Wal-Mart has led as the world’s largest retailer for the past 20 years but Amazon is hot on its heels skyrocketing from number 157 in 2001 to 6th place after its 2016 financial year, according to Deloitte.
Amazon operates sites in 14 countries, saw sales increase by 31% to $177.9bn (£125.1bn) in 2017 and is continually innovating moving into new categories and geographies as well as other areas of retail from web services to logistics. Its pushing forward of boundaries means that it pretty much sets the consumer expectations that the rest of the industry must follow or at least acknowledge as part of their customer-facing proposition.
Last year, the Amazon Echo voice-assistant outdid the company’s expectations with Amazon founder and CEO Jeff Bezos commenting: “Our 2017 projections for Alexa were very optimistic, and we far exceeded them. We don’t see positive surprises of this magnitude very often — expect us to double down”.
With the Echo Dot (and the Fire TV Stick) being the biggest sellers across the Amazon platform last year, “with tens of millions of Echo devices” in 2017 it’s no surprise that the company has enabled other companies and developers to help accelerate the adoption of Alexa into third party devices and ensure the continued use of the voice-assistant by consumers.
eMarketer claims that with the Amazon Echo, the US corporate controls 70% of the voice-enabled speaker device market in the country.
The Alexa Skills store now offers more than 30,000 skills, including developer tools for Alexa Gadgets, gaming experiences and daily podcasts. Owners can also use Alexa to control more than 4,000 smart home devices from 1,200 different brands. Alexa has also been integrated onto PCs from HP, Acer, ASUS, and Lenovo and a Toyota car as well as a myriad of new devices from companies including Polk Audio, Anker and Jabra.
According to Rohit Prasad, Vice President and Head Scientist, Amazon Alexa: “The success and adoption of Alexa is extremely satisfying but we have just scratched the surface of what’s possible.”
2017 saw the company celebrating the 10th anniversary of the Kindle, highlighting how the company has moved from bookseller to marketplace to platform developer for its own and others’ content. Original content from Amazon Studios has been nominated for an Academy Award (The Big Stick) with ‘The Marvelous Mrs Maisel’ TV series winning two Golden Globes.
The company also continued the move into own-branded products launching two furniture brands: Rivet and Stone & Beam.
It is this constant innovation and ability to disrupt even its own business that sets Amazon apart from other retailers – although it prefers to be thought of as a technology company rather than as a retailer. Every company has a wish list of things to do, iterations to be made, ideas to try out with customers but very few are able to ‘play’ in the same way that Amazon does. Its R&D budget is larger than some companies’ turnover.
No wonder then that it is sometimes tricky to keep up with all the developments at the retail behemoth. Is there any area of retailing into which Amazon doesn’t extend?
Amazon is driven to overcome consumer pain points and frustrations with the retailer experience. Ten years ago it looked to cardboard and launched frustration-free packaging much to the delight of customers and councils which are able to recycle every part of the Amazon boxes. Continuing the environmental theme – and its independence – it announced in January 2018 that to date it has launched 24 wind and solar projects across the US, with more than 29 additional projects to come.
Amazon Web Services (AWS), which re-launched in 2006, continues to innovate with the release of 497 “significant new services and features” in the last quarter of 2017, taking the total number of launches over the year to 1,430.
Amongst these is Amazon SageMaker, a fully-managed service that’s helping developers build, train and deploy machine learning. It also launched 4 Artificial Intelligence (AI) services that allow developers to build applications that emulate human-like cognition. Its ML Solutions Lab is connecting machine learning experts from across Amazon with AWS customers to help identify practical uses of machine learning inside customers’ businesses, and guide them in developing new machine learning-enabled features, products, and processes.
It also made further moves with Internet of Things connectivity.
Groceries have been a major focus for Amazon over recent years. AmazonFresh has become embedded as a supplier for Allrecipies.com enabling home cooks to buy the ingredients for a recipe they are looking at online and have them delivered the same day through the AmazonFresh delivery service.
The big news, of course, is its acquisition of Whole Foods Market. Amazon has been working on its integration with Whole Foods since the $13.7bn (£10.7bn) acquisition of the US supermarket chain in 2017. Along with cutting prices to lure customers from other supermarkets, Whole Foods has also been running promotions which are only available to members of Amazon Prime. By integrating Prime into the offline stores’ point-of-sale terminals, Amazon is turning the membership scheme into a rewards system for Whole Foods’ customers.
The two companies also intend to “invent in additional areas over time, including in merchandising and logistics, to enable lower prices for Whole Foods Market customers,” says Amazon.
Many own-label Whole Foods goods have been made available for shoppers to buy online on Amazon and the company announced in February that it is combining Whole Foods Groceries with Prime Now so that Prime members can have their groceries delivered for free in two hours. A one-hour service is available at a cost. The service, which launched in 4 US cities: Austin, Cincinnati, Dallas and Virginia Beach, is being rolled out across the country by the end of 2018.
The much-discussed Amazon Go cashier-less store opened to the public in January 2018. The store uses cameras, sensors and a mobile app to enable shoppers to buy products without have to queue at a checkout. However, with the amount of interest in the store in Seattle, people were having to queue to get into the store.
Amazon is continuing with brick and mortar plans in other sectors too. Three new physical book stores are “coming soon” in Colorado, California and Maryland. These will bring the total number of Amazon book stores to 18. The first one opened in Seattle in November 2015.
Merchandise in the stores is selected based on online behaviour including Amazon.com customer ratings, pre-orders, sales and the popularity of titles on Goodreads, as well as more traditional retailing analytics and predictions. Every book title in the store includes a review card so customers can see quickly what Amazon.com customers think of the book. “Most have been rated 4 stars or above and many are award winners,” according to the company.
The company continues with its moves in the logistics space too. It continues to test and invest in fulfilment services that work across channels for consumers as well as on supply chain aspects of its own business moving products around the country to its own warehouses and stores. Although it has a patent for airship-based warehouses they are further into the future than the drones that the patent shows as flying to and from it.
In the meantime, its customers can have items delivered into their home with the Amazon Key service or have them put into the boot of their car with the In-Car service. The Amazon Key and Volvo On Call apps will notify customers when the delivery is about to happen. On the day of delivery, customers should park within range of their delivery address and a delivery driver will deliver the package during the scheduled time window. Customers will be notified when the delivery is completed and the car is safely locked.
Amazon Prime members can even order clothes to try on before they pay for them with the Amazon Wardrobe service. Shoppers can keep clothes for seven days before returning any that they don’t want.
Many developments in the past year have shown how Amazon is utilising its Prime subscription service to further enhance services for members and bring in additional benefits. The rise in the membership of its Prime subscription service is one of the areas highlighted by the company in the 2017 financial year: “More new paid members joined Prime in 2017 than any previous year — both worldwide and in the US,” the company says.
The moves at Whole Foods with Prime becoming a rewards programme is just the start of innovations across channels as the retail giant gets to grips with the offline side of retailing at both the front and back end of supply from product development to customer lifetime value.
Expect more as it looks to offline in its experimentation and it continues to keep its eyes on the long term.