AMAZON: a Leader and Disrupter of Retail

No doubt that Amazon has seriously impacted on and transformed retail and online shopping in general for more than 20 years. I follow this company since the 90s and I was one of those wondering if Amazon would survive the dot.com disaster of the beginning of the 20th century. They indeed survived it based on a strategy of (mainly) diversification as I described in my 2004 article "Strategies for surviving the Internet meltdown: The case of two Internet incumbents". They still go strong and keep disrupting, if not always without controversy: see the Black Friday strikes of Amazon personnel in Europe. 

Amazon and the limits of growth: The Red Queen effect confirmed

Headlines like this dominated the online and offline media last week: The recent takeover of Whole Foods for almost $ 14 billion by Amazon sent shock waves to observers and high street retailers.
Should we be surprised by the news? Personally I am not surprised at all; Diversification and continuous expansion is a strategy that Amazon consistently pursuits since the beginning of its times.

Is that right? In 2004 I published a research paper in the Management Decision titled: "Strategies for surviving the Internet meltdown: The case of two Internet incumbents" * Although this article won the title of the best paper award of the journal for that year it never became so popular with only 24 citations so far.
In this study I reviewed the strategic decisions made by Amazon and one more of the survivors of the dot.com disaster (E-Trade) at the beginning of the 21st Century, looking for clues why these Internet pioneers did not follow the fate of the thousands of dot.coms that went bankrupt after the 90's dot.com hype.
My study was focused on the major and minor strategic decisions made in the period 1997 - 2001. I classified these decisions according to the well- known Growth Matrix of Ansoff; this matrix identifies as most of us know, four types of growth strategies: Market Penetration, Market Development, Product Development and Diversification.
During the period in question Diversification was the main strategic approach for growth pursued by Amazon: Although Diversification is the most risky of the four options this strategy worked and not only helped Amazon survive the Internet debacle but also transformed Amazon from an online bookstore to an online (and increasingly traditional) retail giant that it is today. We must not forget that Whole Foods is not the first traditional retail venture of Amazon, they operate already a number of physical bookstores; interestingly books is the first product category that help Amazon to be launched as e-shop back in 1995.

As I mentioned, to me the expansion of Amazon to traditional retailing did not come as a surprise. In my 2004 article I came to the following conclusion when discussing the findings:

"An alternative strategic option for both Ž firms (i.e. Amazon and E-Trade) could be to concentrate on the present business domains and pursue further grow by expanding their physical activities rather than the virtual ones, at the cost of traditional players; such a strategy is likely to trigger reactions of traditional, physical Ž firms."

This conclusion was based on the findings that in the case of Amazon (and to a lesser degree of E-Trade) their strategy was looking to be inspired by the Red Queen Effect. My impression was that when Amazon will sell online whatever is possible to sell it might turn to the traditional retailing  in order to maintain its survival and growth.

The interesting thing about the emerging high-street presence of Amazon (and for sure more e-businesses will follow it) is that it can have many negative effects for established retailers but it could have also some positive ones: Is the expansion of e-tailers to the High Street a way to revitalize city centers suffering from shop closures and increasing difficulty to attract buyers in shopping centers?

Interesting issue to follow-up. One thing is sure, the distance between online and off-line becomes once more a bit smaller.

*Efthymios Constantinides, (2004) "Strategies for surviving the Internet meltdown: The case of two Internet incumbents", Management Decision, Vol. 42 Issue: 1, pp.89-107, https://doi.org/10.1108/00251740410510190

Real Time Marketing ADIDAS adiVerse: A new shopping experience based on POS Mass Customization

Adidas in cooperation with Intel created adiVerse, a 3D touch-screen, interactive display that increases substantially the assortment of retailers: 8.000 sport shoes can be displayed and customers can search for them, examine them from different angles and order. The system recognizes the shopper’s gender and displays the proper product selection. Adidas, like many other producers of sport articles has quite an extensive experience in online mass customization.

The display developed by Intel as part of their Connected Store vision aims at offering personalized and customized products in a traditional retailing environment, offering in other words traditional shoppers an advantage that so far only online shopping could offer.

The High Street strikes back? Let's wait for the official launch of the service during the London Olympics next year.
ps. an interesting and relevant to Real Time Marketing / mass customization article of ACCENTURE just relesed