If you think this is yet-another post on Platform as a Service, you’re wrong. I leave all that complicated stuff to The Brain.
I’ll be talking about much simpler things here:
- PaaS – Pasta as a Service
- TaaS – Tea as a Service
- GaaS – Groceries as a Service
No kidding. Well, maybe a bit, but this is about real business. Given our focus @ CloudAve it’s no wonder we tend to think of Amazon as the key Cloud Computing infrastructure provider, and rarely ever discuss the company’s roots as retailer … or I should say as the company that revolutionized retail forever. That’s more the focus of Fortune’s excellent article: Amazon’s next revolution, discussing the early days as Earth’s Biggest Bookstore, then moving on to other businesses, and now Kindle-izing our reading habits while revolutionizing the publishing industry.
So let’s talk about retail, from the consumers’ point of view, examining how Amazon changed our shopping habits and is on the way to becoming the default vendor for just about everything we buy.
Do you know how many product search / comparison engines there are today? I don’t. A few years ago if I wanted to find something online, I probably used those comparison engines – then a funny thing happened. I noticed that I would end up @ Amazon – direct or via a Marketplace vendor – anyway. Might as well stop wasting time… nowadays I will still research major electronics, but for less than $100 purchases I will simply jump to Amazon. They do not always have the best price, but often enough, and the convenience of shopping from a trusted source, safe delivery and excellent service (no-questions-asked refund when my netbook developed a problem) makes it a no-brainer.
We’re also converting our real-world shopping to Amazon: would you spend a few hours driving around looking for a stupid little spare part, or just order it online, even if shipping makes it a few bucks more expensive? (i.e. is two hours of your time worth $5?) I’m clearly not the only one: the UPS truck, formerly rarely seen in residential areas makes its stops in my street every day now. But back to Amazon, here’s a trick to save on shipping: a lot of products are eligible for Free Super Saver shipping when you spent $25. How many times did you search for a penny-item to buy when your total came to $24.19? Add the non-immediate purchases to your “shopping list”, then bundle them with a larger purchase next time.
And now (actually for quite a while) there is another option to get free delivery and shave off an additional 15%: Subscribe and Save. Who would have thought one day we’d be subscribing to groceries? But it makes sense when it comes to regularly consumed items.
I like my pasta low-carb. There are very few truly low-carb pastas on the market, and they taste like XXX ( censored) – except Al Dente Carba-Nada. It’s hard to find and is fairly expensive, retailing anywhere from $3.99 to $4.99 and by the time you figure shipping, it’s above $5 for a small bag. Except when you subscribe to 6-packs on Amazon: the total, including shipping comes down to $2.59 per bag – still expensive, but almost half of what I find elsewhere, and I don’t have to worry about replenishment.
I have subscriptions for tea, sunscreen and several other products that are not easy to find in regular stores, I am using regularly, and the subscription price is favorable @ Amazon. Subscription does not mean hard commitment: you can adjust the frequency of delivery, skip individual shipments, request immediate shipment and even cancel without any penalty (phone companies better pay attention!).
In short, Amazon has become my default vendor by good price and convenience.
Now with all our purchases @ Amazon and all our information @ Google – is there a trend here? Perhaps the GoogleZon is not far after all…
Great article. I think you should have mentioned Prime. That did it for me, once I got Prime – I really started ordering things from Amazon – though I was disappointed to get my two windshield wipers in separate boxes.
Great observations. A couple of thoughts into the mix:
1) Reviews are of the paramount importance. Many buyers visit Amazon for reviews when they purchase something new, even if they are going to purchase at a different store.
2) Amazon lets you sell a used book, but doesn’t let you sell a used HP Touchsmart. When Amazon opens that feature, it’s going to be a huge change in the market.
3) eBay has to think hard and should benchmark Amazon a lot (reviews, aggregation of product offers on one product page). Though eBay today doesn’t look as agile as Amazon.
4) WalMart.com has potential to compete with Amazon, but they are moving slower than needed.
They need to improve reviews, they need to speed up their free site-to-store, and they may even try to open used good sales before Amazon (though I don’t they are agile enough).
5) Google is taking more and more ground from comparison shopping in a lot of categories with integrated search experience. To make things even harder for them, their traffic mostly comes from Google (SEO+SEM), so they are under Google’s mercy. It’s also hard to innovate for comparison shopping web-sites, because their short-term goal is to drive traffic _away_ from their web-site (to get commission from e-commerce sites). If they don’t do this aggressively enough, they will lose in SEM wars.
P.S. This subjective comment comes from a person who amongst other things has dried blackberries and Zola Acai juice regularly delivered by Amazon;-)