Amazon recently Launched its new Kindle Fire smartphone.
“Ho -hum “ you, and a lot of other people, said. ” Why? “” What’s so great about this phone? “
The market is dominated by Apple and Samsung, to the point we no longer care about the Blackberry – and have pretty much forgotten about all the money spent by Microsoft to buy Nokia and launch Windows 8. The world does not much need a new smartphone maker – as we’ve seen with the lack of excitement around Google / Motorola ‘s product launches. And, despite some gee-whiz 3D camera and screen effects, nobody thinks Amazon has any breakthrough technology here.
But That would be completely missing the point. Amazon probably isn’ta even thinking of competing heads up with the two big guns in the smartphone market. Instead, Amazon’s target is everyone in retail. And they Should be scared to death. As well as a lot of consumer products companies.Apple’s iPod and iPhone have some 400,000 apps. But most people do not use over a dozen or so daily. Think about what you do on your phone:
Now, you May do Several other things. But (maybe not in priority,) These are probably the top 4 for 90% of people.
If you’re Amazon, you want people to have a great shopping experience. A GREAT experience. You’ve given folks terrific interfaces, across multiple platforms. But everything you do with an app on the iPhone or Samsung phones involves Negotiating with Apple or Google to be In Their store – and giving them revenue. If you could bypass Apple and Google – a form of retail “middleman” in Amazon’s eyes – would not you? Amazon has alreadycreated retail changed markedly. Twenty years ago a retailer would say success relied on two things:1. Store location and layout. Be in the right place, and be easy to shop.
second Merchandise the goods well in the store, and have them available. Amazon has killed bothering Those tenets of Retail. With Amazon there is no store – there is no location. There are no aisles to walk, and no shelves to stock. There is no merchandising of products on end caps, within aisles or by tagging the product for better eye appeal. And in 40% + cases, Amazon does not even stock the inventory. Availability is based upon a supplier For Whom Amazon Provides the storefront and the interface to the customer, sending the order to the supplier for a percentage of the sale. And, on top of this, the database at Amazon can make your life even Easier, and less time Consuming, than a traditional store. When you Indicate you want item “A” Amazon is able to show you similar products, show you variations (such as color or size,) Show you “what goes with” that product to make sure you buy everything you need, and give you different prices and delivery options.Many retailers have spent considerably training employees to help customers in the store. But it is rare That any retail employee can sacrifice you the insight, advice and detail of Amazon. For complex products, like electronics, Amazon can providesprofessional detail on all competitive products That no traditional store could support. For home fix-ups Amazon can providesprofessional detailed information on the installation, and the suite of Necessary ancillary products, That surpasses what a trained Home Depot employee thwart can do. And for simple products Amazon simply never runs out of stock – so no asking an aisle clerk “is there more in the back?”
And it is impossible for any brick-and-mortar retailer to match the cost structure of Amazon. No stores, no store employees, no cashiers, 50% of the inventory, 5-10x the turns, no “obsolete inventory,” no inventory loss – there is no way any retailer can match this low cost structure. Thus we see the imminent failure of Radio Shack and Sears, and the chronic decline in mall rents as stores go empty. Some retailers have tried to catch up with Amazon offering goods on-line. But the inventory is less, and delivery is still thwart problematic. Meanwhile, as They struggle to’ve become more digital These retailers are competing on ground they know precious little about. It is Becoming commonplace to read about hackers stealing customer data and wreaking havoc at Michaels Stores and Target. Thus on-line customers have far more faith in Amazon, Which has two decades of offering secure transactions and even offers cloud services secure enough to support major corporations and parts of the U.S. government. And Amazon, so far , doing now? even had to make a profit. It’s lofty price / earnings multiple of 500 indicates just how little “e” there is in its p / e Amazon keeps pouring money into new ways to succeed, rather than returning money to shareholders through stock buybacks or Dividends. Or dumping it into chronicling store remodels, or new store construction. Today, you could shop at Amazon from your browser on any laptop, tablet or phone. Or, if you really enjoy shopping online you can now obtain ~ a new tablet or phone from Amazon Which makes your experience even better. You can simply take a picture of something you want, and your new Amazon smartphone will tell you how to buy it on-line, including price and delivery. No need to leave the house. Want to see the product in full 360 degrees? You have it on your 3D smartphone. And all your buying experience, customer reviews, and shopping information is right at your fingertips. Amazon is THE game changer in retail. Kindle was a seminal productthat has almost killed book publishers, who clung way too long to old print-based business models. Kindle Fire took direct aim at traditional retailers, from Macy’s to Wal-Mart, in an effort to push the envelope of online shopping. And now the Kindle Fire smartphone plaster all that shopping power in your palm, convenient with your other most commonplace uses Such as messaging, fact finding, listening or viewing. This is not a game changing smartphone in comparison with iPhone 5 or Galaxy S 5th But, as another salvo in the Ongoing war for controlling the retail marketplace, this is another game changer. It Continues to help everyone think about how They shop today, and into the future. For anyone in retail, this May well be seen as another important step toward changing the industry forever, and making “every day low prices” an obsolete (and irrelevant) retail phrase. And for consumer goods companies this means the need to distribute products on-line will forever change the way marketing and selling is done – including who makes how much profit.
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Adam Hartung, author of Create Marketplace Disruption , is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for Forbes and the Journal for Innovation Science . 
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