It's Amazon, Stupid
GDA Staff -- Gifts & Dec, November 28, 2011
Warren Shoulberg Publisher/Editorial Director
Forgive me, but, duh, what took you so long?
Amazon went live on the web in 1995 - that's 16 years ago, but who's counting? - and even if the first five or so years were pretty much under the radar, it's been a good decade since they have become a game-changer in the marketplace. And even if you say some of that decade was spent concentrating on books and CDs and videos, you still have to give them five years since they've broadened their merchandise mix to include a wide variety of products, including a fair amount of home textiles, either directly or as a host for third parties.
Yet, it's only been the past few months that Amazon is truly starting to show up on the radars of some of the major players in this business. I've heard from a number of suppliers that a couple of key retailers - the names are being held to protect the clueless - are suddenly asking whether Amazon is going to carry this product or if they are buying that program. That's a big change from only a year or two ago when retailers were much more hung up on the competition in their own channel of distribution versus a virtual competitor.
All of this reminds me of another situation more than half a century ago in an entirely different industry. Back in the early 1950s, the railroads were the preferred long-distance transportation choice in this country. They were it, and they spent most of their competitive juices wondering what the other railroads were doing. New York Central was consumed with the Pennsylvania Railroad and vice versa.
The railroads never saw the airlines coming. They kept thinking they were in the railroad business, not the transportation business. It's a classic B-school case study, but the result of that thinking is irrefutable: In less than a decade the railroads were pretty much through and the airlines dominated the long-distance travel business.
Conventional retailers are guilty of much of the same thinking. They may have started up online units within their operations, but by and large they have failed to recognize Amazon as a distinct and unique competitor. They so far have been unable - or unwilling - to make the commitment to compete head-to-head with Amazon.
They don't have the same online shopping experience or pro-active merchandising capabilities. They don't have the back-end distribution network necessary to have Amazon-standard order fulfillment levels. And they have failed to adapt the aggressive - not to mention, progressive - techniques like annualized flat shipping packages that are a backbone of Amazon's strategy.
Just as Wall Street often does, the general merchandising community continues to fail to understand how Amazon is changing the marketplace.
But they will.
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