I am often asked what the future holds for Amazon?
One school of thought is that Amazon is becoming so large that the U.S. government will break them up. Another school of thought is that the larger Amazon becomes, the more challenging it will be for the company to execute and delight customers. Still others believe that Walmart will soon find the right combination of factors and begin to eat into Amazon’s lead.
None of what I listed above will occur.
The reason why I am so confident is because of the following: Amazon has no predator. Amazon is the megalodon of companies that can operate with impunity, free of any fear that somehow an even bigger company is going to come along and beat them anytime soon.
Jeff Bezos isn’t afraid of the noise going on around the company and in politics because Amazon did one thing very well early in the history of the company – Amazon hired really smart people capable of leveraging operations research, economics, analytics and logistics to learn from the failures of other companies in the past.
In addition, Bezos understood very early that for Amazon to thrive, the company had to view itself as an ecosystem of services with one mission – meet the demands of consumers and introduce new services to constantly add value to the lives of their customers.
JC Penney, Macy’s and other retailers all consider themselves retailers. This is why so many large retailers are faltering and going out of business. The mindset of the executives who work at most retailers is to operate their stores efficiently vs. shaping consumer behavior through innovation and new retail models.
Jeff Bezos isn’t afraid because he knows that Amazon has the smartest people in business working for the company. Case in point: Amazon has the least amount of grocery experience yet Amazon leads the grocery industry in innovation. (As a former Amazon executive as well as being a consultant to the largest grocery retailers in the world, including Kroger, I can attest to the fact that Amazon does indeed have the best and brightest minds working for them).
Jeff Bezos isn’t afraid because the majority of executives at the leading retailers in the U.S. and globally continue to operate their companies independently with no desire to collaborate. Let me be clear: Amazon has no predator. The only way Amazon can be threatened is through a collaborative network of retailers and logistics companies working together with one goal in mind – beat Amazon.
This is what I mean by collaboration.
- Walmart merges with Home Depot and together both companies design and implement a leading edge supply chain and logistics network capable of fulfilling orders in hours as well as replenishing to stores at much lower costs because warehouses and transportation are shared.
- Costco acquires Sam’s Club and forms a strategic partnership with grocery retailers to access their warehouse clubs at reduced cost.
- Target acquires Kroger and leverages Kroger’s relationship with Ocado to automate the majority of its grocery fulfillment.
- Albertsons merges with Ahold-Delhaize and contracts Louis Borders to design and implement a new form of grocery fulfillment. Fully automated facilities that operate with lower costs and increased speed.
- Walmart acquires FedEx and creates a consortium of logistics companies (think XPO Logistics) focused on leveraging the combined package delivery needs of every company not named Amazon. There is a saying in logistics “Freight moves Freight.” The more freight (packages and pallets) that FedEx can move through its network, the lower the costs for everyone.
Do I believe what I listed above will happen? Not likely. What I listed are examples only.
I’m not the only person who believes collaboration is a necessity for beating Amazon. Guy Bloch, the CEO of Bringg, speaks and writes frequently on this topic. If you don’t follow Guy on LinkedIn, you should.
What is certain, however, is that if retailers continue to fight Amazon one on one, Amazon will win. One company can’t beat Amazon but many companies collaborating together certainly can. The biggest obstacle to overcome is that if companies collaborate, each company will have to be willing to give up something in return. That ‘something’ could be lost market share, exclusive supplier relationships, and lack of control over strategy.
Jeff Bezos isn’t afraid because he knows the majority of executives don’t have the courage to speak openly about collaborating with other retailers, logistics companies or tech companies to reimagine retail and design a strategy that leverages a collaborative approach to beat Amazon.
Bezos isn’t afraid because he knows Amazon is already reaching out to very large companies across different industries and asking them this question: Would you like to reduce your annual supply chain and logistics costs by outsourcing your entire supply chain, logistics and transportation needs to Amazon?
Jeff Bezos continues to reach out to executives and discuss the value Amazon can provide. A phrase Bezos likes to use most is this – “We can accomplish great things together if we’re willing to collaborate.”
Is Jeff Bezos afraid? Not a chance.