Showing posts with label Amazon. Show all posts
Showing posts with label Amazon. Show all posts

Wednesday 2 April 2014

Amazon penetration....

Yesterday I took delivery of a package from Amazon.

It was due between 1230 and 1330 so at 1130 I did a parcel-check to find that ‘Leo’ was currently four streets away on delivery 30, and still had 33 deliveries to make before reaching me at 1245…

Scarey….in terms of both coverage-density and numbers of their deliveries…

Tuesday 1 April 2014

Frictionless commerce - what other businesses can learn from Amazon

With the move to smoother, quicker, and easier transactions using a combination of f-commerce and mobile payments, to virtual wallet options and NFC, frictionless commerce is becoming widespread.

However, whilst retail may appear to be leading the way in many cases, it can be easy to underestimate the lead that Amazon has gained over all other players...

Using data collection and one-to-one correspondence that would be intrusive were it not the fact that it is so accurately focused on real need, Amazon has become an indispensable buying-tool for many...

Moreover, by perfecting their 1-click approach - and combining it with Prime status to eliminate delivery costs - their model optimises impulse purchase

In fact, in my own case, I have had to remove the Amazon UK icon from my home page in order to cause me to think a fraction longer about real need while I source the site via Google...

However, as online practitioners strive to emulate their rival's 1-click KPI, Amazon's real USP has to be their frictionless returns policy...

In fact, any aspiring online operation has to experience a heartbeat-missing moment when they realise that Amazon's returns process is easier than 1-click, the ultimate online standard... 


Wednesday 5 March 2014

Amazon signs UK deal with Mexican food company, a Morrisons opportunty?

News that Amazon UK have a deal to supply Mexican foods to the UK market, begs the obvious question as to how soon they will want to establish a Bricks & Mortar presence?

Mexgrocer.co.uk will sell 100 products, such as margarita mix and chilli sauce, on Amazon.co.uk, adding to thousands of dried foods on the Amazon site.

The online retailer has been expanding its Amazon Fresh service, which delivers fresh groceries to customers’ doors, across the US in the past year, and is believed to be considering bringing it across the Atlantic.

And, given the issues Morrisons are dealing with, coupled with the Ocado link and a market capitalisation of £5.48bn, would an acquisition be totally out of the question?

Amazon tests physical retail with ‘Kindle Kiosk’ vending machines

                                                                                                                   pic: Geekwire

Geekwire recently reported* that Amazon is experimenting with standalone, automated 'Kindle Kiosk' vending machines in selected airports and shopping malls in the US.

Whilst the machines sell everything from the $379 Kindle Fire HDX to a $20 Kindle PowerFast adapter, in addition to Kindle e-readers and covers.

The experiment signals the company’s desire to expand beyond online sales and third-party retail stores, directly selling its hardware and accessories in physical locations. It’s also notable in the context of past predictions that Amazon might want to buy Coinstar and Redbox parent Outerwall, the automated vending machine company based in Bellevue. That was pure speculation, but such a move would significantly increase Amazon’s physical footprint.

Amazon - with its low margins and love for automation - would prefer a vending machine to a brick & mortar outlet, at this stage, but as far as the UK is concerned, the current issues at Morrisons might make the grocer a useful acquisition to power Amazon's next move towards the consumer....

As far as vending assortment is concerned, whilst it’s not clear how many people will feel comfortable purchasing something as expensive as a $379 tablet from a vending machine, at $69, the standard Kindle e-reader could be an impulse buy for someone preparing for a long flight.

However, the real pay-off for Amazon has to be the subsequent sale of ebooks for new users, and obviously other impulse/distress possibilities from the rest of their portfolio...

* See 21 additional pics here

Tuesday 28 January 2014

When online meets real world - how import restrictions are raising the bar...

With different motives, some governments are trying to slow down the development of imported online purchases.

As reported in the Financial Times, Russia, one of the world’s fastest-growing e-commerce markets, has imposed new customs regulations - submission of some original documents and credit card payment records - to hinder courier deliveries to private customers. DHL and FedEx are reported to have suspended express deliveries from abroad to individuals in Russia because of extra paperwork on all parcels for personal use, regardless of shipment value.

Currently just 2% of Russian retail sales are conducted online, but that is expected to rise to 5%, more than tripling the size of the online retail market by 2015, according to Morgan Stanley.

Incidentally, if you think the Russian restrictions are bad, Argentina goes one better, albeit in an attempt to cope with falling levels of foreign currency reserves…  Under the new rules, shoppers can make just two purchases each year from foreign online and mail-order companies. Any purchases beyond that will be treated as imports, and will require extensive paperwork such as a signed declaration to the customs office in advance, before they can collect their packages, for each international purchase.

Given their pragmatism, it is probable that Amazon will escalate their operation in Russia to restore the simplicity of its business model, and possibly an aggregator role to provide an Amazon  route into Russia for those who cannot, or will not, play in the customs ball-park…

…while the authorities have full access to internal traffic for tax purposes…

Friday 24 January 2014

Amazon Anticipatory Shipping, before you order...

                                                                   pic: Retail Wire
Following their Christmas drone-delivery idea, Amazon gained a patent last month for what it calls "anticipatory shipping,'' the Wall Street Journal reports.

Amazon, the Journal reported, says it may box and ship products that it expects customers in a specific area will want, based on previous orders and other factors it gleans from its customers' shopping patterns, even before they place an online order.

Among those other factors: previous orders, product searches, wish lists, shopping cart contents, returns and other online shopping practices.

Once in transit, the packages would theoretically wait at the shippers' or Amazon's warehouse hubs or on trucks until (and if) an order arrives. In some cases, partial street addresses or zip codes will be filled out with the remaining pertinent details — name, rest of address — completed once the order arrives.

Amazon has worked to cut delivery times as a way of encouraging more orders and satisfying customers, such as by expanding its warehouse network and making some overnight and even same-day deliveries.

Amazon didn't estimate how much delivery time it expects to save, or whether it has already put its new system to work, but the initiative clearly provides a new hurdle for those who regard Amazon as competition – and anyone who thinks that they are in the game by simply setting up an online service…


Monday 2 December 2013

Amazon 30 mins delivery by DRONE - in Bezos dreams?



Jeff Bezos has announced the online retailer has secretly been testing drones that can delivery packages directly to people's doors.  However, the project is at least five years from reality due to still-to-be-determined FAA regulations.

As you know, an octocopter is a type of rotorcraft - or drone - that is powered by eight rotor helicopter blades. Each of the arms are operated by their own motor. For this reason they are designed and used to lift 'heavy' objects. It is also makes them less likely to breakdown if there is a problem with one of the blades. Amazon say their self-made octocopters will be able to carry packages weighing up to five pounds, which accounts for about 86% of the items the company delivers.

Whilst the drones may be a PR stunt, and selling books online seemed  a 'no-go' a few years ago, Jeff's drone-dreams may become a nightmare for competitors...

...leaving time for a few what-ifs for those that feel they can still stay in the game...?



Thursday 21 November 2013

Amazon Expanding Its Own Private Label Offering to Supermarket Goods?

Recent postings by Amazon give another reason for keeping an eye on job listings…

Allthings D report that one of the listings, for a financial analyst, mentioned the “launch of the Private Label Business in Consumables.” In another, for a “Senior Product Manager, Consumables Private Label,” Amazon said it is looking for the new hire to help “launch new high quality Amazon-branded products to our global customers.”

The consumables business at Amazon includes categories such as grocery, health, personal care and baby products. The AmazonFresh grocery delivery business also is part of the area.

Although Amazon private label has had a low profile to date, we believe that the ongoing recession is causing the company to mirror the growth of private label in classic retail.

Given the level of Amazon credibility, combined with its service record and responsiveness to consumer demand, the idea seems a ‘no-brainer’.

Either way, surely worth a what-if by branded and private label suppliers alike?

Hat-tip to Lisa Byfield-Green for pointing us at this news item

Thursday 17 October 2013

The Amazon approach to backhauling: from within P&G warehouses..

Each day, P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area of a joint-warehouse stocked with Pampers, and Bounty paper towels. Amazon employees then package, label and ship the items directly to the people who ordered them.

The e-commerce giant is quietly setting up shop inside the warehouses of a number of important suppliers as it works to open up the next big frontier for Internet sales: everyday products like toilet paper, diapers and shampoo. Amazon is going out to its suppliers with a program it calls Vendor Flex. By piggybacking on their warehouses and distribution networks, Amazon is able to reduce its own costs of moving and storing goods, better compete on price with Walmart and Costco, and cut the time it takes to get items to doorsteps.

Household staples have traditionally been considered too bulky or cheap to justify the cost of shipping. Americans currently buy just 2% of such goods online, retail analysts estimate. Yet even that sliver of business was worth $16 billion in 2012, according to Nielsen, who believe online sales will grow by 25% a year to $32 billion in 2015.

Having cracked the problem of bulky product shipments to consumers, why should Amazon and P&G not extend the idea to other parts of the portfolio?

With pay-offs for both parties (Amazon saving costs of bulky-storage, and P&G eliminating the cost of onward distribution) the idea has already spread to 7 P&G distribution centres worldwide…

...and with no mention of the resulting dilution of traditional multiples buying power, watch this space….

Sunday 29 September 2013

Opportunity or Threat for other retailers - (and suppliers!)?

"Amazon.co.uk:
We're Building Earth's Most Customer-Centric Company"

Source: Instant Refund notice on 'no quibbles' returned order....

Friday 16 August 2013

Helping Amazon make a profit - what will make a difference?

Graham Ruddick writes in The Telegraph that Amazon is Britain's most influential retailer, and quotes predictions that the company will be the ninth-biggest retailer in the world by 2018, despite having no stores and little profit.

This very useful and detailed article points out that the mighty Tesco has been forced to admit its biggest hypermarkets are outdated and overhaul its non-food range, Comet and HMV have fallen into administration, newsagents have installed lockers where shoppers can collect Amazon orders, and people are now reading books on their Amazon-made Kindles.

Even those retailers operating in sectors where Amazon has made little impact – such as food and fashion – are worried about what happens when it begins to take their categories seriously....

And yet, Amazon makes little or no profit, and will eventually run out of stockmarket patience… In other words, Amazon will have to meet City/Wall Street expectations in terms of ROCE, Net Margin, Stockturn and Gearing, in order to preserve its current share price.

Obviously from a NAM point-of-view, the key issues in terms of Amazon profitability are:
- Where are Amazon now?
- Where do they need to be?
- How soon?
- How can suppliers help?

Where are Amazon now?
Based on their latest accounts, Amazon key ratios are: ROCE: 4%, Net Margin: 0.9%, Stockturn: 8.6 times p.a. & Gearing: 65.4%

Where do they need to be?
Based on most other global retailers, they need: ROCE: 10%, Net Margin: 2.5%, Stockturn: 12 times p.a. & Gearing: 40%

How soon?
Whilst Amazon are obviously racing for scale and spread of categories, given global uncertainties, we would be surprised if the stockmarket did not ‘punish’ Amazon via the share price unless they show signs of delivering the above ratios in the next two years..
This means they are currently in the market for help from suppliers in driving ROCE. 

How can suppliers help?
See detailed approach here in Kamcity Library

NB. If Amazon really want to scale the dizzy heights, they need to aim at the Walmart ratios:
ROCE: 19.6%, Net Margin: 5.5%, Stockturn: 10.7 times p.a. & Gearing: 55.3%

NBNB. If you feel that these unprecedented times require a little more emphasis on demonstrating your financial impact on your major customer, why not email me on bmoore@namnews.com and find out how? 


Tuesday 6 August 2013

Amazon buys the Washington Post, Waitrose buys the Good Food Guide, same difference for NAMs?

In another sign of the unprecedented challenges newspapers face as advertising revenue and readership decline, Amazon yesterday paid $250m for the 135-year-old Washington Post, breakers of the Watergate scandal… .

In addition to the newspaper, Bezos gets other publishing businesses, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.

However, the Washington Post represents only a fraction of the company which has expanded into a stable of holdings, including education and health care services and most recently an industrial supplier. The collection of companies that make up the Washington Post is akin to that of Warren Buffett's Berkshire Hathaway Inc, which owns disparate businesses from railroads to underwear as well as a stake in the Post.

Obviously Amazon will bring innovation, a global database and leading-edge online/digital expertise to the mix, but especially consumer-focus, pace and 1-click convenience. 
Above all they will strive to replace all elements that appear to be the cause of newspaper demise, hopefully leaving untouched the core of what the Washington Post is to its readers.

In the process, Amazon, with little experience of newspapers, may happen on a long-term solution to the sector’s problems…

A pointer for traditional media, or the final threat…? 

Meanwhile, Waitose purchase of the Good Food Guide from the Which? consumer advice group, includes the website as well as the 63-year-old magazine.

In contrast with the Amazon deal, here the traffic is more two-way, in that Waitrose gains access to the receiving end of a food service culture, via an army of volunteers who inspect and rate restaurants anonymously, along with enhanced credibility with diner-consumers…

Waitrose also publishes a weekly lifestyle and recipes guide, along with a monthly magazine which will give some scale economies and efficiencies via the new purchase, apart from website synergies.

From a NAM point-of-view, both retailers have just added new dimensions to their relationships with consumers, giving them more insight into making ‘paid-for’ media work, and hopefully more appreciation and understanding of the real value of Return on Trade Investment.

It only remains for NAMs to be able to handle the resulting conversation…

Wednesday 24 July 2013

Amazon - end of the free lunches?

Today’s news that Amazon has scrapped free delivery for orders of less than £10 will come of no surprise to regular users. Indeed many will have progressed  to Prime level, where for £49 per annum, all orders have free delivery. Prime members don’t only contribute a £49 fee, they’re also Amazon’s most loyal, high-spending customers, with some analysts claiming subscribers spend $1,224 every year compared to the casual user’s $505.

Today’s free-delivery restriction will no doubt cause many of the regular, non-Prime users to sign up for the free-delivery service..

That leaves current small-time users and new users.
  • New users will ‘never’ know that free delivery existed, and may be attracted by the Amazon convenience, anyway
  • Current small time users may be a casualty of the new restrictions, but they should expect a couple of retrieval/trade-up moves from Mr Bezos...
Finally, Amazon takes a step towards meeting City needs for profitability in line with sales.

A win-win-win for all…without missing a beat…
Competitors beware… 

Tuesday 25 June 2013

The Amazon Economy - a checklist for NAMs

See this FT article on how Amazon is impacting key aspects of online and offline retailing... The FT offers links to in-depth treatment covering each of the following:

  1. From warehouse to powerhouse (Analysis: a back office infrastructure provider)
  2. How Amazon changed ecommerce (Interactive: simplifies shipping, handling and payments for small retailers)
  3. The Bezos doctrine of ruthless pragmatism (Corporate culture: a modus operandi that is pragmatic, frugal and data-driven)
  4. Amazon finds upside to sales tax payment (Delivery: paying local taxes a stepping-stone to building more warehouses for same-day delivery)
  5. How a warehouse changed a town (Employment: creating thousands of UK jobs, at a price)
  6. Amazon plays catch-up in digital media: (Competition: As books, music and movies have shifted from physical to digital, Amazon has achieved mixed results in defending its revenues from them..)

A must-read for NAMs: If you really want/need to understand the Amazon business model, links to each of the above six articles are available here.

Understanding Amazon means gaining an insight into how your role will play out in the future, because of, or in spite of, the Big A… 

P.S. Market valuation:  If you must go all the way, see the Amazon valuation calculator, a discounted cash flow model that helps illustrate how variations in key assumptions can change Amazon’s potential market value here 

Wednesday 19 June 2013

Amazon should buy Ocado, says Cantor Fitzergerald analyst

One of America's top technology analysts has said that Amazon should buy Ocado, describing the online retailer as having one of the “most advanced technology platforms” for grocery delivery in the world.

In fact, KamBlog readers will have come to this conclusion on 14th August 2012  when we wrote that Ocado’s banking issues represented ‘an Amazonian window’, and again on 26th November 2012 ‘Amazon-the-grocer moves from 22,000 to 150,000 products since July 2010’, making the M25 ‘market’ a natural test-bed…

Why now?
According to The Daily Telegraph, the Morrisons’ deal has put companies that have eyed Ocado for much of the past three years back on “red alert”, including Boots, Amazon and Carrefour, who are considering a licencing deal (a networking tip for your continental colleagues?).

Cantor Fitzergerald analyst Youssef Squali said: “We believe an Ocado deal would bring much more automation to grocery delivery within Amazon and accelerate AmazonFresh’s roll-out across the US.”

Amazon has been testing Amazon Fresh in Seattle for six years and recently expanded it to LA. It is thought to be considering entering 20 US cities.

Why it matters?
The real issue is not the fact that Amazon may be contemplating the inevitable, but that given some pointers, a NAM can be trained to recognise early signals in the market. In fact, by joining up the dots (or having them joined for her),  a NAM can sometimes have at least six months ‘warning’ of a customer move.

This time-advantage has to provide an opportunity to anticipate or even implement a strategic response while competing NAMs are surprised on the day, and have to resort to a reflex re-action…

...and the facts, figures and opportunities are all around us (especially in retailer's latest Annual Reports), all for the want of knowing what to look for, coupled with a creative ‘what if’, or two, combined with the potential synergies arising from a NAM's day-to-day relationship with the customer… 

In fact, ignoring what a retailer says about its finances has to represent one of the biggest and most dangerous tricks a NAM can miss…

Sunday 17 February 2013

Amazing Amazon: Explore the supply-chain reaction to your 1-click order, in high definition...

Amazon's warehouse in Rugeley, Staffs, is the size of nine football pitches. Inside, hundreds of people in orange vests are pushing trolleys, glancing down at the screens of their handheld satnav computers for directions on where to walk next and what to pick up when they get there. They do not dawdle – the devices in their hands are also measuring their productivity in real time. They might each walk between seven and 15 miles today, ‘a sort of robot, in human form’.

At Christmas, the people working in this building, together with those in seven others like it across the country, were dispatching a truck filled with parcels every three minutes or so. According to the FT, before they go home at the end of their eight-hour shift, or go to the canteen for their 30-minute break, they must walk through a set of airport-style security scanners....

Products are stored anywhere there is free space, with only the computer ‘in the know’.

For a fascinating insight into Amazon ‘continuous improvement’ operations, recruitment, wage rates and its positive influence on other organisations’ operational efficiency, see this comprehensive FT article.
A ‘must-read’ for any organisation that feels they have cracked their online presence development….  

In practice, Amazon’s operational bar-raising is (or should be) even more scary for online competition than their 1-click ease-of-use…

Tuesday 15 January 2013

HMV - cause of demise not just online, but good online?

With the inevitability of a slow train crash, HMV’s stakeholders have finally decided to bring down the curtain by refusing to add £300m to the pre-Christmas facility…

We have all had our personal relationships with HMV and each of us picked up different clues, but the clincher for me was going to the Harrods Christmas sale and finding that my favourite department, the HMV franchise, had been replaced by extended consumer electronics, and sadly, Elvis had finally left the building……

However, despite 75% of CD and DVD sales in the UK going online, it needs to be kept in mind that online was not the threat, otherwise even HMV could have cranked up their online offering and made the transition…

The real threat was good quality online…

For instance, many companies have developed a ‘clunky’ online presence that alienates, rather than encourages repeat purchase..

In the same way that corporate web-sites were developed with great initial enthusiasm, but soon become ‘elderly’ through lack of regular upkeep and innovation, so too an online presence needs to be refined to a point that matches Amazon 1-click in all respects, in order to stay in the game…

In practice, peoples’ mediocre online experiences make the following joke funny, but would be meaningless if all online matched Amazon…

Friday 11 January 2013

Amazon moves your old CDs into their cloud with AutoRip

Amazon’s new service  means that any AutoRip eligible CD purchased from Amazon since 1998 should automatically land in the user’s Cloud Player, free-of-charge. Starting with 50,000 of the more popular titles, the company anticipates building a library of millions of titles as they work back through customer records…

Added value, at zero-cost
Apart from being able to listen to an album before the physical CD arrives from Amazon, the service allows you to re-access albums purchased in the past 15 years… OK, so some of your old stuff you might never want to play again, even if you still have the original…..but now you have the choice..

Also, for those that like the look ‘n feel of ‘real CDs, it would not be beyond the capabilities of Amazon to build in a sleeve-note library for even more added value.

Speaking of which, just suppose Amazon decide to add books to the initiative…..

To really get a grip on how fundamental a step Amazon have taken, and the impact on traditional retailers, why not pop into your local branch of HMV (still open?) and ask for a spare copy of a CD you bought back in 1998, free-of-charge….?

Alternatively, why not have a Cloud-nine weekend, from the NamNews Team!

Monday 3 December 2012

Mega-Monday - a vision of the future?

The first Monday in December comes shortly after payday for many consumers and in recent years has consistently been the busiest day for online retailers. Today Visa predicts that online shopping will be up 21 per cent on the equivalent day last year, making it the biggest online shopping day ever in the UK, a sentiment echoed by online retailers throughout the UK.

However, what if every Monday was Mega-Monday, on the way to 24/7?

In other words, why not multiply your online sales today by 365 and consider the resulting vision of the online future....? Moreover, in an essentially zero-sum game this online growth has to be at the expense of traditional retail...

Assume also that as consumers we respond positively to the Amazonian experts as they raise our 'norm-bar' for online access and service level, making non 1-click secondary players seem clunky by comparison...

Accepting the above, what can you do omnichannelwise to realise your fair share of the 24/7 dream?

Alternatively, why not ignore the signs and be surprised by the Mega-nightmare...? 

Wednesday 28 November 2012

Top five scams impacting online xmas shoppers

According to an online shopping survey of 1,005 people commissioned by software security vendor, Kaspersky Lab, 76 per cent of participants will be purchasing Christmas gifts online this year, and each of these is potentially vulnerable to credit card theft and other scams during the holiday season.

Top five holiday scams:
  1. Christmas eCards: links to eCards may contain malware
  2. Parcel delivery notifications: fake delivery notification emails may infect computers
  3. Fake order confirmations: fake order confirmation emails causing shoppers to think someone ordered a product under their name
  4. Holiday screen savers: Holiday-themed screen saver downloads can contain malware
  5. Social media malware: include fake Facebook Christmas competitions, video links with malware, and Twitter viruses
Some tips available here

Managing online trust
Give the fragility of many shoppers confidence in online purchasing, it is vital that suppliers and retailers build consumer education and xx into their online communication. The Catch 22 is that such education needs pitching in ways that reassure rather than further de-stabilise nervous shoppers.

However, the real solution has to be strong online branding.
If in any doubt, think what Amazon has achieved by distilling all consumer reluctance into          1-Click shopping…