Amazon is going to kill your brand. And your job.

 

This past weekend, The  Washington Post put out a blog article entitled, ‘We’re starting to shop  online as often as we take the trash out’. This title is perfect for a  piece about online shopping. No one likes to take out the trash and, as  they depend more and more on online shopping, consumers are growing  bored with the task of shopping. From ordering to delivering, they will  want to avoid the logistics. This monotony and fatigue is exactly what  Amazon is counting on to kill your brand. 

A great brand story is not enough to save your product if Amazon lays  siege to your entire product category. All consumer brands should be  worried about Amazon’s recent acquisition of Whole Foods – not because  Amazon will compete for the 42 billion dollar grocery delivery market,  but because Amazon couldn’t care less about groceries --- or  electronics, beauty products or content, subscriptions for that  matter. Amazon’s ambitions are much bigger --- and scarier for brands. 

Amazon’s end game isn’t about any particular category. Its end game  is nothing less than to be the facilitator, the conduit and the supplier  of consumers’ lives. They are creating a new kind of service product  (the trusted home supplier) on the backs of entire marketplaces (e.g.  groceries, electronics, toiletries, subscriptions, news, and  entertainment). 

As ‘the trusted home supplier’ (my words, not theirs), Amazon is  positioned to dominate entire new consumer categories (like groceries)  as easily as it has rendered existing models obsolete (bookstores). The  implications are profound because they have the power to erase a  consumer product’s branding altogether; think of the ubiquitous  cardboard Amazon box. 

How did we get here? 

Amazon was one of the first companies to truly understand the  importance of designing and optimizing the ideal shopping experience.  That’s how they have been able to dominate category after  category. Amazon’s leaders have consistently spotted opportunities to  provide unique utility, and use technology to differentiate their  offerings, leaving less innovative competitors in the dust. 

Their biggest stroke of genius was to comprehend early a key consumer insight: people value their time. 

Shopping takes time. In the real world or online. Amazon dot com is  designed as an efficient, highly tuned shopping race car. One  destination is all a consumer needs to manage all of their home supply  needs – from automatically reordering goods and checking for the best  prices to delivering subscriptions to their door. In Amazon’s world, the  act of shopping is little more than an afterthought; saving consumers  precious time they value. 

Fifteen years ago, when I was first starting my career, I worked for a  corporate and product branding agency. At that time, every consumer  brand in the US was afraid of Walmart. Walmart dominated the retail  marketplace and was (surprise!) expanding into groceries and selling  private label brands that knocked off consumer brands that spent  billions on branding. 

Existing brands were livid but they were forced to suck it up, lest  they lose access to Walmart’s billion dollar channel. On one hand,  brands needed the distribution and shelf space, but on the other hand,  they resented Walmart for their private label strategy that cut into  their sales. Yet somehow, the consumer brands survived Walmart. They  won’t be so lucky with Amazon. If Walmart started the decline of  consumer brands, Amazon is already gleefully finishing that process. 

Over the last twenty years, as internet speeds and digital  experiences improved, Amazon positioned itself to dominate with smart  choices that anticipated the needs of today’s consumer. They allowed  other sellers on their platform so that any given shopper was guaranteed  to find the item they wanted at the best price. As they improved the  shopping experience – both online and delivery, the frequency of orders  and items in basket increased steadily. Today, almost a third of  Americans buy online each week. Amazon benefits from this shift more  than any other company for a reason. 

But like Walmart, Amazon’s coup de grace was its decision to offer  private label solutions, AmazonBasics and AmazonFresh. A commoditization  journey which Wholefoods complements and expands in profound ways. 

Today, Electronics are cheaper, streamed content is cheaper,  subscriptions are cheaper and in time the reorder and delivery will all  be automated based on algorithms or peoples’ Internet of Things  environments (e.g. Dash, Wand, Echo, etc.). Even shopping for clothing  may become systematic with PrimeWardrobe. Amazon is well on its way to  controlling and dominating the entire e-commerce marketplace and it will  leverage that position to commoditize the many brands it used to get  there. It’s just a matter of time. 

The fallout 

Not surprisingly, Amazon’s win is also American retail’s loss. 46% of  department store jobs have vanished since 2000, coinciding with  Amazon’s ascendance. According to Fung Global Retail & Technology,  5,300 stores have announced closures this year (three times as many as  2016). Between 2013 to 2017, America’s clothing retail stores suffered  64,000 job losses, and from January to June, general merchandisers saw  31,000 jobs go away. Brick and mortar stores have suffered and will  continue to suffer as the Amazon’s of the world take market share and  disrupt entire shopping models. But the real casualty here will be  consumer brands that overly depend on ‘choice’ and placement at the  shelf. 

If the buying and selling of goods becomes determined by algorithms  like Amazon, the work of swaying consumer opinion will radically change.  Marketers will need to convince consumers to care enough about baked  beans, soda, laundry detergent or toilet paper that they will actively  choose to alter their predetermined shopping settings. Asking a person  to change their preferences between two extremely similar items is a  very tall order. It’s a brave new world, with Amazon at the helm. 

Has branding run its course?

 Yes. Today’s consumers are extremely brand savvy. In the words of  Shane Smith, the founder of Vice, today’s young shoppers have a  “built-in bullshit detector, so don't bullshit.” Young people are keenly  aware of how to build a brand which is why so many of them are running  their own media empires via YouTube, Snapchat, and Instagram. In a world  where young people know how to build a brand, how does a consumer brand  stand out? 

How brands should pivot 

The promise of branding has always been that a well-crafted story can  add intangible value to an otherwise commoditized product. This worked  well in the past, but examples like Brandless (new household goods  startup with $50m before launch) and Dollar Shave Club are calling  bullshit. We are entering into a new era where consumers are able to  separate the brand from the commodity. As social brand consciousness  rises, people will start to prioritize other means of differentiation,  like a better utility. This is where Amazon wins. Amazon makes life  easier for millions of people. Thus, brands today need to understand the  utility they should already deliver and the differentiating utility  they could deliver. 

Experience mapping 

In recent years, many agencies have started to move away from the assertion that the brand story is everything.  There is a tacit admission in the industry that the story is irrelevant  if the experience or product is subpar. The role of experience design,  media and data is more important than ever. Crafting a unique experience  for a brand that feels tangibly different from the competitive set is  key. To do this, all marketers need to embrace experience design – the  act of mapping and deeply understanding the consumer journey process in  order to meet and anticipate people’s needs and wants. Only then will  brands be able to spot opportunities to create extra utilitarian value  that sets their brand apart. There is no silver bullet to the threat of  Amazon, but there are solutions. Pivot to subscription-based models, new  means of distribution, showrooming, events that foster culture, new  customer services, and unexpected partnerships and collaborations. Brand  will increasingly need to stand for more by delivering something new,  not simply claiming something new. 

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