WACD - What Amazon Can't Do
Groceries - a key clue for unlocking frequency
Many people who fail in life are those who gave up without realizing that success was right in front of them.
- Thomas Edison
p.19
The food business is a platform on which you can sell everything else.
In all this talk about imminent apocalypse, one word often gets overlooked: relevance. The first principle of retail is to judge whether you have relevance to your customers. The basic rule: provide what customers want and stand out from competitors.
- Relevant = matched to contemporary concerns appropriate to the current time, era, or situation
p.45
Marketplace - FBA (Fulfillment by Amazon)
Prime - membership program (connecting everything within the ecosystem)
AWS - cloud services
+ Fresh, voice recognition, Amazon Studios
p.50
1. Online e-commerce (a good place to buy - convenience, points, delivery, customer acquisition, marketing) + offline
2. Shopping
Functional (buying) - household staples (tissue, groceries): the practicality of online purchase
Recreational (shopping) - WACD
3. WACD
- Going forward, experience, service, community, and expertise will be emphasized more than the product itself
- Future stores: places where transactions happen -> places where you have experiences : physical stores (not a buying space, but a space to eat, work, play, discover, learn, and rent)
4. The moment the overall retail industry's conditions worsen = the moment Amazon captures high-frequency purchases like groceries = becoming the most basic shopping option
5. Saving money (loyalty, points programs) -> saving customers' time, energy, and effort
- Hyper-personalization through real-time mobile rewards
- Simple transactions -> sticky, emotional relationships
6. Proposal
- Existing retailers turn their primary asset - the physical store - into a mini logistics warehouse
- Use it as a way to solve "returns" - the Achilles heel of online companies
- The store is both an experience hub and a fulfillment base
7. Skipping checkout, an alternative to missed deliveries
Removing the barriers of sizing and returns
A true individualized shopping assistant via app, AI, and voice recognition
8. Amazon's goal - by 2021, transforming almost entirely into a services-centric company
: retailer -> transformation, indispensable infrastructure (like the railroads)
9. Co-opetition - being a competitor and a service provider at the same time
People come for the delivery and stay for the digital
p.63
Enabling a convenient lifestyle
Really. What we're trying to achieve with Amazon Prime is to clearly show that people who aren't Prime members are being irresponsible.
p.65 Price: 79 -> 99 -> 119
By putting under one roof each of the services that make customers' lives easier and more enjoyable, Amazon can reach consumer needs that substitute for price.
Amazon wants to share not just customers' wallets but also a part of their lives.
p.67
Europe: loyalty to a single retailer = a past-era perspective
- Proposal: "Spend more, get more back" - no. -> Focus on convenience, service, and experience
- Shift: not saving money, but saving time, energy, effort <- personalization, loyalty building = understanding customer value
- Amazon: ease, convenience, instant gratification + delight
- Aldi, Lidl
p.97 - essence is changing; relevance is shifting
Supermarket - department store - shopping mall - hypermarket - superstore - e-commerce...
The weekend grocery run has disappeared
People no longer go to suburban stores just for low prices and wide selection
Online retailers
Buying a little, often
Just what you need tonight
*my (on the way to or home from work, just a quick stop)
Amazon: the basic law of retail is to be relevant to the customer. The era of "everything for everyone" is over.
p.100
- One-stop shopping, knowledgeable and helpful staff (shop masters) - providing opportunities to discover new products and be influenced
- Personal shopping, fitting rooms, other creative spaces + the above (replaceable by mobile)
p.103
Over the past century, (American) culture could be defined by consumption. But things are changing.
"Our highly productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction and our ego satisfaction in consumption. Social status, social acceptance, and prestige are found in patterns of consumption" (Victor Lebow, 1955)
The millennial generation (born 80-96) spends twice as much on education as previous generations.
Buyers now just taste ownership (Boots CEO, Sebastian James)
- Retailers need to transform their stores to fit the "sharing and experience" economy
- Capital-scarce millennials <- FOMO (Fear Of Missing Out)
- Baby boomer generation: emphasis on material goods, social status, buying things - transaction-centric -> points-driven loyalty cards
- Millennial generation: travel expenses, hotels, flights, concerts, meals with friends/family, pensions, insurance, medical services - experience-centric -> real-time personalized information, digitized loyalty systems
p.112
Omnichannel phygital - connected, seamless, frictionless retail
The era of channels (online or offline) is over. A world where channels are fully merged has arrived. We have to think from that perspective.
e.g., internet search, product search, checking store inventory for size, home delivery. Physical or digital, you may not have walked out of the store with a product but you're satisfied with the shopping.
Showrooming-based services
Click & collect - order, then pick up in person
In-store online order processing spaces
p.117 (*my)
The era of Google's crisis - the target of search, the goal, has shifted.
- Search > browse > connect (to a site) VS. Search > browse > execute (payment, purchase, content)
Portal -> search -> category killer (Stack Overflow, Reddit, Steemit, Amazon)
p.118
Why Amazon has to do tech-intensive retail (online), or has no reason not to
- (*my) finding items in retail stores, finding items in fulfillment centers <- book search and classification systems are the origins of this field (also mentioned on p.167.)
- The background that made warehouses, AI robots, and Amazon Go possible
p.154
(Groceries are) a way to seep into people's daily lives. There's no other way to do that.
(*my) The iPod and the smartphone started the same way.
Through groceries, Amazon gains frequency. "Food is a platform on which you can sell everything else."
p.159
The vision for groceries - removing the hard labor from the experience.
p.160
Amazon's website is built for search, but grocery shoppers tend to browse through items.
Most online transactions consist of 2-4 items, but a grocery order averages 50 items.
Handling complex supply chains and different user experiences well is the key to entering the online grocery business.
p.167
It took five years for Amazon Fresh to expand beyond Seattle, but Prime Pantry was launched simultaneously in all 48 contiguous U.S. states. "A box of Cheerios isn't that different from a book. There was no need to fundamentally revise or build entirely new infrastructure."
p.169
In classic Amazon fashion, Prime Now took less than four months from planning to launch. At launch, before expanding everywhere, they piloted in just a single zip code in downtown Manhattan to build the perfect customer experience.
p.170
Time is becoming an increasingly important commodity for everyone.
At some point Amazon will have to choose: will it be a supermarket, or a marketplace?
It must remain in a leading position in product selection and convenience.
p.183
The entire set of items disappears from the physical store, and the empty space is used for the next thing:
- Fresh food, prepared food, and other emotionally charged items
- Mixed experiences from cooking classes to public work spaces
- Order pickup and returns counters
- Online grocery order fulfillment for same-day delivery
The biggest upside Amazon gets from entering groceries is weekly customer contact,
locking them into a broader ecosystem.
(*my: weekly contact... aren't they already doing it? aren't they having even more frequent contact than that? is it just because it isn't offline? is online engagement lower than offline? are loyalty and per-customer spend lower?...
Or isn't this actually an imperialist strategy to preemptively block and claim the entry of offline players?)
p.212
The Amazon model is "customers can buy anything, and they can buy it cheaply and conveniently."
But that's just close to a transaction. Amazon isn't well-suited to fashion. (Zalando CEO Rubin Ritter)
(*my: I agree. Amazon is different from Netflix. If we have to compare, it's closer to Google. It's retail - that is, distribution. To overcome this, they're making their own products. I think it's the process of overcoming that complex. In their position, in their spot, maybe it could be scary. The wheel is accelerating and you see the peak ahead? They're angling the wheel off. To not fall... But in that process, the small carriages that had been riding alongside them on both sides - the ones getting in the way of their growth - are being crushed.)
p.216
Advantages of private labels
They show even more power in the grocery field
Because of the products' high frequency and habitual buying. (*my: silk? are there no other fields?)
Auto-ordering for daily necessities (due to product characteristics) removes chore-like elements.
(*my: hmm? couldn't it also be read the opposite way? rather, through their e-commerce? no (that looks too thin), through Prime - the personalized service - the moment an item becomes auto-orderable, isn't it also the moment it gets treated as a daily necessity?)
(*my: some kind of limit starts to show)
p.222
As modern life becomes digitized, from function-heavy purchasing patterns like the weekly grocery run ->
it becomes easier to pursue and find ways to deliver a more enjoyable or informed customer experience.
- Consumerization of technology -> convenience, immediacy, transparency, relevance + customer expectations
- Catering to the tastes of consumers who do things their own way
Retail vs. Retail tech
- To provide more of what customers want, the "what" of frictionless retail (queueing, delivery, returns, service),
and the "how" of using digital to improve the customer experience (online ordering, delivery to home/fulfillment base, reviews, lowest-price search) - implemented with technology (ubiquitous connectivity / LTE, mass-market interfaces / touchscreens, autonomous computing / AI)
p.237
Only applies to ordinary everyday goods (*my: engagement is gradually dropping)
(*my: Fire Phone - the core, what they were trying to do = Firefly (text, sound, object recognition), a service or hardware that lets buyers look up over 100 million products and purchase them online) = reborn from the failure of Webvan -> Amazon Fresh -> reinforced via Prime
p.254 (*my: the logic is getting thin... they said their core business is tech, not retail? the failure of the Fire Phone's concept and device?)
p.256 In most households, Alexa is not used for shopping; it's used for 1) task handling, music, 2) home automation, 3) tech and shopping.
p.257 (*my: 71% growth year-over-year... really growth?)
p.282
Amazon's goal is to build physical retail where they can identify customers at any time and repeatedly use the customer data they obtain.
- Partially personalize the customer experience -(real-time confirmation/recommendations)-> complement the full span of the shopping journey (higher conversion, optimized transactions)
p.311
The concept of experiential retail
Stores need to be transformed into real destinations.
p.312
Retailtainment (retail theater)
Retail has to handle not just shopping but also social interaction.
(*my: similar to the start of cafes? a role that eventually gets assigned to every space)
p.318
Eataly
Whole Foods Market - rooftop greenhouse
Hema chain
JD.com - 7Fresh
Waitrose
Publix
*Germany Metro <- growing vegetables inside the store
*Italy Co-op <- strengthening quality and origin
Study assignment ^^
1) One-line review:
(1) Very American. And while reading, Tsutaya Bookstore kept coming to mind. <- beware of bias and preconception.
(2) What do I mean by "American"? Very neoliberal. What do I mean by "neoliberal"?... it's long... a monopoly on violence?
"For the customer"? Like how a politician says "for the people"?... ah, too long, replacing with a linked post.. http://ccej.or.kr/5170
신자유주의, 제대로 알자
현재 전 세계를 뒤덮고 있는 천박한 천민 자본주의는 지난 30년간 세계를 휩쓸고 있는 신자유주의가 만든 것이다. 앞의 칼럼 \
ccej.or.kr
(3) Tsutaya - designing space as experience + giving it context (*unlike Alexa, which tries to offer services around context-free "do-anything" functions / the core of voice recognition accuracy is asking questions first. To do that, you need to be able to form context or narrative.)
*narrative = real or fictional events woven by cause-and-effect relationships that take place in time and space
(4) Westernism = self-centrism. Triumphalism. Colonialism. Rather than making things themselves, they distribute. Or they use labor or raw materials. Like no-brand PB products? Putting labels on finished goods from subcontractors? Of course, in that process, profiting from it is what conventional common sense calls "smart."
2) Three most impressive lines
(1) Buyers now just taste ownership
(2) Time is becoming an increasingly important commodity for everyone.
(3) They come for delivery and stay for digital <- hooked? lol
3) Three important concepts
(1) (American) culture can be defined by consumption. But things are changing. Buyers now just taste ownership.
(2) At launch, to build the perfect customer experience before expanding everywhere, they piloted in just a single zip code in downtown Manhattan.
(3) Saving money (loyalty, points programs) -> saving customers' time, energy, and effort
4) Review:
Personally, I was curious how Amazon - an e-commerce company that started as a bookstore - could grow like this. Reading this cleared some of that up.
Finding items in a store, finding items in fulfillment centers - isn't that search capability originally the domain of book search and classification systems in bookstores and libraries?!
With this technology, some use it only as the Amazon of the past, and others are building today's Amazon with it.
* Is the fashion business really struggling? (Department store consumption -> personal brand consumption, corporate consumption -> individual-seller consumption - hasn't that shift just not been captured in the numbers?)
* The cover is already a bestseller. Confidence? Cleverness? Well, with my personal bias... I'd say it's "American." It looks less clever and more opportunistic. Values and common sense are shifting. This kind of attitude will likely be reassessed depending on the era and social conditions.
* Amazon's competition is anything buyable through search. The prerequisite for search is that the target must be a specific product that's universally recognizable. It's not about food vs. fashion. It's whether it can be distinguished or recognized via search, i.e., via keywords.
* Amazon is tech-based from its origin. Search and classification. In fact, these are the foundations of IT algorithms - especially recent AI - so maybe that's why they adapt so well.
* Amazon is a middleman from birth. A business that takes margin in the middle. The term "retail" is itself a frame, I think. "Retail"... lol
5) Discussion agenda:
(1) What other items drive and maintain frequency?
(2) Is there a WACD that even our neighborhood supermarket (small business owners) could do?
(3) Are there other issues with Amazon's trajectory (ethics, business morals)? Or: is disruptive innovation always, for everyone, the right thing?
6) Commerce business cases:
Overall thoughts) Well, I'm not sure.
Isn't this just the solution (how or what) needed from their position?
Still, how will you stop that wheel? Is control over inertia (or acceleration) even possible?
Is it okay because it's Amazon? What does Black Swan think?
