Home Business News Are we past ‘Peak Amazon’? Why its ecommerce model is rife for disruption

Are we past ‘Peak Amazon’? Why its ecommerce model is rife for disruption

14th Jul 21 10:31 am

The news about Jeff Bezos stepping down from Amazon has been accompanied by lots of enthusiastic reports on his ‘relentless focus on customers’. When viewed through the lens of its financial performance, it is undeniable it has been the big winner of the pandemic. Indeed it remains the world’s most valuable brand according to a global ranking by Kantar’s BrandZ. With its sales surging 44% in the first quarter of this year, it roared ahead of even the most optimistic earnings forecast.

However at the same time as these stellar performances – another quieter story is slowly getting louder. While we may have arrived at ‘peak Amazon’ during the past 18 months, perhaps the mood is starting to shift. There is an increasing dissatisfaction with Amazon for a variety of reasons, from working practices, poor treatment of ‘partners’, fake reviews to only playing lip service to choice. When I first joined the organisation in the early days, I loved the initial rebel attitude of Amazon and the idea of creating one shop with everything, when I was one of around 200 people on the UK team. But over the years that has changed as it has become more dominant and squeezed out competitors.

In fact the ecommerce market dominated by Amazon now bears all the hallmarks of a typical industry dominated by one player. Meaning a lack of competition leads to often poor outcomes for customers and brands in its ecosystem. There are three key areas that customers and brands are being let down.

Poor brand recognition

Retailers struggle not because of physical or online presence but because of lack of brand recognition. When the doors of physical retailers reopened, a brand like Primark could be confident of seeing customers flocking back in. This was despite seeing no sales due to shunning an ecommerce presence. While others may have scoffed at them for this, they remain in a stronger position than online retailers who have ‘created their landlord’ by bolstering Amazon by becoming sellers on its platform. Amazon’s iron grip on ecommerce is a threat to plurality in retail and genuine choice for consumers. Consumers don’t remember or recognise many of the brands they buy via Amazon. But they do remember Amazon.

Broken ratings system

The online ratings system is broken and must be fixed. This is the reason the CMA are investigating it. An investigation by Which? Consumer group in 2019 revealed a flood of fake five-star reviews for tech products on Amazon. Amazon reviews contain a mix of incentivised reviews, corporate espionage or comedians, whereas a vote from a friend is worth 100 anonymised reviews. In fact when I was at Amazon there was even a run of sales on some products due to the comedy reviews.  There are also many platforms for reviews about retailers but a dearth of trusted product review sites. This has to change.

Lack of transparency

There is also a lack of transparency for shoppers in the current ecommerce experience in general. While you can find a comparison site to find a deal on complex products like car or life insurance, try finding a pair of trainers without opening a bunch of tabs on your browser and being forced into checking a myriad of sites. The result? Google is no longer the ‘best Nike trainers” but a collection of the bigger advertisers and the best SEO departments with Amazon advertising set to create the same environment. There is no single source of truth and it takes too long to research, discover and buy; and deep research on a mobile is really difficult. We therefore need to focus on how we can improve the customer experience. What are the experiences and qualities people like about the physical shopping experience?  Shoppers require a trusted personalised experience. They are not receiving this now. We should also remember to describe them as ‘Shoppers’ and not faceless ‘users’. It’s an important way of recalibrating our perspective to always remember the human being at the other end of the transaction.

Many businesses follow the Amazon rhetoric about putting the customer first – but I think that could be disputed. Amazon has a stranglehold on the market and is focused relentlessly on the bottom line at the expense of true customer-centricity. With Bezos stepping down perhaps it is time for a new vision that disrupts things in the same way Amazon first did a quarter of a century ago.

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