Amazon Frown

It is Amazon 4Q earnings day. Normally this is a day of both joy and despair. The e-commerce community revels in the sheer scale of Amazon’s revenues, thinking that they can capture some fraction of that. Amazon is ongoing proof that e-commerce is a rocketship. At the same time, there is despair because at the bottom line of the earnings report, there is marvelously little left over. Profits, when there are any, are minuscule.

But Amazon, when it’s results come today, will surely show that it won the holiday. Amazon is simply killing it in e-commerce. The world’s e-commerce poster children, like Fab.com, and Wayfair, and One Kings Lane, in aggregate, do less annually than Amazon does monthly. (In 2011, Amazon did something like $4b in sales a month. Good luck catching that any time soon.)

The question remains, however, is why anybody else even tries? Amazon has nailed the logistics of e-commerce. They have nailed the essence of customer service. They have nailed the ease of payment thing. They offer added services that make it hard to want to shop other places (Prime, Video, Music).

So, why do we even try to compete?

The answer is really simple. Amazon sucks at telling stories. When you buy a suit, you want to see how you might look. When you buy a couch, you want to imagine how your room will look. When you buy a toy, you want to see the wonder in your kids eyes. In its essence, Amazon has come as close as anyone to perfecting the transaction engine. And Amazon is great for making refinements to your purchase process. You can find alternatives to what you want to buy, or options, or what have you. But Amazon is simply too big to endorse. And unless the shopper is really a buyer (namely, someone who is in the transaction zone rather than the discovery zone), Amazon is a hugely overwhelming place with no sense of context.

Amazon has everything, so they have no idea what you want.

That is why the rest of us try. That is why the rest of us can make more profit on a dollar of revenue. Because we share the human element of story and context that allows us to help you discover what you want. Shopping – the discovery part – is fun and social and engaging and somehow elemental to our societal experience. After all, here in America, we’ve built thousands of shopping malls to give us the opportunity to shop socially and collaboratively. Window displays work because they help discover. Glossy print ads create desire. Believe me, I am not bullish on the prospects for most real-world retailers, and while I am an Amazon fan, Amazon does retail a disservice because of it’s mastery of the narrow end of the funnel.

Shopping and selling are fun. There is joy in the discovery of the right sweater for you. There is little joy in deciding amongst 25 versions of a yellow sweater from 60 different sellers. Customers want to have romance, and curation, and serendipity and joy in their purchase experience. And those things don’t have to happen in a store. They can happen on your website. They can happen in your e-mails. They can happen in your display advertising.

Don’t chase Amazon at its strengths. You will never be able to do Amazon Prime. Attack it at its weakest point – the essential human activity of storytelling.

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