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Amazon Will Own Your Customer And What To Do About It

James L. McQuivey
James L. McQuivey
Vice President, Principal Analyst
February 8, 2018

From twenty years of trying, I know this about covering Amazon: It’s tricky. Our report process can take months during which we comb through our extensive Technographics data to find patterns or we interview executives. Not to mention the time it takes to write, edit, and produce our reports. During which time, the moving target we call Amazon announces dozens of new things that you can’t go back and add to your report. So while I’m pleased to announce that my latest comprehensive review of Amazon’s long-term strategy is now ready for clients to read (see Amazon Will Own Your Customer In The Future), it will appear I have left a few things out. Except that I haven’t, because our read of Amazon’s strategy is so on-point that every one of these significant moves announced by the orange smile is accounted for in our model. For example, Amazon:

  • Will now offer Whole Foods customers in specific cities two-hour delivery. This was just announced this week and it’s a perfect proof point of the discussion we offer in the report about what it means that Amazon now owns this premium-priced delivery node in many of the country’s most attractive zip codes. This will increase the frequency of interaction that Amazon has with key customers — something Alexa already enabled to an insane degree — but this time with revenue attached.
  • Announced record fourth-quarter earnings and 31% sales growth in 2017. This has helped the company weather this week’s stock market turbulence a bit better than most, causing its market cap to briefly flirt with passing Microsoft’s. As we note in the report, though, its profits still depend on AWS rather than the consumer-facing retail business.
  • Expanded Alexa to a gazillion new devices and partners. Gazillion is a technical term that represents the 65+ partner announcements made by Amazon’s new friends about Alexa and related tech in cars, homes, etc. In the report we christen what Amazon is building an ecosphere, not an ecosystem, because it encases and cocoons customers in a single, satisfying experience. Even though that experience is dependent on merchant partners or the makers of devices that integrate Alexa the experience starts and ends with Amazon.

In the report we tackle the big questions that go beyond current announcements but which many in the mass media are finally waking to. Things like: Can Amazon sustain its low-profit approach to growth? Will brands move more of their ad dollars to this giant? And will consumers really be happy inside this silken cocoon? The answer to all of these questions, emphatically so to the last one, is YES. As we wrote in the report:

“By the end of 2019, Alexa will go further, using personalized nuance in how she speaks with each user, acknowledging their unique context and emotional needs. #Alexaismybestie will be a common joke in social media, but it will become literally true for millions” – From the report, “Amazon Will Own Your Customer in the Future.

Yet, while the title suggests fear and loathing as the appropriate response, the report is really a how-to guide to living inside of Amazon’s ecosphere in order to reach your best customers while at the same time hatching a plan to have your own entangled customer relationship. (We borrow the word entangled, with permission, from Sebastian Jespersen and Stanley Rapp, learn more at http://www.entangledmarketing.com/). Because having your own direct connection to the customer — a high-frequency, emotion-rich, convenient relationship — is your best way forward in a world where many of those same customers have an even deeper connection to Amazon.

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