Amazon is always looking for growth, as the launch of a Dutch web shop in 2020 proves. But is it too late by now? And how can others to compete? Retail influencer Natalie Berg explains how at RetailDetail’s Omnichannel & E-commerce Congress 2020.
A whole new level of retail
Amazon has a unique position, with its dual role in both retail and infrastructure. However, having its marketplace on one side and cloud computing services AWS on the other is both its enormous strength and its weakness - according to Natalie Berg, author of the book ‘Amazon: How the World's Most Relentless Retailer will Continue to Revolutionize Commerce’ and key-note speaker at RetailDetail’s Omnichannel & E-commerce Congress on 6 February.
The company could become a victim of its own success, as there are increasing concerns over this dual role and the ensuing power position. “There has been plenty of research discussing how it supposedly favours its private labels over external brands, there is the issue of counterfeit goods and more. Increasingly, you see brands re-evaluate their presence on the marketplace, like Nike pulling away. I think we can expect to see more brands come to the same conclusion.”
Still, Amazon has without a doubt set the new standard for retail. “When it comes to competing, everyone needs to keep up. Today, there is a whole new level of customer expectations when it comes to fulfilment, delivery speed, free delivery and returns, and so on. Amazon has fundamentally revolutionised retail operations and technology, you have to give them credit for that.”
Things Amazon cannot do
Is there anything left Amazon cannot do? Fortunately, there are. Berg calls them WACD – ‘What Amazon Can’t Do’ – and uses them to point out where opportunities for competitors might be. Experience is a big one in that respect: “Do not forget, and I keep repeating this, Amazon is not a retailer. It is a technology company that does retail very well, but it does suck all the joy out of shopping. What it offers, is purchasing, not shopping.”
This also means that customers are loyal to the convenience, but they are not emotionally attached to the brand. At Amazon, everything is all about transactional loyalty, according to Berg, but that is not always sufficiant. Especially in high-touch categories like fashion, where Amazon is investing in at the moment, you can not create a brand with emotional ties overnight.
Nearing the end of its life span?
Although the increasing number of brick and mortar stores might be a way to 'humanise' the brand, there is still ample opportunity there for other retailers and brands - at least, as long as they do not try to imitate the eCommerce giant. “The number one rule is you can not beat Amazon on their own turf. That never is a viable long-term strategy.” Tesco found that out the hard way: Tesco Direct was set up as an online non-food platform to rival Amazon, but it turned out to be too cost-heavy to make an impact, and was shuttered in 2018.
Also, it could only be a matter of time before the disruptor himself is disrupted. Interestingly, Jeff Bezos recently said he believes companies have a thirty year life span, knowing Amazon is nearing its thirtieth birthday. Is he anticipating the end of his reign?
Increasingly facing government scrutiny, Amazon might get forced to sell off its cloud computing activities, or could face consumer backlash over increasing privacy concerns. “Amazon has done a great job at literally embedding itself into consumers’ homes and lives. It is surprising how little talk there is of that up until today, but perhaps consumers will start feeling Amazon has become too dominant and has too much control over their lives.”
Amazon will shake-up the Benelux
Nonetheless, Amazon is still very much looking to expand. “Amazon is always in growth mode, whether it be in tackling grocery, bricks and mortar or new markets. Fashion and grocery still seem very hard to crack for them, and at one point they might let go, but then again, they are never in a hurry. They are happy to wait and strike when the time is right.”
That is also exactly what is going on in the Benelux, where Amazon is finally opening its long announced Dutch web shop. But are they not too late by now, as the market is already dominated by other players - like bol.com? “Never underestimate Amazon”, Berg warns. “The United Kingdom is a good example: Argos was the closest thing to Amazon the country had before, and still today, the newcomer is slower to make its mark, but it sure is very persistent.” For one, Amazon is determined to invest in meal delivery service Deliveroo, despite market authorities looking into the deal.
“They might have to take it differently – an acquisition is possible – but to Amazon, it is a case of back scaling, of improving economies of scale. Even in a mature market, they can still challenge the current situation. For example, by introducing Prime Now and same-day delivery, they can raise consumer expectations all over the market. Competitors will have to be prepared to up their game.”
Natalie Berg is the key-note speaker during the RetailDetail Omnichannel & E-commerce Congress 2020, themed "Consumer relevance in a digital world". The congress's seventh edition will be held in Antwerp, Belgium on 6 February 2020. Other speakers include Alex Lorette (director enterprise solutions Proximus), Ilse Van Vaerenbergh (CCO smartphoto group), Kristof Baeten (managing director State of Art Belgium) & Luc Van den Broeck (CEO TailorFIT) and Sven De Waele - E-commerce director and owner Pharmapets). Retailers can request a special discount code at firstname.lastname@example.org. For more information and to register, click here.