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Amazon Vs. Wal-Mart

November 24, 2009 in Marketing | 0 Comments

amazon box

There’s a big war a brewin’ between Amazon and Wal-Mart. Supposedly, it’s a holiday season price skirmish, but really it’s a war for the future of shopping.

Amazon, whose sales are a fraction of Wal-Mart’s, owns the online shopping space. Walmart.com is growing faster than Amazon, but those are just statistics, which we know can lie. This shopping war is between online and offline. Currently, online shopping accounts for about 4% of all sales, but some projection see it moving as high as 15%.

You know who loves to shop online? Single, twenty 20 and 30 year olds –especially the ones who are kicking ass in their jobs. In a brief recently, I called this target “Power-Ups.” They’re achievers, very wired, and have big careers in their sights. After work, Power-Ups like to come home to someone…but the someone they come home to every night is often a box from Amazon. “Honey, I’m home!” This target will marry and marry well, and in addition to being conditioned to buy online, they will buy high margin products. A value target to be sure.

Amazon knows this. Jeff Bezos knows this. When these 20 and 30 years olds become 40 and 50 year olds, they’ll still be loyal customers and have passed on the Amazon online shopping gene to their progeny.

Wal-Mart can plan all they want, but in my mind they won’t be able to be a leader in both online shopping and offline shopping. You can’t be black and white. Very, very interesting. Don’t be surprised if Wal-Mart starts sniffing around Amazon with checkbook in hand.

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Kindle and Kindling

May 27, 2009 in Marketing | 0 Comments

 

I’m riding the train to the city (sorry, New York) and a gent next to me is reading the new Amazon Kindle 2. I interrupted him to ask about its performance and he was not even miffed. He loves it. When I ask how many books he’d read he told me with the Journal (sorry, Wall Street) on screen that he is reading more than ever before. “I always have something with me.” The wireless works fine, he added.  

 

The idea that people will read more than ever because they always have material close by is intriguing and, if correct, suggest better grades for kids, better erudition for adults and, dare I say, a more informed populace. Ahh, the future.  

 

This dude was so Zen-ed out, in fact, that after I returned it to him and apologized for the newsprint smudge on its pretty thin frame he smiled and gave me a knowing nod. Enough said. This thing is going to take off like dried kindling on an arroyo. Peace.

 

 

 

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For Amazon the price is right.

January 30, 2009 in Marketing | 0 Comments

 

 

Let’s face it, the economy has sucked for the last 3 years. Why else would Hyundai have grown into one of America’s best selling car brands? It’s just this year the economy is dinging the top rungs of the ladder. Hard. And it’s not trickling down, it’s pouring down.

Marketing has always been about the 4 Ps (Product, Price, Place and Promotion). Most marketers rarely concern themselves with the price P. Though they spend some time with Product and Place (the sales channel) they focus mainly on Promotion. Well, when the economy sucks price becomes very important. And when price is important the cost of goods going in to the product are important. The entire supply chain is important and manufacturers view with a close eye suppliers, efficiencies, headcount and margins. It creates a thinning of the herd, as it were, which isn’t a bad thing long term.

Amazon reported its best ever December. Why? Because it is a price and value leader. Its cost of goods is low thanks to volume, it doesn’t have to promote, shopping is easy and people are confident in the brand. As more people get hooked on shopping Amazon, it will be hard for them to go back. When the price is right, people spend.   Peace!

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Oprah. Kindle. And pirates. Oh my.

December 24, 2008 in Marketing | 0 Comments


Thank you Oprah for priming the pump of digital book sales. She plugged the Amazon Kindle in October and sales have taken off.   By some accounts, Amazon has sold a million Kindles. Oddly, they won’t announce how many. I wonder if their reticence has something to do with the number of digital books sold. Hmmm. For instance, if 1 million Kindles have been sold, but only 1.1 million digital books, at $11.00 a pop, that would suggest people don’t like the medium. They are not coming back in other words.

Anyway, the Kindle and competitors, which now include the iPhone, will change the book market, no doubt.  Even a geeze like me expects to be a user soon. But book publishers must look out for piracy or they’ll end up like their music counterparts — not making money on their art, but on book signings (digital, of course). The pirates are out there. And even Oprah won’t be able to stop them. Peace! And happy holidays!

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Advice for Amazon and eBay

October 13, 2008 in Marketing | 0 Comments

 

There was an interesting article in the NY Times Business Section over the weekend about Amazon and eBay. It suggested Amazon is winning because they do better long-term planning and are willing to fail for a while so they can win.

 

Both companies have made some missteps, but both should thrive.  Even with its problems, eBay is still the leader in online auction.  Amazon is the 800 lb. gorilla in online retailing, and since ecommerce is only 7% of all commerce, there’s certainly room for both.

 

Some advice for eBay: Keep the auction business discrete. Any playing around with fixed price, VOIP, online payment, etc. should be either spun off or handled by unique management. Smart decisions are harder to make when considering the impact on other “family” businesses. As for Amazon: Stop with all the “trust” value prop talk. Make your business about “price.” Trust is earned and requisite, it’s not a branding idea.  Peace!

 

 

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Digital Distribution Empire

April 7, 2008 in Marketing | 0 Comments

There was an ad campaign a couple of decades ago by a major Chemical Society that asked the question “What in the world isn’t chemical?” Well today that question might be better asked, “What in the world isn’t digital?”   
 
One company poised to corner the digital distribution business is Amazon. Known for books then CDs, Amazon has evolved into a distributor of many different type of products, from electronics to tools, to health food. But as Amazon make inroads in digital music downloads, it has moved into digital books (thanks to the Kindle,) and has a digital download movie business called Amazon Unbox. Ultimately, they will sort through all the permutations of distribution, usability and rights management and strengthen their play in these categories — in which they are currently underperforming. And when they do they’ll have one supreme advantage: price.
 
As Amazon begins to cross-sell its various digital products it will be able to amortize costs and offer discounts which will be hard to copy. Buy two digital movies and a digital novel by Nelson DeMille and we’ll give you Shelby Lynne’s new single.
 
As Amazon becomes the online store for all things digital, they will be the Exxon Mobil of this generation.
 

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Kindling of a sort.

November 29, 2007 in Marketing | 0 Comments

 

 

You don’t have to be a Star Trek fan to believe that one day the majority of books will be distributed digitally and read on non-paper devices.   Amazon believes this and spent a good deal of money developing the Kindle in an effort to get out in front of this market. The kindle allows owners to download books wirelessly to the device for $9-12 dollars each then read them one page at a time with a battery powered flat panel tablet. The product costs about $400.
 
It sounds like a good first start, but has been panned by some pretty smart people. Robert Scoble did a vlog screed on the design here http://www.kyte.tv/ch/6118-scobleizer-sponsored-by-seagate/77475-dear-jeff-bez#uri=channels/6118/77475 .
  
The Journal’s Walter Mossberg was nicer but echoed Robert’s points about button position and clunky usability. I have yet to touch one and being a tree-hugger wannabe applaud the effort, but must agree that Amazon may have been long on vision but short on execution. They should have done a lot more usability testing on the Kindle before finalizing design and rushing it to market.  (Hear that Microsoft Zune marketers?)  People read books everywhere. With feet up, down, tucked. Standing in subways.  Slouched in beach chairs. Not just in Seattle test kitchens.
 

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