takingpitches

Jeff Bezos’s latest shareholder letter — a guide to proactively disrupting yourself:

One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader...

I can keep going – Kindle Fire’s FreeTime, our customer service Andon Cord, Amazon MP3’s AutoRip – but will finish up with a very clear example of internally driven motivation: Amazon Web Services. In 2012, AWS announced 159 new features and services. We’ve reduced AWS prices 27 times since launching 7 years ago, added enterprise service support enhancements, and created innovative tools to help customers be more efficient. AWS Trusted Advisor monitors customer configurations, compares them to known best practices, and then notifies customers where opportunities exist to improve performance, enhance security, or save money. Yes, we are actively telling customers they’re paying us more than they need to. In the last 90 days, customers have saved millions of dollars through Trusted Advisor, and the service is only getting started. All of this progress comes in the context of AWS being the widely recognized leader in its area – a situation where you might worry that external motivation could fail. On the other hand, internal motivation – the drive to get the customer to say “Wow” – keeps the pace of innovation fast…

As proud as I am of our progress and our inventions, I know that we will make mistakes along the way – some will be self-inflicted, some will be served up by smart and hard-working competitors. Our passion for pioneering will drive us to explore narrow passages, and, unavoidably, many will turn out to be blind alleys. But – with a bit of good fortune – there will also be a few that open up into broad avenues.

 

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The law of e-commerce:  Things seem to get worse for retail and better for e-commerce (i.e., Amazon) the less friction there is between computing power and shoppers, e.g. smartphones versus going home and firing up the desktop/laptop.

So, if people are walking around with Google Glasses, there is no friction/social embarrassment with price/quality checking, which, I think, is good for e-commerce and price comparison services such as Google Shopping and some new type of comparison shopping service that I have not thought of, and heralds even more bad for old-school retail.

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I previously noted that 30% of shoppers start their searches for products on Amazon.

Now Amazon is jumping into that business in an even bigger way by offering targeted ads on its websites, Kindle e readers, and its own advertising network.  Amazon’s competitive advantage is the browsing and purchasing data it has on its nearly 200 million active shoppers, i.e., most everyone.

As the FT reports:

Marketers note that Amazon is now charging prices that rival its competitors and that its ad business stands out from the pack because of its massive reach, rich data-set based on actual customer data and personalisation techniques. The more that consumers and advertisers go directly to Amazon to search for products, the bigger the threat the company poses to others – especially Google – experts and analysts said.

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Whether it is because of the economy or it marks an even more interesting permanent change in customer gifting behavior and gift-receiving preferences, gift cards apparently were the thing last holiday season.  In fact, they are apparently worth a 50% discount to many gift receivers according to the FT:

In a sign of the limited faith many Americans have in the discernment of friends and family, 49 per cent of people said they would prefer to receive a $25 gift card than a present worth $50, according to a survey by First Data.

If gift-giving is moving more toward gift cards, an interesting question is whether this is an additional headwind to niche retail.

If the preference for gift cards is maintaining as much liquidity as possible, then rationally retailers with the broadest selections — the Amazons and Walmart — will have even more sales move their way.

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The most surprising statistic that I have heard in a while: a significant number of shoppers start at Amazon before Google.  The Economist reports:

Some experts think Amazon also poses a threat in this battle to find things. “Google used to be the toll-taker, directing people to Amazon,” says John Battelle, a seasoned Valley-watcher and the founder of Federated Media. “Now people are increasingly bypassing it and going straight to Amazon to find and buy stuff.” He has a point: Forrester, a research firm, reckons that 30% of America’s online shoppers begin their search for a product at Amazon.

This is in interesting contrast to my post yesterday about online education and Google.  In some ways, Google is more weighted toward services/products that operate with sales cycles requiring qualified sales targets on the front end such as online education and insurance, rather than retail products.

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Few things fascinate me more than bringing digital immediacy into physical. As I have blogged about, I was an early and frequent customers of Kozmo in NY and DC and am fascinated by Amazon’s ability to surprise me sometimes with same-day delivery.

This thesis is beginning to heat up.  In addition to Amazon, the WSJ reports yesterday on ebay, Walmart and Google’s efforts to cut the time between desire and fulfilment.  Also this week, the Economist speculates on Google potentially buying UPS to compete with Amazon’s distributed delivery centers, nothing that “[at] $69 billion UPS has a market value less than a third of Google’s; it is valued at less than twice the search giant’s cash pile.”

And as a bonus, the same WSJ article updates me that Joe Park — the bold, way ahead-of-his-time founder and CEO of Kozmo — is now running Bluefly.com!

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For whatever faults Walmart may or may not have, you have to give it credit for really trying with WalmartLabs, its ecommerce innovation group.

It  is now testing subscription commerce businesses, potentially as a means whether to put them on the retail shelves.  One of the first is goodies.co.  This is from its About Us page:

Food is personal. Food is social.

Goodies Co. helps you discover new foods you’ll love.

If you’re anything like us, you often find yourself thinking, “I’m so tired of eating the same old thing.” But branching out can be difficult. Why? Because trying new foods is expensive, time-consuming and risky. What if it doesn’t taste good? It’s money down the drain, not to mention a dull and very disappointing meal.

That’s no way to live.

And that’s where Goodies Co. comes in.

For just a $7/month subscription including taxes and shipping, the Goodies Co. box features 5-8 delicious new foods hand-picked and delivered directly to your doorstep. You get to receive a surprise every month, sample new foods and expand your palate without breaking the bank. We always try to include a wide variety of foods, from healthy, organic, artisan, and international.

Let Goodies Co. show you how good life can be.

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