Amazon summary

One simple truth of retail is that you can’t have a store without customers.

Amazon understands this better than anyone else, which is why it’s put customers at the center of its business strategy from day one. In fact, Customer Obsession is the very first of Amazon’s 14 leadership principles.

The concept of retail incentives like loyalty programs, coupons, and discount cards is almost as old as retail itself. Given its customer obsession, it’s no wonder that Amazon has put a lot of effort into developing its own reward system for loyal shoppers: Amazon Prime.

When it was launched in 2005, Prime membership cost $79 a year, and its main advantage was access to free two-day delivery on Amazon’s broad range of products. But over the years, membership benefits have expanded far beyond shipping.

There’s no denying that the rise of online shopping has plunged traditional retail into a crisis. While online sales have doubled in the past five years, stores all over the United States and Europe are closing down. Over 20 major retailers, including iconic brands such as Toys R Us, have had to file for bankruptcy in the last few years.

Curiously, in the same period of time, Amazon began to open its first physical stores. In 2015, somewhat ironically, it opened a bookstore in its hometown Seattle. In 2018, it premiered Amazon Go, a cashierless supermarket. Since then, physical Amazon shops and pop-ups have been tested around the world.

In mid-2017, Amazon made a startling announcement: it had bought Whole Foods, the famous US organic supermarket chain.

Even seasoned business experts were a little confused by the move. At the time, most online retailers’ experiments with grocery shopping had been met with tepid reactions from customers. As early as 2007, Amazon had begun testing its own grocery delivery service, AmazonFresh, in Seattle. But even though it has since expanded to multiple US and European cities, uptake of the service has been relatively slow.

If you want to win retail in the age of technology, you’d better know a thing or two about technology. Luckily, Amazon is at least as much a tech company as it is a retail business.

In fact, another of Amazon’s leadership principles is Invent and Simplify. Over the last few decades, they’ve done quite a bit of both those things, investing in futuristic-sounding technology like Artificial Intelligence, robots, drones, 3D scanning, virtual reality, and driverless cars.

By pioneering one-click orders and two-day delivery, Amazon has been a key driver of rising customer expectations in the digital age. Amazon is the reason why today, when shopping online, customers take it for granted that products are delivered fast and free of charge.

With its launch of Prime Now in 2014, Amazon further raised the stakes for other retailers. Available in over 30 cities in North America, Europe, and Japan, Prime Now promises two-hour delivery on an increasing variety of products, a potential lifesaver when it comes to a birthday, anniversary, or Christmas.

Amazon’s swift rise to the top of online retail and its continued expansion into almost every category of commerce make many business owners tremble in terror of a coming retail apocalypse.

What’s more, it’s very likely that Amazon’s range and flexibility will allow it to continue transforming the landscape of modern retail, pushing customer-centric innovations and disrupting entire industries. But that doesn’t mean that other retailers won’t stand a chance against the online behemoth.