Amazon & it’s bold experiments!

Jeff Bezos writes an annual letter to his shareholders which is an amazing lesson for any business. He always attaches a copy of his original 1997 letter to reiterate that even today it is Day 1 in his business. He believes that “A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades. When you find one of these, don’t just swipe right, get married”. Here is a link to one of his letters:

http://bit.ly/2eC3NPt

Anyone who thinks Amazon is just another online retailer isn’t paying attention. Amazon is constantly experimenting. You have to compare your business to Amazon & ask how many experiments did I run today & how many of those did I scale up?

In comparison, most legacy companies love structure & defined process. They test few things after a lot of shortlisting & then test them to scale up. They measure them vs financial returns metrics like IRR hurdle rates & only scale up those that pass financial metrics. I have nothing against this rigor. What I believe is that the metrics need to change. Companies must allow far more experiments to happen & measure the one’s which customers start to vote for & then change the system to understand how to scale them.

And mostly Amazon experiments are about how to provide more value to its customers.  Everything in this list of customer-facing projects that set Amazon apart started with experimentation:

  • Amazon 1-Click,
  • Mechanical Turk,
  • Amazon Marketplace,
  • Customer Reviews,
  • Amazon Recommendations,
  • Amazon Wish List,
  • Amazon AutoRip,
  • Amazon Storyteller,
  • Amazon Studios,
  • the Kindle line of eBook readers,
  • Print on demand,
  • Amazon Cloud Drive, and
  • Kindle Direct Publishing.
  • And of course, AWS lives on innovations:

I would like to talk about two Amazon experiments:

  • Courage to change pricing:

At one of Amazon’s meetings, Jeff Bezos said that the company’s goal is to make Prime benefits so numerous and valuable that it’s irresponsible not to be a member. Wow, that’s almost a challenge to consumers to become more responsible!!

Amazon has been experimenting with physical retail stores since 2015. Though their efforts have mostly been experimental, there are lessons in it for Brick & mortar” retailers.

Customer loyalty is much more than a Loyalty program. Many Retailers launch loyalty programs but over time they are not able to clearly attribute the success of these programs. There are vague references to what percentage of sales is attributed to the Loyalty program but no clear mention of how much of that sale comes from repeat customers. The typical approach to customer loyalty shouldn’t end with the launch of a program, emphasizing discounts and offers. Rather it should signal the beginning of a strategic intent: the desire to building a relationship of value to the customer. Companies need to be loyal to customers & not the other way round.

Making significant operational changes is not easy.  Cashiers at Amazon’s physical bookstores now ask each customer the same question: Are you a Prime member? I know that we do get asked this question at many retailers we visit-Shoppers Stop Customer care associates ask if you are a member of the First Citizen program. But what is radically different is that the Prime customer actually gets far more value. That’s because Amazon recently implemented a new pricing structure at its bookstores that could signal a broader strategy for the company’s brick-and-mortar retail expansion.

At the Amazon bookstore in Seattle’s University Village, Prime members who pay $99 for an annual membership— or $ 10.99 per month— can purchase books and other items at the same price that they sell for on Amazon.com.

However, if you’re not a Prime member, you pay the list price

.

  • Bringing in new data, reading your car license plates: Identifying cars would help it speed up pickup times at brick-and-mortar stores. Amazon knows that to truly win the retail wars, they have to attack the grocery segment & provide significant value for consumers. One of Amazon’s many ambitions for the next version of its grocery-delivery service, Fresh is to innovate like crazy. The company will set up a series of “convenience stores,” the Journal reports, where it will sell basic goods like milk, produce, and meat. For customers seeking a quicker checkout, Amazon will soon begin rolling out designated drive-in locations where online grocery orders will be brought to the car, the people said. The company is developing license-plate-reading technology to speed wait times.

    In India, the government is providing the digital data of registered vehicles to banks, insurance companies etc. as a paid service. Here’s the link to apply for the same: https://vahan.nic.in/paidnrservices/faces/welcome.jsp.

    Can we pick up video feeds from Mall parking lots and automate the process of picking up the license plate dos from the video feeds & then hit the Vahan site & get the name of the owner & car make.

    Post that we keep deduping it with our client databases to get matches & then append the information.

    Amazon is teaching companies to experiment & learn how to build value.Hope legacy companies are listening!

     

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