had it go wrong, a supplier refusing to take back shoddy goods and Amazon just waded in and refunded my £120 or so on the strength of my word (and presumably my history with them) but all from the safety of my armchair.

They are the John Lewis of internet shopping.

 

[10032012]

Be careful what you say about Amazon... they struggled for years to get where they are today. It wasn't so long ago when Amazon struggled to compete with ebay here in the UK. Amazon did really well, credit where credit is due... but I think a lot of how they have rapidly grown in recent years was the demise of ebay.

For me, I heard of Amazon (and visited the site) 3 years before I had decided to make a purchase from there. I stuck to other ecommerce websites (jungle.com, dabs.com, high street stores online offerings etc.) and ebay. Amazon just never really appealed to me.

Define what is the "Amazon effect"!!! Then I can determine what (if anything) others can learn from it.

 

[WrightPsychology]

Personally I think Amazon are incredible.

They are on track to be the largest publisher of books in the world.. Dominating the book front.

They also have audible.. audio books.

Then Netflix and lovefilm..

 

[garyk]

Is it asking your parents for $200,000 to start a business? Because thats what young Jeffrey did!

 

[CarolineGebbie]

I think they are the one company that scares google.

They are also great for you to get your own book out there. I wrote a report for my staff to reduce petrol costs, got asked by another business if I could give them a copy. 1 hour later it's on Amazon and they can download it.

 

[Team Leith Training]

Tempted to ask for a copy myself.

Not sure how google would be scared tho, different business sectors

 

[CarolineGebbie]

I have set it up to be free for 5 days from 3/11 to 7/11 you can download a copy then at Amazon just put this code in the search bar B009SMWE2S
I'm happy for anyone to get a free copy.

 

[Team Leith Training]

It says its £1.02, still looks interesting, so i bought a copy just the same

 

[Alan]

It says its £1.02, still looks interesting, so i bought a copy just the same

I though that too, but I re-read "free for 5 days from 3/11 to 7/11", all free things come to those that wait.

 

[Team Leith Training]

Yes, seems my payment fell over, just as well, wait until its free

 

[Stephen Davies]

Then Netflix and lovefilm..

Netflix and Lovefilm are terrible. My girlfriend and I took the free trial for both and were not impressed. All the films we've either seen, they're really old or really rubbish

 

[Team Leith Training]

Netfix i could not comment on, Lovefilm, we got the DVD's however only about 1/5 actually played, so we cancelled the membership

 

[kulture]

Google fear Amazon, because a growing number of people go straight to Amazon and search there when they want to buy something. Not only does google loose the footfall, but they also get to pay Amazon, because Amazon display google content ads.

 

[Team Leith Training]

Google fear Amazon, because a growing number of people go straight to Amazon and search there when they want to buy something. Not only does google loose the footfall, but they also get to pay Amazon, because Amazon display google content ads.

I wonder how close to this Ebay might be.

It is true tho, Amazon seems to be the new online answer to Argos. Even Argos must be suffering by Amazon

 

[10032012]

Argos are nearing the end. Its been a long while since they had index as another catalogue shop competition, however, despite their catalogue being more popular than the bible (sounds good but when you think about it means nothing lol) they probably have 3 years to turn things around or they will be another woolworths.

Amazon AWS services are probably their best offering, although I generally prefer rackspace.

 

[Team Leith Training]

Argos are nearing the end. Its been a long while since they had index as another catalogue shop competition, however, despite their catalogue being more popular than the bible (sounds good but when you think about it means nothing lol) they probably have 3 years to turn things around or they will be another woolworths.

Amazon AWS services are probably their best offering, although I generally prefer rackspace.

Comes as no suprise, most of their stores seem quiet at the best of times. Much of what they advertise never seems to be in stock.

As a kid i used to look in their catalogue first when i wanted to spend my Christmas money. That was before the internet of course.
How times change...

 

[silvermusic]

Amazon is a retailer, eBay is not. For me both very different businesses. I'm somewhat confused when people compare them side by side.

I can't say it fills me with any delight seeing Amazon grow in such a manner. There a lot about their business I don't like or agree with on a business, personal and moral level. What's their game plan, total online retail domination? is that really a good deal for everyone. eventually the mighty will fall, I wonder what the online retail world will be like in another two or three decades, Google, Amazon, eBay, will they still be around, will there be some new super player, that makes these look like a corner shop.

I won't be around by then, I'll be pushing up daisies in the graveyard. But just remember something. If we've learned one thing from recent years it has to be that no one is too big or too established to fail. It will happen to them all eventually, it's just a question of time.

And on that happy note, I'll bid you a pleasant evening.

 

[10032012]

I think Argos' downfall isn't just due to the recession and internet retail (they have a website you can order from).

They tried to refresh the brand by replacing the existing (dated) logo with a terrible one. They wanted people to be happy shopping hence the "smile" element in the current logo, however, despite the rebrand a couple of years back some stores still carry the old logo and a few with the logo before that!

This gives customers the impression of a run down store - even if the condition of the logo and store is of a good standard. Apparently the rebrand is costing £70m - a very big risk in a recession.

Argos being a greek word doesn't really help matters either - politically.

They phased out the pens replacing them with pencils. You cannot buy anything there without being asked if you want to purchase several other items or warranty. This annoys customers. They axed the "extra" concept with all stores supposedly carrying "extra" stock but keeping the extra signs at many locations.

They are also losing focus - they recently launched a TV channel (cheesy... shows desperation) and are replacing the catalogue model for a primarily digital one, catalogue second. I do wonder whether Argos will end up as solely an ecommerce website one day. They also do a lot of POS promotions etc. something they never used to do.

Argos used to be a FTSE 100 company, now with Home Retail Group its just FTSE 250... last years profits is around what they were over 10 years ago. Sad to say, but I am kind of looking forward to them hitting the wall.

older logos:-
http://upload.wikimedia.org/wikipedia/en/2/20/Argos_Logo.png
http://farm4.static.flickr.com/3205/2524245050_d8dcca324c.jpg

 

[10032012]

Amazon is a retailer, eBay is not. For me both very different businesses. I'm somewhat confused when people compare them side by side.

I can't say it fills me with any delight seeing Amazon grow in such a manner. There a lot about their business I don't like or agree with on a business, personal and moral level. What's their game plan, total online retail domination? is that really a good deal for everyone. eventually the mighty will fall, I wonder what the online retail world will be like in another two or three decades, Google, Amazon, eBay, will they still be around, will there be some new super player, that makes these look like a corner shop.

I won't be around by then, I'll be pushing up daisies in the graveyard. But just remember something. If we've learned one thing from recent years it has to be that no one is too big or too established to fail. It will happen to them all eventually, it's just a question of time.

And on that happy note, I'll bid you a pleasant evening.

ebay and amazon are rivals. they are different models but people buy widgets... if both places stock them, then its relevant.

So buying a kettle by online ecommerce shop, auction website, local retailer, supermarket, catalogue retailer or mail order catalogue etc. is all possible. Certain items will be more popular by different business models and have different market share.

 

[Team Leith Training]

Amazon is a retailer, eBay is not. For me both very different businesses. I'm somewhat confused when people compare them side by side.

Mainly because people search either or site for what they seek. Though one could argue one is an online car boot sale the other is more for new or end of line goods (my opinion only there)

you also wondered which would still be around in ten years, Amazon, Ebay, or Google?

Google is a different concept, it is a search engine, granted people go to straight to Amazon to buy things, but Google offers maps, lets face it most people use, which businesses pay to advertise on. They have email, where again their links appear. They are still up there i believe.

My money is on Ebay being the first casualty of the three.

 

[silvermusic]

OK, let me run it by you again.

Amazon is a primarily a retailer, eBay doesn't sell a single physical product, it's not a retailer, it's a service provider. Once you start to think of them in that manner it puts things in a different light. Amazon, Google and eBay, all three have a core business, but they're all different and how far they'll expand over each others areas we don't know, we can guess. I'd love to know how it all pans out over the next few decades.

 

[Team Leith Training]

OK, let me run it by you again.

Amazon is a primarily a retailer, eBay doesn't sell a single physical product, it's not a retailer, it's a service provider. Once you start to think of them in that manner it puts things in a different light. Amazon, Google and eBay, all three have a core business, but they're all different and how far they'll expand over each others areas we don't know, we can guess. I'd love to know how it all pans out over the next few decades.

I see your point silvermusic, but again, have you noticed that much of whats on sale in Amazon is being sold by a "third party" as well, rather Ebayish is it not?

Its about how the people see those companies, and where they look to get what they want.
Granted, people will go to ebay to sell their brick - a - brack something hard if not impossible to do on Amazon.

However apart from that, the concepts are the same. Except ok, one is a department store, the other is a street market with a car boot sale tagged on. I hope that helps clarify my point better

 

[silvermusic]

Folk really need to get out of eBay = car boot sale mentality. eBay have tried being like Amazon, it doesn't work for them. eBay has many long term strengths that Amazon doesn't.

Sure Amazon has a lot of third party merchants, but it also carries the risks associated with that. Competing against the very third parties who sell on your site could well turn out be out to be their downfall. The race to the bottom could turn out to be very nasty for many, not least Amazon when they die a death of a million cuts.

 

[kulture]

Folk really need to get out of eBay = car boot sale mentality. eBay have tried being like Amazon, it doesn't work for them. eBay has many long term strengths that Amazon doesn't.

Whilst I agree with you that Ebay is not really a car boot sale, it is up to EBAY to educate the population and persuade us that it is no longer a car boot. For many many people it is perceived as a car boot/used goods dumping ground. This is one of the reasons that ebay could not be like Amazon.

Sure Amazon has a lot of third party merchants, but it also carries the risks associated with that. Competing against the very third parties who sell on your site could well turn out be out to be their downfall. The race to the bottom could turn out to be very nasty for many, not least Amazon when they die a death of a million cuts.

Their just published last quarter figures echo this. They had a huge loss.

 

[Alan]

It is a shame about Argos, the hold on-line purchase in store (HOPS) concept is very convenient, especially if you don't want to wait 3 or 4 days for something.

HOPS is something that will be taking off big time for local retailers as the accessibility of the technology increases and the 'support local' movements increase in popularity.

 

[vvaannmmaann]

Amazon.co.uk, Britain's biggest online retailer, generated sales of more than £3.3bn in the country last year but paid no corporation tax on any of the profits from that income – and is under investigation by the UK tax authorities.
Regulatory filings by parent company Amazon.com with the US securities and exchange commission (SEC) show the tax inquiry into the UK operation, which sells nearly one in four books sold in Britain, focuses on a period when ownership of the British business was transferred to a Luxembourg company.
The SEC filings, highlighted by Bookseller magazine, show that in the past three years, Amazon has generated sales of more than £7.6bn in the UK without attracting any corporation tax on the profits from those sales.

The Guardian

 

[Alan]

The company reported sales of $12.8 billion, up 29 percent, in the second quarter while it eked out net income of $7 million, or a penny a share.

Those results essentially matched expectations. Analysts had estimated the Seattle-based retailer would earn 2 cents a share, down from 41 cents a share in the second quarter of 2011.

In what is becoming a routine warning, Amazon said that profit in the current quarter would remain elusive. Revenue might grow as much as 31 percent, the company said, but it was expecting a loss. Losses at Amazon were routine in its early years but in recent years it has made a profit, albeit a small one.

The New York Times
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[Salt&Pepper]

What is amazing is that the majority of things listed on Amazon are sold by other retailers. I have been one of those in the past, yet the buying public have more confidence buying via Amazon than direct.

This is because if I wanted to buy direct I would have to register and re-enter my card details every single time. As Amazon demand parity (you can sell it cheaper on your own website) there is realy no incentive for me to buy direct.