When the subject of innovation is raised, Amazon is on the top of everyone’s lips.

Story highlights:

  • Trump tells Amazon to keep on innovating; Amazon drives Warren Buffett to exit 90% of Walmart shares
  • Amazon Prime, The Loyalty Subscription business & Alexa, the intelligent personal assistant, helps Amazon own the home
  • Amazon Go, coupled with blue-prints for a full service supermarket run by robots shows Amazon redefining experience…and convenience
  • AWS is the leader in open source, game changing technology that is used by the best, & available to all

Even incoming US President, Donald Trump, recently said, “We want you (folks) to keep going with the incredible innovation”

And innovate they do for breakfast.

This year, Amazon is launching in Australia. Local retailers are singularly underprepared for the Amazon Tsunami. According to a Nielsen survey conducted last month 75% of Australians aged over 18 say they are interested in Amazon Australia and 56% are likely to purchase from its Australian site

But it’s when we take a look at the full Amazon ecosystem that we get a better glimpse of its awesome scale and what its game-changing innovation will mean for the future of retail

Five key takeaways from our recent analysis include:

1. It’s the Age of Premium Content

Amazon Prime

Gaining Share of Wallet Now Means Share of Hearts & Minds….A few Australian media-backed start-ups have given it a go. Netflix was the first to make us really look.

If you live in the US (or happen to have a VPN), Amazon Prime steps it up another level with access to premium video content, streaming music, a wide catalogue of e-books and free delivery on all Amazon deliveries (within the US). All for US $99 per year

Now that’s a game changer. And also why 44% of US households are signed up (70% with household incomes $112l+)

Retailers need to think about their brands can engage with consumers at a higher level with premium content that engages hearts and minds

2. The Next (Age) Is All About Automation

Alexa copy

We’re all looking for more me-time.

Amazon Alexa is here to gives us exactly that.

An intelligent personal assistant that is capable of voice interaction, music playback, making to-do lists, setting alarms, streaming audio, and providing real time information like weather & traffic.

Alexa can also control smart devices using itself as a home automation hub.

She’s just waiting for everyone else to catch-up

Like LG Smart InstaView Refrigerator. Aside from its 29-inch translucent touchscreen and interior fridge cams, it also boasts full Alexa functionality.

In addition to the usual tasks like news and weather updates, it can lend a hand with grocery orders

LG Alexa

3. In-store Will Become Hyper-Real

Amazon Go

Whether it’s immersive experience or ultimate convenience, in-store will become hyper-real.

Amazon Go is on the ground in Seattle and showing us hyper-convenience without the checkout. (customers check-in with their app, & are automatically billed on check-out)

The full service supermarket is their next frontier with a widely rumoured robot run format set to unleash a new wave of disruption.

Amazon Robots

Nothing will ever be the same again

4. Product Will Always Be King!

Amazon first showed the world its awesome scale with the depth and breadth of its book offer. Amazon turned the books market on its head

But perhaps even more impressive, is the traction it has gotten in fashion. According to Bloomberg, Amazon recently passed Macy’s as US’s top online fashion retailer, and is likely to pass Macy’s in total fashion sales this year.

Retail Sales

It’s a huge shakeup for the apparel industry, which has long been dominated by department stores like Macy’s, Nordstrom, and JCPenney, as well as big-box retailers including Walmart and Target.

According to a survey conducted by Morgan Stanley last year, around 58 percent of shoppers purchased clothing on Amazon over the previous six months—more so than any other retailer in the US

(As a side note, Amazon are one of the few liberally minded retailers still stocking Ivanka Trump’s line of fashion & accessories. Amid calls from#GrabYourWallet to boycott, Ivanka’s perfume has hit No.1 on the list of Amazon’s best-selling fragrances)

Amazon now has lingerie firmly in its sights with plans to launch its own lingerie range with bras for $10 or less.

Amazon Lingerie

Though details are scarce, Amazon already launched a similar project in Europe under the name Iris & Lilly.

The brand’s U.S. line, the Wall Street Journal reports, will likely debut within the next few weeks

Watch out, Victoria’s Secret (and every other lingerie retailer on the planet)

5. The Democratisation of Technology Is The Great Enabler

AWS Logo

Originally built to service the Amazon behemoth, since 2006 AWS has offered a suite of cloud-computing services for the rest of the world to use.

AWS now boasts over 1 million active users every month in 190 countries, and includes the who’s who of the Fortune 500.

Revenue from AWS is now approaching $10bn

AWS sales

Source: https://www.nextplatform.com/2016/05/02/big-ecosystem-growing-clouds/

AWS offers more than 70 services entirely on an IAAS, PAAS & SAAS basis.

From compute, storage, networking, database, analytics, application services, deployment, management, mobile, developer tools to tools for the Internet of things, AWS can answer it all.

Updates that once took local customer, Qantas, months to deploy to their website, now take just 30 minutes.

Open source & within easy reach of the smallest start-up, innovation is now within every retailer’s grasp

 

In its 2016 annual report, Amazon notes it had become the fastest company ever to reach $100 billion in annual sales. Also in 2016, Amazon Web Services reached $10 billion in annual sales … doing so at a pace even faster than Amazon achieved that milestone.

They both share a distinctive organizational culture that cares deeply about and acts with conviction on a small number of principles:

  • Customer obsession rather than competitor obsession
  • Eagerness to invent and pioneer
  • Willingness to fail
  • The patience to think long-term, and
  • The taking of professional pride in operational excellence

As the online and offline worlds continue to converge, there is no doubt Amazon will continue to be a driving force of change.

Amazon insiders claim the company will roll out Amazon Prime Now in Australia this year and launch Amazon Fresh six to eight months later. Amazon Fresh bricks and mortar stores would follow in 2018.

In the face of Amazon, Warren Buffett’s Berkshire Hathaway Group last week dropped 90% of its Walmart shares, referring to Amazon as “a big, big force…it has already disrupted plenty of people and it will disrupt more”

Amazon vs Walmart

Now is the moment Australian retail faces its moment of truth.

Local retails can look Amazon in the eye, and find a way to reply. Or they can ask their finance departments to start accounting for a sharp decline in future sales

Author Nerida Jenkins

More posts by Nerida Jenkins

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