Features, Strategy & Operations

Amazon’s Trojan Horse

RR Amazon StrategyCould Jeff Bezos have a new strategy for his physical retailing plans: rent rather than own?

Jeff Bezos may be outsmarting the rest of the retailing world…again. While everyone speculates on which physical retailer Amazon will buy next, Bezos may be working an entirely different strategy for how to expand his domain beyond the virtual.

True, he bought Whole Foods last year to get into the grocery business – not to mention giving the company another 400 physical touch points with Amazonians – and he continues to progress on the twin roll-outs of Amazon Book Stores and Amazon Go convenience stores. The company even operates 35 Treasure Trucks in the U.S. and the U.K., providing actual mobile retailing as opposed to virtual mobile retailing. But perhaps all the crazed conversations about his physical store plans may be missing the point. Consider his own words – granted making a different point, but strangely relevant – in his just released shareholders letter:

“One thing I love about customers is that they are divinely discontent. Their expectations are never static… People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. I see that cycle of improvement happening at a faster rate than ever before…You cannot rest on your laurels in this world.”

That’s why you can make a real case that Bezos has come up with a new way to get physical. Call it Trojan Retailing, call it a magician’s diversionary sleight of hand, call it going in through the back door. However you describe it, it’s an intriguing theory.

Over the past year, Bezos has set up partnerships with Kohl’s and – just a week or two ago – Best Buy. The particulars differ but each deal essentially allows Amazon products to be sold through these retailers, sometimes on an exclusive basis. The Kohl’s deal includes allowing the store to take in and process Amazon returns. Each is somewhat limited in scope and Amazon has been selling its hardware at selected retailers for some time.

But consider this theory: Instead of going through the expensive, time-consuming and culturally abrasive process of buying up existing store-based retailers, Amazon continues to set up these partnerships, becoming a de facto physical retailer in the process. All of a sudden, Amazon is now in far more locations, far faster, with a greater presence than it would be if had to buy up individual retail chains. It’s saved a boatload (cart-load?) of money and aggravation in the process and it doesn’t have to figure out how to run actual stores at the scale and scope it will eventually need as it continues its ongoing takeover of retailing as we know it.

Is Bezos this smart, this diabolical, this clever to actually be pulling this off in plain sight while everyone is focused somewhere else? Or is the real question: Is Bezos this smart, this diabolical, this clever to actually be pulling this off in plain sight while everyone is focused somewhere else…again?

Warren Shoulberg is a business journalist who writes about retailing. He placed his first Amazon order in 1998…and his most recent one last Tuesday.

, , , ,

0
no comments
You might also like...
    • From the Archive: