The Amazon Effect

Companies will sink or swim based on their ability to continue to move further away from the competition, most often by creating new market categories or exploiting whitespace in the industry.

To date, Amazon has been a leader in this strategy, creating new demand and revolutionizing the way the retail industry works, effectively destroying the brick-and-mortar paradigm. What they have done is not a paradigm shift, but a paradigm decimation.

Each week brings news of another retailer shuttering storefronts and shifting to a digital only presence or, worse, filing for bankruptcy and scrambling to survive. Commentary and public opinion are mixed on the long-term effect on the retail industry.

Some praise the ‘Amazon Effect’ as a means of pushing retailers to modernize and become more competitive on price and product range. Critics bemoan it as the death of retail industry, questioning what it means for product quality and truth in advertising when you can’t touch or feel something before you buy it.

Adding to the confusion, Amazon’s foray into its own brick-and-mortar storefronts is popping up across the world as we speak. The difference is that Amazon brings additional value to their stores by making the experience more customer friendly and focused.

I’ve had the opportunity to go to an Amazon Books store and my experience was quite positive. The stores take some customer-favorite features, like reviews and customer ratings, and bring them to life in an in-person experience. In store, only books rated 4-stars or better are available, meaning you can feel confident in your purchase.

What’s powering all this? Amazon’s ability to take big data and use it in stores to curate products that they know will resonate for markets and consumers and drive customer satisfaction and loyalty.

Amazon’s latest move – their proposed acquisition of Whole Foods, Inc – has commentators and industry and armchair experts speculating on Amazon’s motivates and future plans, and what this means for the future of another market, the grocery industry.

Personally, I’m hoping this move will result in better pricing and selection, as well as customization and personalization of the experience. Also, I’d be very happy to have my Whole Foods order dropped by Drone onto my front porch. This idea seems like just a dream, but the truth is that drone delivery isn’t that far-fetched.

About Merit

Merit is the global leader in market invention. More often than not, our work carves out an entirely new market and transforms industry through research and strategy, communications, creative, and technology. For a company to succeed in the new era of marketing, it needs Merit.

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