Published on: December 6, 2021
We had a story last week about how Amazon's dominance and size may be turning into a kind of vulnerability.
It seems to me that Amazon often tends to get defensive about stories like these, arguing that they are based on misperceptions and errant observations, more a result of the enlarged target on Amazon's back than an accurate portrayal of reality.
I get that. It is hard to hear such things - even for one of the world's biggest and most influential companies.
But I would argue that Amazon really needs to create a kind of ombudsman position whose job is making sure that these criticisms are not just taken seriously, but dealt with transparently. There is no shame in saying, "We tried to do our best. We fell short. We're going to do better."
The entire company is founded on the premise that established business models can be disrupted and made obsolete, but it seems to me that new CEO Andy Jassy needs to put less of a premium on disruption and more of a focus on living up to the value proposition that it has sold to both customers and vendors. There will remain plenty of room for disruption in both new and existing businesses, but somebody has to recognize that there is a broader narrative playing out, a narrative that may be spinning out of Amazon's control. And so, Amazon has a choice - write the next chapters itself, or let them be written by others.
I know which one I'd choose.
MNB reader Steve Anvik responded:
Your point is well said, and it’s up to Amazon to regulate. To the many critics of Amazon, with both big and small complaints - I’m not a blind fan. Frankly, Chewy beats Amazon 24/7/365 in their segment. But I am an unapologetic Prime member who cheers when Amazon does well, and in turn does well by my interactions. Similar criticisms were leveled at Walmart, Costco, Meijer, etc. – each in their stratospheric rise(s). Yet I remain eyes wide open fan of all, each for various reasons. I also love many local shops (and local restaurants), but being a large player is Not by itself bad. We’re all consumers, and thus our aggregated spending will ultimately create the changes we seek in the marketplace.
I did a FaceTime video last week about the dangers of epistemic closure, referring to a New York Times piece by columnist Jane Coaston about how "knowledge bubbles work against us."
MNB reader George Denman wrote:
What a great video Kevin and one that I plan to incorporate into my Miami University Marketing #315 class in Professional Sales. In so many instances a seller goes into a sales call with a retailer trying to sell his “stuff” without any idea what is important to the buyer. He is trapped in his knowledge bubble and is basically offering what my friend Warren Thayer describes as “deja poop” which is defined as the feeling you’ve seen all this crap before. If the buyer was more familiar with the retailers store format, go-to market methodology, what his KPI’s were then there is just one question that needs to be answered. “How are you going to help me make my number?” The seller then can be brief, be bold and be gone in just five slides.
There was a piece last week in which Albertsons various initiatives were listed: "…an AI-powered grocery cart, app-based checkout, membership program, robotic delivery carts, automated grocery pickup kiosks, robotic aisle scanners, small fulfillment warehouses, and more."
I said that I liked that list a lot, and added:
I'll betcha the "more" could be even more interesting and impactful on the company's future.
Prompting one MNB reader to chime in:
I love that list too, but how about some more cap ex for their fleet of stores, like Shaw's which could use a lot of remodels and updates.
We've had an ongoing conversation about consumer-centricity, with some discussion about the degree to which the old Efficient Consumer Response (ECR) initiative ignored consumers. Another MNB reader weighed in:
Your readers are chiming in on the ECR process that retailers are or have utilized. That is really funny when you have these statements of how consumer directed their operations are. Especially when I just received an email from one of my broker representatives that a retailer sent out. “I am going to revise the slotting rates for the balance of 2022 resets (cycle 7 forward) to $76,000 which is about a 5% increase from the original number. I will allow any brand that has not had a cost increase in 2021 or 2022 to pay the $72,000 which was originally posted. If you are a manufacture that has raised costs on any of your brands than the new slotting rates will apply.”
None, zero, nada, of this goes to the consumer. To go a little deeper, this is per item not per brand. This is only a 6 month guarantee that the item will stay on the shelf ( of until the next reset cycle). Plus the manufacturer has to spend promotions on top of this in an attempt to keep it there. The cost to just slot a new item nationally is well into 7 figures. So maybe the FTC should factor in these BS charges into their equation, as to what is causing pricing increases. I sincerely hope that this makes the cut because the time has come to out these ridiculous practices. I wonder, not really, what the consumer would say if they knew.
Finally, I got what I thought was a really smart email from MNB reader Grant Krause, reacting to my brief mention on Friday of the new Amazon series about Jack Reacher, which looks to rectify some of the problems that the Tom Cruise movies had in translating the Lee Child novels to the screen.
Can't wait for the new Reacher series. Tom Cruise as Jack Reacher is what happens when you trust your valued asset to a third party...
Exactly. Extra credit for finding a way to link Jack Reacher to my continuing observations about the dangers of retailing trusting their most valuable assets - their customer data - to companies like Instacart.
Like I said … a really smart email.