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20/03/2012 by

What CMOs Can Learn From Amazon – Part II

Love Apple and Steve Jobs as much as you like, my hero is Amazon founder and CEO Jeff Bezos.

Often critized by ignorant analysts, Bezos now serves 281 million unique shoppers.

And where brick retail is often perish; Bezos has turned screen commerce into profit.

Bezos has injected a stunning new innovation and intensity to his platform again; he added an army of robots to Amazon.

So, I thought it was time for “what CMOs can learn from Amazon” part II. armed with an army of robots?

Last Monday (March 19) Amazon announced the acquisition of Kiva Systems for $775 million. Kiva is a company that designs robotics aimed at increasing supply chain optimization.

Some analysts will probably critize the acquisition and might start again about Amazon’s profitability. But most analysts around Amazon have clearly shown in the past that they do not have long term strategic brainpower.

And certainly some analysts have shown a true lack of vision of how this giant is breaking through the conventions again and again, with a true long term vision that goes way beyond the quarterly profits and short term stock price.

Kiva Systems, army of robots

Why financial analysts are wrong about Amazon?

Hopefully these analysts, the ones with their short-term 3 month stock vision, will now understand that Amazon is serving 20% of the web population: over 281 million shoppers.

And that for giants like Amazon (or WPP/ Omnicom etc.) the long term profit can be maximized by supply chain optimization, automization, smarter architectures, more advanced systems and more efficient processes.

And by purchasing Kiva, Amazon’s fulfilment centers will improve its productivity. And certainly make the customer experience even better, if that is still possible at Amazon.

Among Kiva’s customers are internet retailers and, two companies that were recently acquired by Amazon.

Amazon’s acquisition of these retailers and Kiva suggests the company is placing a greater emphasis on delivering a wider range of products to customers faster.

Amazon spent $4.6 billion last year on warehouses—the company’s largest operating expense, Bloomberg reported.

Jeff Bezos, founder and CEO

What can CMOs learn from Jeff Bezos?

Now what can CMOs learn from all of the above? That is what I will try to explain crisp and clear.

Most brick retailers have stalled eCommerce for about 10 years for all the wrong reasons. We are not ready yet. Not everybody is buying online yet. Our products (fashion) needs to be felt, smelt and fitted, it does not sell online, etc.

Most are bull shit arguments by being in denial: how is it possible that false assumptions are made so long? How is it possible that so many brands ignore massive trends for so long? How can it be that we are stuck in linear thinking for so long?

Many consumers have embraced eCommerce, Social Commerce and mCommerce and are buying almost all products from any possible digital screen nowadays. Some brick retail is really perished and in several markets 15-25% of the stores in our streets might have disappeared by the end of 2015.

And too many brick retailers have been defending themselves for a decade by saying: well, Amazon is not as personal as my shops. In fact, Amazon will never ever come close to the experience our shops are offering to consumers.

Well think again my dear CMOs. Amazon has invested so much in smart straight through processing, architectures, systems and injected so many smart innovations to its platform that the customer experience at Amazon is 10-20x times better than most of your retail shops.

In fact, most retail shops will never ever get close to the experience Amazon is offering its customers.

Belgians spot retail trends much earlier than CMOs?

Some insights and ideas? Amazon offers smart and handy recommendations which people love and make them buy more stuff. This experience in retail is only offered and the few small local bakeries that might be gone from our street corner soon.

Amazon is smart, personalized and relevant. It knows who you are and tailors most to your needs. In most retail shops where I buy frequently, they don’t even know my name, my size and my taste.

And at brick retail shops, they never ever have a clue if a product is still available in my size. So down goes the shop assistant again, 10 minutes into a deep basement to look for my size.

Annoyed as hell because the lack of innovation and waste of my precious time, I mostly dive into my iPhone screen to check Facebook or Zite. Why can’t this retail “chick” look on her iPad to see if my size is still in stock from the shop floor?

If a product breaks at a brick store, you have to go back. And argue with a 25 year old assistant manager that starts explaining that it is not his product and it’s the fault of the manufacturer or sometimes my own fault.

Not at Amazon. Because even with 281 million customers, 99% of all problems are fixed by a smart and relevant helpdesk. A helpdesk or care center that afterwards also -mails to check if I’m a happy customer again.

At Amazon I can pay with one click. At brick retail shops, even the ones I visit frequently, I always have to stand in line at the cash desk: a one-click payment is unthinkable here.

So my story to CMOs is this. Look at Amazon and invest in a smarter architecture, systems and processes. Try to close the gap with their out of this world customer experience. In 2012 and beyond: invest in Social CRM and CRM. Not just in media and advertising.

This is the social era, where only the best recommended shops by my peers will get my retail Dollars. Make sure to inject innovations into your retail shops.

Work hard on improving your customer experience. Be smart, personalized and relevant.

And invest in digital commerce, commerce in on any screen and especially in social and mobile commerce.

Don’t wait until all your targets are buying through digital screens, innovation you do for a niche audience, if adoption has reached the masses, you’ll be too late.

Now is the time to embrace innovation. It’s innovate or die.

What About You?
What do you think CMos can learn from Amazon? Looking forward to read your ideas in the comments below.

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About the Author
Igor Beuker was CMO at 3 listed companies, chairman at the IAB, jury member at Webby, AMMA and Esprix awards, founder of 3 digital agencies (sold to WPP) and global chief social officer at Mindshare. Now he is ‘freejack’ consultant and a sought after keynote speaker.


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