It's a state. It's a city. It's a country. It's a movie producer, a real estate broker, a publisher, a wholesaler, a fashion house, a distributor of anything and everything. It's really anything you want it to be. However, unlike Superman who could finally be seen and recognized, Amazon is still in the fog of the unknown. Nobody knows how to accurately and succinctly describe it. However, since it sells stuff to consumers, it is most often referred to as a retailer, and therefore, traditional retailers' biggest fear. Described as Pac-Man in a prior Robin Report article, chomping up share of market in multiple industries, Amazon is now pushing $80 billion in revenues and growing at 20+ percent a year.
On the other hand, e-commerce start-ups who display positive growth trajectories have been more than happy to get acquired, or to merge with Amazon. And, the range of such deals over the past many years just confirms the fact that Amazon is an all-inclusive, 'boundary-less' world of whatever one might want or need. The list is endless, ranging from drugstore.com, to pets.com, wineshopper.com, audible.com, shopbop.com, foodista.com, to zappos.com. And, these are just a few.
Ironically, or brilliantly, Amazon is most often operating with a red bottom line. This of course is simply absurd, counterintuitive and unacceptable for most traditionally grounded businessmen, particularly since this has been CEO and founder, Jeff Bezos' 'MO' from Amazon's day one. How does he get away with it? Well, Wall Street not only accepts it, they totally understand that it's an expansion and growth strategy without end, not limited to any product or service category, to any consumer segment, to any geography. It is simply a distribution platform, able to distribute anything and everything to anybody and everybody, anywhere in the world, and soon to be distributed in one day.
So, Bezos continues to take any left-over cash from revenues and throws it at new business launches. And Investors have learned to not only expect and accept it, they, well... invest in it.
And, while Walmart is still the world's largest retailer, and recently declared that their approximate 4500 stores are indeed, distribution centers, they are so established in the minds of consumers as a traditional brick and mortar retailer, selling basic, commoditized 'baskets' of products and services at rock bottom prices, that it would be near impossible to transform itself into the Amazon model.
Having said that, we do not count the 'behemoth' out, do we? Pushing towards $500 billion in sales, with a mere 1-2 percent (roughly $5 billion) of sales generated online, its digital future should be its oyster. However, given its established business model, with a narrower range of product or service avenues for growth compared to the 'boundary-less river' of Amazon, I just don't see a horse race beyond the point when Amazon reaches Walmart's size and begins to pull away.
And, for the rest of you, regardless of the industry you are in, your product or service category, your position as luxury or discounter, wherever you are located geographically, just simply expect and accept the fact that Amazon is going to be eating your lunch for a long time.
And, believe me. They will open physical buildings, commonly called stores, probably sooner than later. Further, those stores, 'pods' or showrooms, or whatever you wish to call them, will offer a level of personalization/localization that you simply cannot achieve. Why? Because they have bigger data than anybody else on the planet and they know how to mine it.
Robin Lewis has over forty years of strategic operating and consulting experience in the retail and related consumer products industries. He has held executive positions at DuPont, VF Corporation, Women's Wear Daily (WWD), and Goldman Sachs, among others, and has consulted for dozens of retail, consumer products and other companies. He is co-author of The New Rules of Retail (Palgrave Macmillan, 2010). In addition to his role as CEO and Editorial Director of The Robin Report, he is a professor at the Graduate School of Professional Studies at The Fashion Institute of Technology.