That’s got to be the most depressing headline I’ve ever written, right?
After all, if Amazon.com can’t make it in e-tailing who can? If Amazon with its “Willy Wonka” warehouses, its huge cash hoard, its 20 million-name customer database and its Time Magazine “Person of the Year” designation can’t survive, for gosh sakes, what hope is there for the rest of us?
When a market turns, everything that once seemed clever can seem dumb. Amazon’s investments in other e-tailing ventures (Pets.com, Homegrocer.com, Drugstore.com) suddenly look dumb. Amazon’s use of convertible stock instead of debt to fuel growth suddenly looks dumb. Amazon’s “maqana” attitude toward earning a profit in favor of pushing growth suddenly looks dumb. Even Amazon’s use of its own database looks dumb to plaintiff’s lawyers.
I’ve always said Amazon was a risky business, although I applaud the audacity Jeff Bezos shows in taking everything the Internet stock boom could give him. Here’s how he’s trying to get out of it.
Keep Hope Alive. I see Amazon’s footprints all over the recent mergers of Pets.com with Petstore.com and Homegrocer with Webvan. Amazon has backed Pets and Homegrocer, and its merging with rivals dilutes its stake. When PlanetAll couldn’t be saved, Amazon simply absorbed its people and capabilities. This keeps companies alive, and if Amazon’s stake in one falls below 20 percent of the combined outfit’s common, it no longer reports those losses on its books.
Integrate Everything. Amazon will use Webvan to deliver all merchandise from it and its partners. That means the Webvan will drive up to your door with books and CDs, medicines and pet foods, not to mention marketing materials. If Amazon’s own mega-warehouses and computer systems can be integrated with Webvan’s, deliveries can be coordinated throughout the channel, lowering costs for everyone. The same process will occur with Kozmo.com, in which Amazon holds a stake.
Sell the Idea of Margins. Each time I talk to an executive associated in any way with Amazon these days, he or she brags about “gross margins.” This is not a profit, just the difference between what they pay for goods and what they get for them. This isn’t even EBITDA, Wall Street’s favorite measure of cash flow and a stand-in for profit at fast-growing companies. But at least it’s a positive number. Positive numbers give analysts warm and fuzzy feelings.
Keep on Keeping On. This year Amazon has launched a lawn and garden store, a health and beauty store, a cooking store, a furniture store, and a wine shop. Amazon has also turned its auction operation into a clever liquidation house. When any army gets caught behind enemy lines it fights harder.
When in Doubt, Cut Costs. Amazon’s recent lay-offs were small but telling. It’s not a strategy but a tactic, and if it helps beat an analyst’s number (or soothe the pain of missing one), watch for it to happen again.
When you play for high stakes and take big risks, you either succeed big or fail big. That’s the Amazon story, and Bezos is sticking with it. The ending has yet to be written, but watching it play out is great fun.
As an organisation, finding the right marketing channels is an essential part of your marketing strategy.
2017 is the year in which CMOs are expected to outspend CIOs on technology, according to Gartner, which is no surprise given the way in which consumers of all kinds are increasingly using technology in their everyday lives.
As it prepares for a 2017 IPO that could be the largest in the social media space since Facebook went public in 2012, all eyes are on Snapchat.
Amazon Prime was launched in 2005 as an express shipping membership program and more than a decade later it has tens of millions of subscribers who enjoy a lot more than just free, fast shipping on millions of products Amazon sells.