Jim Tompkins (2013): What is the Amazon Effect?

from his blog Tompkins International

Jim Tompkins, founder and CEO of Tompkins International, is a long-time supply chain guy. And guess what? Jeff Bezos, CEO and founder of Amazon, is a supply chain guy too. He has to be, because business is now at a critical X-Roads in demand-driven supply chain and customer satisfaction.

Amazon has invented – and is continuously refining – new ways to connect customers with solutions. They are your biggest competitor. Watch the video:

“For many businesses, Amazon is simultaneously a sales channel, a potential service provider, and a competitive threat.”– Forrester Research

In this video you will learn about these topics:

  1. What is the Amazon Effect?
  2. Which Amazon? Products and Services
  3. The Magic of Amazon Prime
  4. Amazon Network & Two-Day / Same-Day Delivery
  5. What Can We Expect from the Amazon Brick-and-Mortar Store?

You know that Amazon is exploding in the online retail world. Odds are that you’ve recently ordered something from their website. But did you know that they are also your company’s biggest competitor, regardless of the products you sell or your industry?

Today, we want to help you understand more about your supply chain by understanding more about theAmazon Effect. This huge and mysterious Amazon Effect is about to get even closer to your customer base because the online retailer is planning to open its first brick-and-mortar store.

“Amazon is a black box… It’s difficult to discern any of the company’s essential goals.”– TIME Magazine

What in the world will this new Amazon store look like?

Jim Tompkins has some expert insight into the store’s likely features and how you can compete with Bezos’ expansion plans. Tompkins predicts that between now and holiday season of 2013, both in-store and online retailers have major decisions to make that will result in either success or bankruptcy.

“We are willing to be misunderstood for long periods of time.”– Amazon CEO Jeff Bezos

The traditional thinking around customer satisfaction, distribution networks and operations is obsolete given the X-Roads that we sit at today with the Amazon Effect.  We can talk about multichannel, omnichannel and every other buzz word – but at the end of the day, it’s really about price, selection, convenience and experience.

Learn how to compete with Amazon, and you will survive Business at a X-Roads.

Want to learn more? Read expert opinion and view an illustration on what an Amazon brick-and-mortar store will look like.

The Amazon Store: What Will It Look Like?

It seems like Amazon announces a new product or service every week, and its growth shows no signs of stopping. For example, its dedicated business-to-business website,AmazonSupply, offers price, selection and delivery options that make it a big competitor for industrial distributors.

Amazon’s future plans, both short-term and long-term, are typically hidden from view. While business leaders, news analysts, and social media channels are all watching Amazon to solve the mystery of how fast its growing or what new markets it is getting into, a topic of major speculation is how an Amazon brick-and-mortar store looks, and how it will perform.

When you think about what an Amazon store looks like, the size of the store is the first thing that comes to mind. With the millions and millions of SKUs Amazon has, wouldn’t an Amazon store have to be about the size of the state of Vermont? But of course, that’s impossible; nor will it be bigger than the world’s largest Wal-Mart.

Instead of focusing on size, consider the Amazon culture and compare it to other popular ones: Starbucks comes to mind. Then think of the Apple stores, where they have the Genius Bar for in-store customer support and service, and the devices right there for you to try.

Put these two concepts together, then think about how Amazon is customer-focused. Amazon CEO Jeff Bezos said so himself: “Do not be competitor-focused. Be customer-focused.” What do customers want? Price, selection, convenience, and experience. When you add all these together, what do you get?

A Tour of the Amazon Brick-and-Mortar Store

“We see customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”– Amazon CEO Jeff Bezos

The Amazon store is three-stories tall, and it’s open 24/7. On the first floor, in the center, you will see the coffee bar, with lockers in the back where you can pick up the items you ordered online. That is actually the extent of product in the store – items customers have already ordered, waiting to be picked up.

Customer service agents will be positioned on the left side of this first floor, who can tell you how to use all the Amazon products and services. Then on the right side of this floor you can find all the Amazon-related electronics, like the Kindle.

Take a trip up to the second floor. Here you will find all of Amazon’s product offerings from the various other sites they own: For example, Abe Books, which is Amazon’s rare book offerings. There will be local offers, similar to Groupon, on this floor. You can also find all the Amazon Wireless-related cell phone services.

The second floor is going to be fun place to hang out with your friends. Products won’t be there, but there will be displays and employees to tell you how to use the site to order a product and help you get a good deal. This floor is where you find merchants like Zappos for shoes, MyHabit for designer-label fashion… the list goes on and on. Here is a sampling.

  • AmazonPrime
  • Shopbop
  • Audible
  • Soap.com
  • BeautyBar.com
  • Wag.com
  • Book Depository
  • Whs. Deals
  • CreateSpace
  • Woot
  • Diapers.com
  • YoYo.com

The third and final floor will help you navigate all of Amazon’s many service offerings. Experts will be on hand to help you build a website hosted by Amazon, get you set up with display ads posted by Amazon, track your web site’s hits, and services to help you take credit card payments from customers on your site. They can help you with fulfillment of orders, store your data in the cloud, and many other business applications.

Since its early days, Amazon has developed many innovations in online convenience, including one-click check-out and advanced search and recommendation functions, as well as Amazon Prime. When they apply that innovation to a brick-and-mortar store, and add customer experience to their customer-pleasing good prices, convenience, and selection, businesses in any industry need to be prepared to respond.

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