Amazon’s Trojan Horse and the end of traditional retail

Amazon Echo, or as it is commonly called, Alexa, is a Bluetooth speaker that has a virtual assistant (Siri-like). This device is considered as one of the principals responsible for Amazon’s excellent results in 2017, which went far beyond the expectations of analysts and Jeff Bezos himself, currently the richest man in the world. Apple with Siri, Google Home and Microsoft’s Cortana are other strong competitors in this field. These virtual assistants have many people and companies. But in reality, are they either harmless gadgets or Trojan horses with extremely relevant strategies?

The average customer has a so-called “customer journey”, i.e., the steps he takes to make a purchase. From having the desire, researching the product, deciding on the store, making the purchase, to use and repurchase. The goal of these companies is to capture the ecosystem and the customer completely. If before retailers were more focused on the decision of the place of purchase, now, with the “famous” data they start to anticipate customers’ desires even before they are aware of them. Alexa initially gets into the retailer’s choice part. Even with ecommerce we have the option to choose the store where we buy (we can go to Amazon or Continente’s site, for example, to buy a Colgate toothpaste). If we say directly “Alexa, buy me a toothpaste” while we brush our teeth, the purchase goes directly to Amazon, eliminating the choice. So far problems, only for retailers. The toothpaste brand is satisfied as it sells more products. But not for long considering all the information and relationship Amazon has with the customer. By identifying the demand levels and preferences, Amazon produces a toothpaste just like the one chosen by the customer and calls it amazon basics (the company’s white label). Without the screen, the customer won’t bother to choose between the various toothpastes, and Amazon ships theirs. And with the scale this company has, it can do it better, prettier, and cheaper. And so, these voice assistants threaten not only the other stores, as it was thought, but even the manufacturers themselves. And as these companies are getting into banking, insurance, and many other sectors….

Amazon wants to be the dominant player worldwide at the retail level, if their motto “is the everything store” I would add, “for everyone”. What is there to do?

To start with, differentiate by brand, so that the customer doesn’t want to buy one but a specific brand, such as Colgate. A great example of this differentiation are luxury products. For example, the customer doesn’t want to buy a Louis Vuitton handbag that looks “similar” and also doesn’t want to buy it at Continente.

Something that should be obvious but is not, is focusing on the customer and understanding them with data. Banks and insurance companies are a great case of “rammed down customers’ throats” products, often maladapted to their real needs. If we don’t give the customer what they want and there is one who does, what is our chance of succeeding as a company?

On the other hand, almost in 2020, if many companies still think that e-commerce is not here to stay, how can they understand the next step in the strategy of these large digital retailers? It is time to analyze and prepare real digital transformation strategies.

You must understand what is behind the new technologies that remind us of the Jetsons and “Back to the Future”. Like the Trojan Horse, all is not what it seems.

David Bernardo
David Bernardo
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