Now more than ever, retailers that wish to stay competitive must develop an Amazon strategy. 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 on for details on Amazon’s successful model and 12 rules for putting it into practice.