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Posts tagged ‘Amazon’

Nordstrom: full-line store sales down 1.2%, but Nordstrom.com up 22%. A new trend?

Cool article on Forbes about Nordstrom’s evolving strategy in retail; consider this paragraph especially:

It is very important to understand the customer’s need to find time to shop.  Nordstrom gets this.  Consumers, especially young working people, are less and less interested in store visits that require a drive in a car and a major allocation of time.  In contrast, the Internet – open 24 hours seven days a week – allows for a leisurely shopping experience at a personally convenient time.  However, until now, people have not shopped new fashions on the Internet. The Internet for many people has been about bargain hunting or the search for a specific item. Customers seldom take the time on the Internet to ask “what is new?”  There are few impulse shopping sprees except maybe on sites like Nordstrom’s Haute Look. The personal service of the Trunk  Club can be the answer since there is a online stylist providing the customer service previously found only in stores. Nordstrom, and other retailers, will have to find a counterpart for women that will offer the same intensive attention and service. (Customers can go to nordstrom.com today and book an appointment with a stylist.)

That’s kind of a terribly-written paragraph, but the idea is there: basically, Nordstrom realizes that the future of shopping might be about people being able to shop at the time they want and navigate without crowds and driving and parking and all that. This is a little bit different for males and females — you could argue that for a percentage of females, shopping is still a social experience, so they want to go to malls, etc. — but the advantage of the Internet as a retailer from the get-go has been the flexibility aspect. (Amazon made themselves into a cultural icon off of that.)

The “digital” space, in general, has been slow to catch up to “conventional” spaces in the eyes of some people that still make decisions in organizations — consider ad spend on digital vs. television, for example — and there’s still a little bit of “Well, the Internet will do such-and-such…” (as opposed to “has done such-and-such”). In the same Forbes article, people from Forbes note that online sales could surpass 50% of the business within about 5-7 years. I’m sure it’s trending that way from places like Best Buy and Macy’s too, although I’m not sure how directly anyone would admit it. Having a physical brick-and-mortar anchor-type location is very easy to point to your boss and say, “Look at us. We’re branding!” But talking about the online space is a lot fuzzier for most people.

I don’t think physical shopping will ever die out for two reasons — the social aspect mentioned above, and also the day-of necessity. For example, I play in a co-ed over-30 soccer league right now. (Lord help me.) I forgot shin guards. I need to go buy some. Since I have a game tonight, I can’t order them online per se — maybe if Amazon’s Drone stuff gets up and running, but not right this second. Rather, I need to drive to Target or a similar store and get them there. That’s one thing that will keep brick-and-mortar around: immediate necessity. The Internet isn’t there yet, and may never be.

There’s also this study:

One of the most eye-opening findings: “Ninety percent of shoppers surveyed would prefer to buy in a brick-and-mortar store across demographic and age groups,” Mike Moriarty, a partner in the retail practice of A.T. Kearney, and co-author of the study, told Forbes.

And for pretty simple reasons. “They love going out, shopping with people and touching stuff,” Moriarty said. “Everybody likes going shopping.”

Indeed, despite the hubbub over digital commerce, 94% of total retail sales are still generated at brick-and-mortar stores, according to data from market research firm eMarketer.

And don’t forget this on the “Big Data” side. Somewhat terrifying, but somewhat logical:

Satya Nadella and Microsoft just hit one of the all-time corporate pivot moments

Remember back in about 1996, when there were all sorts of pre-Internet memes about how, if Bill Gates stumbled across a $20 on the street, it actually wasn’t worth his time to bend over and pick it up? Everyone thought they were a monopoly over at Microsoft, Apple was down, Google was still in a garage, and … Redmond, WA owned the tech world for as far as the eye could see.

Flash forward to today: Microsoft just laid off 14 percent of its employees, predominantly in the mobile (Nokia) space. The pivot of all pivots — MBA jargon alert! — is coming. A company that gave the world Microsoft Office and owned the PC market only shipped 14 percent of the world’s computers last year. The Nadella hire was awesome from a “poach vs. develop” standpoint, and they may need that internal knowledge more than ever now. They just owned the World Cup — data science space! — but that doesn’t pay for 10K+ employees, per se.

To go back to something from the previous paragraph, “corporate pivot” refers to, essentially, switching your focal point. Oftentimes, MBA-type case studies revolve around this idea centrally. Either a company adapted (Netflix, for example) or it didn’t (Kodak, for example) — and that’s the line where everything can be defined. It’s honestly amazing to think that a company once as big and dominant as Microsoft — and still big and dominant in many ways, honestly — is facing such a pivot.

It seems like the focus is going to be “productivity and platforms” for the “mobile-first, cloud-first” world. That’s good that Microsoft has realized this. It’s also possible that Office for iPad might become the future of the productivity market. Nadella’s base summary of the “new” Microsoft is that “we help people get stuff done.” In a world that is insanely focused on how busy everyone is, that’s not a bad marketing strategy (cue “The Essentialist Movement”). Nadella seems to be aiming for simple synchronicity across multiple devices. As PC World explains:

That, of course, will be aided by Microsoft’s machine learning and ubiquitous computing endeavors—two initiatives that Nadella has been keen to push during his short reign thus far. Those are basically fancy buzzwords for using big data and cloud computing to help you in your everyday life and delivering a seamless experience across devices, the results of which we’re already starting to see in the cross-device syncing capabilities of Windows 8 and SkyDrive, as well as Microsoft’s recently unveiled Universal Apps that span Windows 8 and Windows Phone alike.

It seems like Nadella and his core leadership team made a good bet here — if they can bring true leadership to the cloud space and dominate the productivity space, they could stay in that race with Google, Facebook, et al around the various aspects of tech. But it is interesting to see such a pivot, and only 20 years or so after they were the company in tech.

 

Amazon vs. Netflix is getting more and more interesting

Just learned this today: Amazon has an entire landing page for “not on Netflix.” A shot across the bow? Perhaps. It’s kind of interesting broadly, though: five-six years ago, you would maybe kinda view Amazon and Netflix as business rivals — Netflix primarily delivered DVDs to you via a red envelope, and you could theoretically also choose to buy (and maybe rent? I forget) those DVDs via Amazon. Now, with seemingly more millennials cutting the traditional cord and going to streaming (I’ve been on that for about a year), the war for original content as a driver of new customers/clients/leads/whatever you want to call it is heating up.

Netflix currently gets more attention in this regard, primarily because of House of Cards and Orange is the New Black. Hulu Plus has a ton of original shows, although I’d still argue most people go there to find the newest episodes of in-season shows (that’s why I mostly go there); their long-term play seems to be focused on the originals, though. Amazon has nine new shows coming this year — critics were kinda iffy on their first two efforts, although I liked them —  and this Transparent show could be big. In fairness, it has pretty much everyone that “in the know” people claim to love, from Jeffrey Tambor to Judith Light to Mark Duplass (king of mumblecore!) to Gaby Hoffman (she’s in everything hipster released in the past 10 months).

Almost half of the United States subscribes to either Hulu, Amazon Prime or Netflix — so there’s big numbers here if one of them can kind-of break ahead of the pack. As of now, Netflix seems to be winning in this space — Goldman thinks they’re worth 590/share — but Amazon overall is a behemoth. They don’t make profits per se, but if they choose to “turn on the spigot,” they would be dominant.

Interesting to see how this all shakes out — and if you ever doubted the value of content as a concept, or the explosion of the idea of “content marketing,” look no further than this war — which is rooted in the acquisition of content and using original content to drive strategy — as evidence of the value of it in the modern age.

 

The world got impatient; one second of slower load time can cost Amazon $1.6 billion across a year

There are some statistics you run across in the course of consuming information that just straight up blow your mind. Here’s one example:

In the United States period he’s describing (via the book), the U.S. built basically almost everything we currently have. The Chinese then used more concrete than that in three years. Stunning, right?

Here’s another ridiculous statistic, regarding impatience and business:

Surprising as all this may be, the implications of this impatience are even more shocking. Amazon’s calculated that a page load slowdown of just one second could cost it $1.6 billion in sales each year. Google has calculated that by slowing its search results by just four tenths of a second they could lose 8 million searches per day–meaning they’d serve up many millions fewer online adverts.

One second of load time = 1.6 billion dollars. You talk to some people who live in Seattle and they’ll tell you that Amazon “on-boards 300 engineers a week.” I’m not sure that’s 100 percent true — although it could be — but if it is true, you can now somewhat understand why. (You can also draw a logical line to a decrease in innovation around the rest of Seattle.)

We already knew that people’s attention spans aren’t the greatest, but one second being tied to $1.6 billion is something you’d expect to hear out of the military — i.e. if someone misses a jet landing on an aircraft carrier by a second and skids the plane into the ocean. But 1 second of load time for “neymar soccer jersey” and Amazon is losing money? (Odd too, because Amazon doesn’t technically make profits.)

Here’s another way to look at it: every time Amazon increases load time by 100 milliseconds, it can gain a 1 percent increase in revenue. (Amazon does make revenue, and how!) There are 1,000 milliseconds in a second (logical, right?), so if they increase load time by a second, that could be a 10 percent increase in revenue.

Overall lesson: the small things do matter — perhaps a bit ridiculously so, but still, they matter.

 

What is Alibaba? It’s kind of like if you combined Amazon, Hulu, JCPenney, PayPal, Google Maps, Twitter, Spotify, Orbitz…

Lot of news recently about Alibaba, since it’s going public in the United States. A common refrain is: what is it? There are many ways to answer that — do your own Google search — but this one might be the best contextual explanation of the company. Based on the different services they provide, here’s all the Western companies (that you might be more familiar with) you’d have to combine to add up to Alibaba:

Baba

This all makes sense in one essential way: Alibaba is probably most compared with Amazon in the Western world, and Amazon’s strategy is a bit similar: seems scattershot on surface, but basically is about entering tons of different markets, connecting back to previous markets, and creating a world for the individual where the central brand (Amazon, Alibaba) is crucial to their day-to-day life. Isn’t that the essence of what “branding” really is?

 

 

Social media pretty much killed the marketing funnel and the relationship between “advocacy” and “customer”

One central component of marketing is the idea of “the funnel.” You can look at it in different ways, but essentially it teaches you how customers move through their interactions with a brand: typically it’s something like awareness, interest, evaluation, trial, adoption/conversion, and advocacy. My dad took MBA classes at Columbia in the mid-1960s and I took MBA classes at the University of Minnesota in the mid-2010s, and this was taught at both places, both times, in largely the same way. Read more

The last time Amazon didn’t post at least 14 percent sales growth in a quarter was the fall of 2001. Whoa.

Amazon1

Check out the chart above; essentially, the last time that Amazon had quarter-over-quarter sales growth of less than 14 percent was, ahem, 2001. This is a completely new model in the business world in some ways, because while their sales growth — and the consistency of it — is stunning, they don’t actually make that much in the way of profits. In short, American investors tend to love companies with insane growth potential that may actually lose money day-to-day; in the case of Amazon, though, they may be starting (very slowly) to test the patience of this model:

Wall Street has long given Amazon a bye on profits and allowed the company to focus on growth and investments for the future. But some have viewed the recent Prime price increase and deal with HBO—which promises to entice new members and retain old ones—as a signal that Amazon is trying harder than ever to bolster its bottom line. So far, investors seem ambivalent about the latest results.

Just think about the past couple of news cycles and Amazon: they got the deal with HBO (a shot across Netflix’s bow on the content side); they rolled out Amazon Fire (the set-top box); they launched PrimePantry as a grocery-delivery service; and they launched this thing called “Amazon Dash,” which is essentially a wand whereby you can restock your house pretty quickly.

This is in addition to raising the price of Prime (to $99), which apparently hasn’t hurt them a ton; testing their own parcel-delivery service (to cut down on shipping costs, which are outpacing revenue and might continue to do so); and just generally running the world of online shopping while also figuring out ways to make the process even easier. I think Google is probably the most important company of our time — think about your grandparents, who might still Google the word “Amazon” to start shopping — but Amazon is a fairly insane little model too. The sales growth has been ridiculous — and been ridiculous for 13 years, which most companies would kill for. But are stormier days ahead?

(Also, stop and think about this for a second: even five years ago, the idea of Netflix and Amazon being rivals was kind of absurd. Netflix was DVDs in red envelopes. Amazon was where you ordered new sweaters. And now … yes. Business can adjust really quickly.)

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