Amazon’s marketing strategy can be summed up in a single sentence;
“Amazon will dominate any market they want because they are willing to provide a better level of service at a lower cost until no one else is competitive”
Amazon is just frankly more competitive than any other company. They are willing to do the most to win, and that is their advantage. It is difficult to beat a company that isn’t worried about making a profit in a 5 to 10 year window.
Most people look at this as a negative, but I think it is simply a good business model. If you’re building a business, you should be focused on building it for life. This shift in mindset is what allows companies to grow. In business, you almost* have a binary option to optimize for growth or profit. Now, I am not advocating to not make money, I’m simply pointing to the timeframe you want to make that money in.
In 2017, Wal-Mart made more money in a week than Amazon did in a quarter. This is not by accident. The reason Amazon’s valuation is 3x than Wal-Mart can be simplified down to this decision by Jeff Bezos to optimize for growth, not profit.
So, it is no surprise that Amazon is now entering into the apparel space with a revolutionary offer; a “try before you buy” subscription service similar to that of Truck Club & Stitch Fix.
With Amazon quietly private labeling over 80 new brands, it only makes sense that they would use their direct pipeline (Prime) to introduce these brands to the world.
What does this mean for the competition?
We are not naive enough to think every company can compete with Amazon. They have the deepest pockets in the game, and access to the cheapest capital in the world. So, do you pack your bags and go home? No!
You figure out how to serve customers better, creating value in the white spaces Amazon cannot operate in.
Take Chewy for example. The $3 Billion dollar company competes in a space directly with Amazon, subscription based pet products. But they are able to out-maneuver Amazon through what they call “Delivering Happiness”. That sounds familiar doesn’t it? *cough cough Zappos*
Get creative with how you can outperform Amazon, the white spaces are there. A good place to start is to look at Amazon’s acquisition behavior and ask yourself “why did Amazon buy this company instead of building it internally?”.
At the end of the day it comes down to a simple principle; are you optimizing for growth, or are you maximizing profitability?