Published on: August 12, 2019by Kevin Coupe
CNBC had an interesting story this weekend that made, I think, a conclusion that was only partly right.
The piece suggested that Amazon seems to be at a point where it has a lot more friends than enemies. It broke up with FedEx, which no longer will be shipping Amazon packages in the US (though, to be fair, Amazon only represented 1.3 percent of its business). It is in a battle over whether its PillPack subsidiary is inappropriately accessing and using consumer data. It seems embroiled in a series of feuds with politicians ranging from President Trump to Sen. Elizabeth Warren (D-Massachusetts) about its business practices and is facing at least the possibility of tougher regulatory scrutiny.
In fact, CNBC suggested that Amazon’s only real friends these days are on Wall Street, where there continues to be enormous enthusiasm for the stock. (At the end of last week, it was trading at 1804.40, below its 12-month high of 2053 … but still a pretty high number reflecting a market capitalization that gives it access to cheaper capital better than a lot of countries.) Wall Street analysts seem pretty uniform in their feeling that Amazon’s upside is high, though they do concede that regulatory issues and a recession could hurt its prospects.
I would quibble with some of this in small degrees, but would also suggest that CNBC is missing one major piece of the puzzle that makes Amazon even more formidable.
The quibbles mostly have to do with the regulatory stuff. As big a fan as I am of Amazon, I do think it needs to be careful not to breathe its own exhaust; it needs to be sensitive not just to realities, but to appearances that it has become arrogant, manipulative and anti-competitive in its actions. I’m sure it skirts close to the line … every big company does, which is how they get to be dominant and why they make enemies - but they need to be careful not to cross the line in ways that puts the entire enterprise at risk.
I also think at times that maybe Amazon is getting too big … but its ecosystem-centric approach has been working so far, so who am I to challenge it?
The big piece of the puzzle that CNBC is missing, I think, can be summed up in one word: Customers.
It isn’t just Wall Street that remains enthusiastic about Amazon. It is all the customers, many of them Prime and Subscribe & Save member, who continue to drive sales and express their loyalty to the company every day.
Amazon has changed a lot of customers’ lives. Though customer knowledge - and its peerless ability to convert knowledge into action - Amazon has become an almost indispensable part of people’s everyday existence.
If you’re competing with Amazon, you have to deal with that. Your customers almost certainly also are Amazon’s customers. It is critical, then, to find the things that you can do better than Amazon, that are unique to your business and your (admittedly smaller) ecosystem, and work those advantages to the best of your ability while constantly seeking to define new differential advantages. Every day.
“Never interrupt your enemy when he is making a mistake,” Napoleon Bonaparte once said. Amazon doesn’t make a lot of mistakes, and you cannot afford to either … but you also cannot afford inaction.
It is the Eye-Opening sentiment that I’ve repeated here over and over for almost 18 years:
Compete is a verb.
- KC's View: