Monday, October 31, 2011

The Four Horsemen Driving The AMAZON Retail Apocalypse

The Four Horsemen Driving The AMAZON Retail Apocalypse Are: Inertia, Fear, Myopia, Apathy

Amazon’s “Killing Fields” are now relentlessly consuming the entire Specialty Products Industry with significant help from “The Four Horsemen of the Retail Apocalypse” (Inertia, Fear, Myopia & Apathy).
Amazon’s recent QUARTERLY results show their $40.3 billion online sales rose $3.3 billion (31% y/y);  more than the TOTAL sales of most specialty retailers whose in-store y/y sales were -2% to +3%.
Borders (1971-2011), Blockbuster (1985-2011), and Circuit City (1949-2009) (collectively “BB&C”) were the largest “Big Boxes” recently taken down by Amazon, with more on the way.
The Problem Is:  the bigger Amazon gets, the more NEW sales it needs to continue its 30% annual growth over the next 10 years.  And to do this, they are significantly investing in new technology and infrastructure all the time to meet these higher and higher internal growth needs.
What Can You Do About It ?     It’s really quite simple:
E-Commerce is relatively new. Amazon had a 15 year head start.  Copying Amazon now is risky with dubious to mediocre results at best.  You need a significant “Game-Changer” not a ho-hum copy-cat.
Beware The Four Horsemen (Inertia, Fear, Myopia & Apathy) who force the gates open from within allowing Amazon inside unchallenged to destroy you and your Industry (confirmed in chart one below).
Here are a Few of The Horsemen’s Misguided Opinions that Push Open the Gate;  Allowing Amazon Unobstructed Entry to Your Customers. (You simply need to close the gate).
1.       When the economy recovers, so will we” – Your company’s decline began 1.5 years BEFORE the recession which ended one year ago (see Dow Jones below & the “Real Reason” Amazon).
2.        “You are blowing this whole Amazon thing way out of proportion” – Look Ahead – Within 10 years Amazon will be the #2 retailer in America next to Walmart from their current #17 position unless they are stopped now.
3.         “We don’t believe your Pro Formas can be achieved” – Prospective client only see our Plan ‘A’ – We achieved Plan ‘C’ (a MUCH larger plan) with one of America’s largest retailers, and we can prove it.
4.       “We want to be on the leading edge, not the bleeding edge” – What about the fact that Amazon already has you on the bleeding edge (see below).
5.        “The bar has been set for next-day delivery” – What about Amazon’s “Same-Day delivery, significantly up from their previous “Next-Day” and 3 to 10 days.
6.       Nobody needs things in 30 to 60 minutes” – Amazing.  Our research proves consumers prefer service in 30-60 minutes (83%) Vs. Same-Day (33%).  What else do you think can beat Amazon’s “Same-Day” service ? AND why are they offering it ?
7.       We’ve been in this business for years and don’t need anything new” – What about your customers who are now at Amazon – they wanted something new. (see below)
8.       What if it doesn’t work for us” – What about the decline of your sales, profits and share value over the last five years ?  Try it in ONE benchmark city.
9.       This is so new, I could lose my job if I OK it” – What about your job (and résumé) if your company follows BB&C ?  Trying it in one benchmark city gives you huge rewards with minor risk.
10.   We had other problems like this before but our senior executives always came through What about your responsibility to suggest/recommend/implement “turn-around” change ?
11.   We’re introducing new features into our website, like a complementary marketplace to offset Amazon” – What about Amazon’s 15 year head start ? Copying Amazon will not stop them from depleting your in-store sales, quite the opposite.
12.    “We’re installing our own Rapid Delivery system” – When you consider added staffing to cover your considerable PEAK & VALLEY order periods, it’s cheaper and more efficient to hire local couriers.  (Webvan; Borders & McDonald’s amongst many, tried DIY and failed.)
The Grand Finale:  “What makes you think you are the only solution to our problems” – Please see ‘Our Credentials’ below.  Offsetting the drain on your sales by your biggest marketplace problems (Amazon, eBay & Walmart) with new growth sales, free cash flow and higher profits by implementing a proven system they can’t duplicate will have a tendency to mitigate your other lesser internal problems.
When your Innovative Industry Executive Champion objectively looks line-by-line at: (1) our detailed SuperCyberCenter ‘Before & After’ P&L statements; (2) Earnings Analysis;  (3) 18-month ramp-up per store;  and (4) 3 to 12 months capital payback period; they will quickly confirm our claim – and want to at least try it in one benchmark city.
Assuming you are open to something new, we are the only realistic “game-changing” solution to The Amazon Retail Apocalypse (shown graphically below).
As far as The Four Horsemen go, behind them are good people, but they need your Executive help to get on track with the current problem below.
These Other Four Horsemen (Action, Courage, Vision, Boldness) Can Easily Beat AMAZON – as long as they know:
1.       There is an INDUSTRY-WIDE problem – that is relatively new, but growing quickly.
2.       Their job is not at risk for “trying” a new significant “game-changing” solution.
3.       AND they will be rewarded for their extra efforts.  Win-Win – not Lose-Lose.



Gail Nichols

Vice Chair

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