Amazon's New Customer

["Dave Farber" <farber () gmail com>]

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: June 20, 2017 at 11:57:19 AM CDT
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] Amazon's New Customer
> Reply-To: dewayne-net () warpspeed com
>
> [Note:  This item comes from friend David Rosenthal.  DLH]
>
> Amazon's New Customer
> By Ben Thompson
> Jun 19 2017
> <https://stratechery.com/2017/amazons-new-customer/>
>
> Back in 2006, when the iPhone was a mere rumor, Palm CEO Ed Colligan was asked if he was worried:
>
> “We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not 
> going to just figure this out. They’re not going to just walk in.” What if Steve Jobs’ company did bring an iPod 
> phone to market? Well, it would probably use WiFi technology and could be distributed through the Apple stores and 
> not the carriers like Verizon or Cingular, Colligan theorized.
>
> I was reminded of this quote after Amazon announced an agreement to buy Whole Foods for $13.7 billion; after all, it 
> was only two years ago that Whole Foods founder and CEO John Mackey predicted that groceries would be Amazon’s 
> Waterloo. And while Colligan’s prediction was far worse — Apple simply left Palm in the dust, unable to compete — it 
> is Mackey who has to call Amazon founder and CEO Jeff Bezos, the Napoleon of this little morality play, boss.
>
> The similarities go deeper, though: both Colligan and Mackey made the same analytical mistakes: they mis-understood 
> their opponents goals, strategies, and tactics. This is particularly easy to grok in the case of Colligan and the 
> iPhone: Apple’s goal was not to build a phone but to build an even more personal computer; their strategy was not to 
> add on functionality to a phone but to reduce the phone to an app; and their tactics were not to duplicate the 
> carriers but to leverage their connection with customers to gain concessions from them.
>
> Mackey’s misunderstanding was more subtle, and more profound: while the iPhone may be the most successful product of 
> all time, Amazon and Jeff Bezos have their sights on being the most dominant company of all time. Start there, and 
> this purchase makes all kinds of sense.
>
> Amazon’s Goal
>
> If you don’t understand a company’s goals, how can you know what the strategies and tactics will be? Unfortunately, 
> many companies, particularly the most ambitious, aren’t as explicit as you might like. In the case of Amazon, the 
> company stated in its 1997 S-1:
>
> Amazon.com’s objective is to be the leading online retailer of information-based products and services, with an 
> initial focus on books.
>
> Even if you picked up on the fact that books were only step one (which most people at the time did not), it was hard 
> to imagine just how all-encompassing Amazon.com would soon become; within a few years Amazon’s updated mission 
> statement reflected the reality of the company’s e-commerce ambitions:
>
> Our vision is to be earth’s most customer centric company; to build a place where people can come to find and 
> discover anything they might want to buy online.
>
> “Anything they might want to buy online” was pretty broad; the advent of Amazon Web Services a few years later showed 
> it wasn’t broad enough, and a few years ago Amazon reduced its stated goal to just that first clause: We seek to be 
> Earth’s most customer-centric company. There are no more bounds, and I don’t think that is an accident. As I put it 
> on a podcast a few months ago, Amazon’s goal is to take a cut of all economic activity.
>
> This, then, is the mistake Mackey made: while he rightly understood that Amazon was going to do everything possible 
> to win in groceries — the category accounts for about 20% of consumer spending — he presumed that the effort would be 
> limited to e-commerce. E-commerce, though, is a tactic; indeed, when it comes to Amazon’s current approach, it 
> doesn’t even rise to strategy.
>
> [snip]
>
> Dewayne-Net RSS Feed: <http://dewaynenet.wordpress.com/feed/>



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