Unless you’ve been living under a rock, you should have heard about Amazon by now. Most of us know it as the company that was founded by Jeff Bezos in 1994 to sell books online, mainly textbooks for college students. The vision statement for Amazon has been To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online for the longest time. Amazon wants to conquer and disrupt industries through e-commerce, let’s take a look at what the company has done and where it’s going.
Now Amazon works by breaking the world of commerce into smaller parts which they call “primitives”. The business ones are: servers, databases, warehouses, delivery trucks etc and the consumer ones are: books, music, clothing, television shows etc. Using that strategy, the company has managed to expand its online store to sell electronics including their own devices like Amazon Echo, Kindle; furniture; jewelry; and almost anything you could want. This has made Amazon one of the largest online stores.
To conquer some of the business primitives, the company was an early adopter of clouding computing and opened up a subsidiary called Amazon Web Services (AWS). AWS captured the market for people who want to rent servers, access storage, build cloud based applications or get services offered by a typical data center. Since they were early to the game, they have a head start and that has resulted in their AWS services being one of the best offered on the market.
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Another thing that the company offers for businesses is Amazon Pay, an online payments processing service similar to PayPal. Recently, they partnered with Shopify, a popular solution for building e-commerce stores, to provide account management, planning support, technical resources, training, and more. They also rent out some of their warehouse storage space to businesses.
Things are going pretty well for Amazon in terms of serving businesses but when we come to the consumer side, things are still shaping up. The company has managed to get a cut of the streaming revenue through its Prime Video which offers original and exclusive Amazon television shows as well as popular movies.
Two of the things that Amazon has struggled to sell to people just as much as they have sold books, music, toys, computers etc are clothes and grocery. Let’s take a look at grocery. Even though the company launched Amazon Fresh in 2007, a grocery delivery service currently available in some U.S. states, London, Tokyo, and Berlin, they didn’t have a large enough distribution to disrupt the brick and mortar stores that many have come to love. That is until now.
Last week, Amazon bought Whole Foods for $13.7B in cash. Why is that a big deal? Whole Foods, founded in 1978, is widely credited with helping to make organic food go mainstream. The company now has about 87,000 employees and more than 460 stores — mostly in the U.S., however, Whole Foods has also expanded to Canada and the U.K. So they’ve bought a big brand and a large distribution network.
When you combine two powerful brands, you’re bound to come up with something special. Besides that, they now have access to a large data set and if there’s one thing companies are starting to realize now, it’s that data is power. You can use that data to learn, plan and even predict the habits of consumers.
I mentioned clothes earlier, before we talk about that, let’s take a look at Amazon Prime. Jeff Bezos says: Amazon’s goal is to make it ‘irresponsible’ to not be a Prime member. Woah, this thing must be special right. Yes it is and it’s a very clever system. When building software that has a user interface, the golden rule is to not make the user think. Simple, whatever you do, it should just seem natural and flawless. Amazon Prime is that, it offers members benefit such as FREE Two-Day Shipping for eligible purchases, unlimited streaming of movies and TV shows with Prime Video, and the ability to borrow books from the Kindle Owners’ Lending Library.
I believe Prime is what will make Amazon conquer any industry if they’re smart about it. On 20 June, they announced Amazon Prime Wardrobe. This leads us to how they’re going to try and make people think less about buying clothes and just do it. The service allows Prime members to pick at least three items, and up to 15, from more than a million Amazon Fashion options, including clothes, shoes and accessories for kids and adults.
The clothes that you pick will be delivered to you for free and you don’t pay for them yet. You get to try on the clothes for seven days and if they don’t fit or you don’t like them then you can return them. So you only pay for what you keep and for the more items you keep, you get a discount. When it launches, it will also be free to prime members so no additional costs to use the service.
To some this might sound odd or weird as to why you’d allow people to do that but it is about removing the barriers that limited people from buying more clothes on Amazon and making it more convenient. It’s certainly possible that Amazon will bring some type of Prime Grocery with the same discount features and convenience to maximize its new acquisition of Whole Foods.
With their experimental Amazon Go shop, which allows people to just walk in and grab what they want and walk out, Amazon is starting to disrupt the way people buy grocery just like it did the way with books etc. They’re are also leveraging human nature, Amazon has discovered that people are busy nowadays and very few like the pain of walking around a shop looking for what they want and then have to wait in line etc.
The only big retail markets that Amazon hasn’t touched are cars and houses. I wonder how they will take on that challenge but at this pace, they are already getting a piece of almost every pie on the market. It’s probably going to take some time before Amazon’s actions impact Zimbabwe.
However, that shouldn’t stop some people interested in e-commerce from looking at what the company is doing, learning from it and creating e-commerce solutions tailored for Zimbabwe. Since we are already using “plastic money”, I still wonder why e-commerce hasn’t reached its true potential locally.