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Brand Winners... And Losers: Amazon and Traditional Retailers
Brand Winners… | And Losers |
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The Marketing Doctor says:
Winner: Amazon
Loser: Traditional Retailers
The Winner:
Amazon is this week’s winner hands down, for one obvious reason: in one of the worst holiday seasons in retail history, Amazon just announced that it had its best year ever.
Here’s the story and here are the numbers: Amazon reported that the buying was strongest on December 15 when they received 6.3 million orders, which according to the Dow Jones translates to a “record 72.9 items a second.”
Amazon’s success speaks for itself, but I want to make two points.
First, it is the Amazon brand —–and the long-time brand value that this company has built— that has won here. Why? Because overall online retail sales actually declined by a reported 2.3 percent this year. That means Amazon has bucked the downward trend.
There is bound to be a lot of speculation as to why this happened —some reports suggest that bad weather kept consumers at home and online to do their shopping— but if Amazon hadn’t established its brand as the first (and often last) stop for online shopping —i.e., as the place to go for a huge segment of the online shopping population because of its value and consistency of shopping experience— then it wouldn’t have benefited from any external factors. (By the way, I don’t buy the weather argument because it seems to me that it would have translated to an uptick in online sales overall if it had been that big of a factor.)
Second, and the most important point I want to make, is that Amazon has this strength because from the beginning they have built themselves around the consumers’ experience. Everything they do is marketing. They follow up with emails on almost each shopping experience. They guarantee what they sell and closely monitor vendors who sell through them. They personalize the experience using consumer feedback, but they don’t hard-sell or over-sell based on this feedback, since they know that the successful online shopping experience is never coercive. Most of all, they’ve done an excellent job of staking out their brand’s territory from the beginning and then sticking to it.
There aren’t any accidents in marketing. Bottom line: Amazon isn’t the beneficiary of luck. It’s the beneficiary of its own excellent branding strategy and a business model that has marketing built into its very core.
The Loser:
The loser this week is obvious: traditional retailers.
For them, unlike our winner Amazon, this is looking to become one of the worst seasons on record. Here’s that story.
There are many reasons for this, and it’s not all their fault, but marketing never happens in a vacuum or under ideal conditions. Yes, the last few years have been great for these retailers —maybe it’s been too easy. Now, we’re getting back to a selling environment where these retailers are going to have to really market hard.
Their marketing will have go well beyond deep discounting. First, I think we’ll see a lot of retailers go out of business; and then in the new landscape we’ll see retailers begin to seek out the consumer in very specific ways (read limited and highly targeted inventories) that will be built around price and value.
But make no mistake. For the near feature, traditional retail is in trouble, and only the best marketers will be able to work through their big inventories and then move forward.
And remember, it’s always easier when you keep marketing and branding in mind.
TODAY'S TANTILLO TAKEAWAY -
If your business model is built around marketing, your business will be able to prosper and at the very least endure any business environment.
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