Now more than ever, retailers that wish to stay competitive must develop an Amazon strategy and discover the mindset behind Amazon's operating model. Like it or loathe it, Amazon is a colossus that can’t be ignored. Amazon is now over $130b in sales and is likely to touch nearly $200b in gross merchandise value (its marketplace model only reports commission).
Many naysayers complain that Amazon doesn’t make any profits – this is simply not true. Amazon made over $2b in profits last year. Even more importantly, it takes a very long-term view of customer profitability, with a model that allows it to navigate the trade-off between growth versus profitability. Over 22 years, Amazon has developed a strategic approach that is firmly centered on its customers, and powered by data. All retailers need an Amazon strategy, and this has two fundamental components:
A value proposition based around exclusive products, service and experience that gives a sustainable point of difference.
An operating model that takes the best bits of the Amazon approach.
Read more for details on Amazon’s successful model and 12 rules for putting it into practice.