360° Coverage : What Amazon Understands That Others Don't

2 Updates

What Amazon Understands That Others Don't

Apr 26 2014, 9:17am CDT | by

Since 1995, I’ve been focused on the potential of personalization as a business strategy to attract customers and vanquish competitors. I was one of the original partners of the 1to1 marketing...

Filed under: news


25 weeks ago

What Amazon Understands That Others Don't

Apr 26 2014, 9:17am CDT | by

Since 1995, I’ve been focused on the potential of personalization as a business strategy to attract customers and vanquish competitors. I was one of the original partners of the 1to1 marketing consultancy, Peppers and Rogers Group, and in 2001 I wrote Making It Personal: How to Profit from Personalization without Invading Privacy.

For much of this time, Amazon has been the single best example of the power of personalization. It’s 1-Click ordering – patented in 1997 and granted in 1999 - was a brilliantly obvious idea that removed friction from the buying process. To this day, I buy goods from Amazon that it never before occurred to me that they carry; it is so easy to make a 1-Click purchase, I always check first to see if Amazon carries an item for a reasonable price.

In the late 90s, when my partners and I were delivering hundreds of 1to1 marketing workshops worldwide, Amazon was already doing the things others only dreamed of doing. In the ensuing years, they have never given up their relentless and aggressive pursuit of growth through personalization.

By many standards, their stock remains ridiculously overvalued. But this is largely because Jeff Bezos does what so many management teams refuse to do: he manages for the long term.

To be fair, Amazon has fallen short of many of the standards I hoped they would achieve. It is nearly impossible to find a real human being at Amazon to help solve your customer service problem. They have been arrogant, to say the least, in their attempts to revolutionize the publishing industry. My perception from afar is that Amazon is anything but a great place to work.

Amazon has not demonstrated the power of personalization to treat both customers and employees in a more humane and responsive manner. But they have demonstrated its power to annihilate competitors and win fierce loyalty from customers.

New York Times columnist James B. Stewart points out that:

Even after this week’s plunge, Amazon’s shares remain expensive by most measures. Its price-to-earnings ratio was still over 500.

But, he says, that is largely because investors have focused more on Amazon’s rapidly growing revenue and less on its minuscule profits. Amazon now accounts for about two percent of global retail sales and many analysts believe it has plenty of room to keep growing. Stewart observes:

If history is any guide, this week’s drop in Amazon based on one quarter’s results may just be another buying opportunity, and not a reversal of a 20-year trend.

Way back when, the foundation of 1to1 marketing strategy was this: the greatest competitive advantage a business can have is knowledge about a customer that its competitors lack.

On this basis, Amazon has just begun to fight. No other competitor knows so much about individual consumers across such a wide range of interests and activities. In personal terms, Amazon knows what I read, for how long, and which passages in each book are most meaningful to me. They know which books I consider buying, but don’t. They know many of the movies I watch, what I do in my spare time, what I wear. They know – better than even I do – when and how I spend money. You get the point.

Today, Amazon sells nearly everything. More importantly, they are obsessed with solving some of the most intractable  problems in retailing: how to lock in customer loyalty, how to anticipate customer needs, and how to deliver products the last mile to a customer’s home.

One of my lessons from studying personalization over these past 20 years is that granularization becomes increasingly important to business success. That is, to remain competitive, companies will have to zoom into higher and higher levels of detail. It will not be enough to have lower prices, faster delivery, or better advice. They will need to have all this plus a deep and quantifiable understanding of what each customer wants.

Amazon strikes me as a company that continually re-calibrates the ideal level of granularization. It understands before nearly the rest of the world when and where it needs to go deeper. It has the courage and tenacity to invest in its future, even when doing so causes investors to pound its stock.

As long as Jeff Bezos continues to lead Amazon, I would never bet against them. He understands personalization better than any person on the planet, and 20 years later, I still can’t name a more powerful path to competitive advantage.

Bruce Kasanoff (@BruceKasanoff ) is the author of How to Self-Promote without Being a Jerk.


7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,000 b ...
Source: Business Times Singapore   Full article at: Business Times Singapore


7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and ...
Source: Business Times Singapore   Full article at: Business Times Singapore


Don't miss ...


<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.


blog comments powered by Disqus

Latest stories

Germany, France agree to boost investment
Berlin, Oct 21 (IANS) Germany and France have agreed to strengthen investment for the euro zone economy.
EU strengthens sanctions against Syria
Brussels, Oct 21 (IANS) The European Union (EU) Monday announced it was strengthening sanctions against Syria.
Lufthansa pilots' strike causes 1,500 flight cancellations
Berlin, Oct 21 (IANS) German airline Lufthansa cancelled over 1,500 flights Monday after its pilots union announced to extend the 35-hour strike to include long-haul fleets.
Norwegian doctor recovers from Ebola infection, discharged
Oslo, Oct 21 (IANS) A Norwegian doctor, who was infected with the Ebola virus in Sierra Leone, has been discharged from hospital after recovery from the deadly disease, doctors at Oslo's Ulleval hospital said.

Latest from the Network

1,074 new dengue cases in Chinese province
Beijing, Oct 18 (IANS) China's Guangdong province has reported 1,047 new cases of dengue fever, health authorities said Saturday. Six people have already died in Guangdong -- five in Guangzhou and one in adjacent...
Read more on Business Balla
Blake Lively 'always' wanted to be mum
Blake Lively has ''always'' wanted to be a mother. The 27-year-old actress is expecting her first child with husband Ryan Reynolds and she admits she's been dreaming of this moment since she was a youngster. Speaking...
Read more on Celebrity Balla
Kris Jenner 'torn apart' by Bruce's new relationship
Kris Jenner feels ''torn apart and angry'' that Bruce Jenner is dating her former assistant. The 58-year-old matriarch split from the 64-year-old Olympic gold medalist last October following 22-years of marriage but is...
Read more on Celebrity Balla
Cheryl Fernandez-Versini won't move to France
Cheryl Fernandez-Versini doesn't want to move to her husband's home country of France. The 'X Factor' judge, 31, who comes from Newcastle, is adamant she won't be relocating any time soon to suit her new spouse Jean-...
Read more on Celebrity Balla
Lance Bass sets wedding date
Lance Bass has set a date for his wedding. The former *NSYNC singer and his partner Michael Turchin, who have been dating for two-and-a-half years, are to tie the knot on December 20, 2014, a representative for the...
Read more on Celebrity Balla
Nepal avalanche toll reaches 39
Kathmandu, Oct 18 (IANS) At least 39 climbers died while hiking on a key Nepali route after it was hit by a major snowstorm and avalanches earlier this week, BBC reported Saturday citing officials. Over 350 stranded...
Read more on Politics Balla
Jake Gyllenhaal says society is complicit in 'nightcrawling'
Jake Gyllenhaal says almost everybody in society ought to relate to his new movie 'Nightcrawlers'. The eagerly-awaited film concerns those people who monitor police scanners and then race to crime scenes to film eye-...
Read more on Movie Balla
India eves look for first win in AFC U-16 qualifiers
Dhaka, Oct 18 (IANS) India will hope to register their first win of the 2015 Asian Football Confederation (AFC) Under-16 Women's Championship qualifiers when they take on hosts Bangladesh in a crucial encounter at the...
Read more on Sport Balla
Moyes mulling return to management
London, Oct 18 (IANS) Former Manchester United manager David Moyes said that he is ready to revive his managerial career six months after being sacked by the 'Red Devils'. "I am ready to return. I have enjoyed the...
Read more on Sport Balla
Ebola fears loom over Ghana hosting AFCON
Accra (Ghana), Oct 18 (IANS) The Ghana Medical Association (GMA) cautioned the government Saturday against hosting the 2015 African Cup of Nations (AFCON), despite a request by the Confederation of African Football (...
Read more on Sport Balla