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The Age of Amazon Lesson 2: Commoditized Products and Services

https://www.youtube.com/watch?v=hrNXDpxgCVs

If you offer commoditized services and products, expect to be treated as such by your customers—and by Amazon.

Online shopping isn’t new. I can recall seeing ads for online merchandise on television 40 years ago—call this toll-free number and order today. Amazon certainly isn’t the only online merchant out there. Today, there aren’t many products you can’t order online.

But, the evidence seems to suggest that, once again, today’s merchants who wail that they are being overwhelmed by Amazon are in that position because they haven’t been paying attention to their customers and the general retail environment. Their leaders were still playing by the old playbook of locating in or adjacent to large shopping malls, with highly homogenized products, and advertising in many of the same channels that have always been used.

lesson 2

Walmart countered by investing more in their stores, acquiring numerous firms to build their own online shopping experience, offering pick-up and delivery services of the goods thus purchased and slowing down the addition of more stores. The result has been several quarters of increased, same-store sales (even though margins have suffered). Others are doing the same thing.

Regional Good Thriving

Then, there was a story printed in The Wall Street Journal in late December about Wausau, Wis., where a local mall has died, yet downtown merchants with mostly specialty regional goods are thriving.

Amazon and others like them can deliver on the sale and delivery of a wide range of commodity-like, homogenous products. If that is your niche, you’ll likely need to partner with Amazon. But, that leaves the door open to numerous niches where consumers like the personality of specialty products (and services) and the experience of going shopping for them. Amazon is an amazing company with its wide range of products and services and an ability to deliver those goods. Even Amazon admits there is just so much they can do with specialty goods and that last mile of delivery. Anyone for opening their front doors to an Amazon delivery service when you’re not home?

Few buy high-end specialty items from or through Amazon. For the great majority of shoppers, there’s still the experience of browsing, either online or in person. But merchants that want to compete will have to improve their own offerings, and add something special to both their product lines and the experience of actually shopping with them.

Lesson: To compete in today’s retail environment, whether in goods or services, the product or service needs to be highly customized to one’s consumers. Not only does the product itself have to be highly customized, but the delivery of theexperience must be as well.

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