Last week the news broke that Amazon had signed up Jeremy Clarkson, James May and Richard Hammond, formerly of Top Gear, to promote a motoring show on the ecommerce giant’s video-streaming service. The ensuing headlines capped an impressive few months for Amazon, as it continues to expand through rapid innovation.
Shortly before the Top Gear excitement, Amazon upgraded its Prime service in the UK to include its music-streaming service, which had previously only been available in the US, and the one-hour delivery times offered by Prime Now. Given the hype around Apple’s attempt to take on Spotify in the music-streaming service, Amazon’s move also garnered quite a lot of attention. Although Prime currently offers a music library 30 times smaller than Apple or Spotify, its wingspan does extend to over 500,000 ebooks and 15,000 movies and TV shows. As a service it’s impressive, but its true purpose is to bring customers to Amazon’s core business and order products from the main website.
Amazon’s business model is built around innovation, and it doesn’t look like that will ever change, despite reporting a surprise profit last month. The profit was a surprise because, although the company probably makes a profit on each individual transaction, it spends so much money on innovating that there isn’t any money left over. The company has in the past even been compared to a charity. More recently, though, those innovations are starting to show real, ground-breaking results, and not just in terms of profit and loss.
Amazon’s USP is, of course, the convenience with which it gives users access to thousands of SKUs without overwhelming them, whilst at the same time using data to suggest items to shoppers that they didn’t previously know they wanted.
One recent innovation has been the launch of the push-to-order Dash buttons, which, as of last month, are now available to consumers in the US. The latest thing in convenient shopping, the buttons can be placed around the house and, after being connected to a smartphone, will order one of the 266 available household products on the Amazon App with a single push. And if it wasn’t enough to have Amazon in your home, the company is reportedly set to disrupt the grocery market, with the launch
of an 11,600 square-foot McDonald’s-like drive-through in California. Again, the focus is on convenience, with the idea that shopping will be much quicker and simpler. You’ll be able to buy fresh ingredients that Amazon currently can’t deliver, and of course you won’t need to pick up the bulkier items like washing powder because you’ll have a Dash button ready to order them for you. The company is looking to claim a 2% share of the grocery market in the UK. It may not sound like much, but it’s around three times what Ocado currently has – a good example of Amazon’s insatiable ambition to be the one-stop shop for everything you could ever need to buy.
Past innovations and expansions are already beginning to pay off, with the company poised to become the largest apparel retailer in the US by revenues in 2017. If Amazon can pull off similar success in the grocery market, we could be about to witness an even bigger disruption than the arrival of the German discounters. It remains to be seen whether that will lead to Amazon making a profit.
Will Amazon ever stop innovating, and will it become consistently profitable? Send me your thoughts at moira@thembsgroup.co.uk and have a great weekend.