Amazon and Alibaba are retail's global superpowers shaping the future of global commerce. The presentation overviews Leadership, Culture, Commerce Ecosystems, Performance, Innovations, Competitors, New Business Model and Learnings
2. “Never before have we seen a company so large, grow so fast,
disrupt so many sectors, spend so much on R&D, deliver so much
radical innovation, engender so much customer loyalty, attract
the lowest cost of capital, have such a high PE ratio, generate so
little profit, pay so little tax, and destroy so many jobs.”
5. Sam Walton
Mastered the art of minimum wage
employees selling you stuff in
warehouse stores.
Jeff Bezos + Jack Ma
Mastering the science and algorithms of robots
to get stuff you want fast before you need it.
RETAIL’S TECTONIC SHIFT
Photo Source: Google Images. Quote Source: Adapted from Scott Galloway L2 Inc. 2016.
Scott Galloway (L2 Inc.) has defined the shift in Retail by contrasting Sam Walton & Jeff Bezos.
6.
7. C ULT UR E
R E TA IL E C O SYST E M
PE R FO R MA N C E
A MA Z O N R E IN VE N T IN G R E TA IL
A LIB A B A’ S N EW R E TA IL IN N O VAT IO N S
3 R E TA ILE R S W IN N IN G W IT H A MA Z O N
4 C O N SE Q UE N C E S
N EW R ETA IL MOD EL FO R G ROW T H A N D RE ALIT Y
9 LE A R N IN G S
9. “Over the last two decades, we’ve collected a large
group of like-minded people. Folks who find our
approach energising and meaningful….customer
obsession rather than competitor obsession,
eagerness to invent and pioneer, willingness to fail,
the patience to think long-term and the taking of
professional pride in operational excellence.”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
11. “Get used to rejection, keep your
dream alive, focus on culture, ignore
the little man (who doesn’t
understand your idea), get inspired,
stay focused, have a good name,
customers are number one, don’t
complain, look for opportunities and
lastly…have passion.”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
12. CHAMPIONING GLOBAL SMALL BUSINESS
Source: Alibaba
Spirit of entrepreneurship, innovation and unwavering focus on meeting the
needs of our customers to generate opportunities for prosperity
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
14. Source: Amazon Annual Reports
“Our mission is to be the Earth’s most
customer-centric company, where
customers can find and discover
anything they might want to buy online,
and endeavors to offer its customers the
lowest possible prices…we always work
to meet those needs, innovating new
solutions to make things easier, faster,
better, and more cost-effective.”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
16. “Whilst Amazon is an empire
that controls the supply chain
we are focused on developing
an ecosystem to empower
others to sell and service. We
are an ecommerce company
improving the world by helping
10M global small businesses
serve 2B customers”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
24. 5% 6% 7%
18%
27%
38%
45%
66%
2010 2011 2012 2013 2014 2015 2016 2017F
Source: L2 from Piper Jaffray, MWPL. Facebook. Twitter. US Census Bureau. L2 Inc.
US Population living within 20
Miles of Fulfilment Centre/Stores
FULFILMENT INFRASTRUCTURE FASTER DELIVERY
Amazon’s US Fulfilment & Whole
Foods Network
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
25. Source: Euromonitor International & Credit Suisse
AMAZON’S SALES MIX
US Amazon GSV
$B 2011-2016
Amazon & Third Party Product
Range & Fulfilment %
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
26. Source: L2 Inc. Scott Galloway DLD 2017.
AMAZON LEADS PERSONALISATION
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
27. AMAZON DEVICES
KINDLE FIRE TABLETS FIRE TV DASH ECHO
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
34. Photo Source: Google Images
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
35. Leverage 465 store network & apply
AmazonFresh, Pick Up & PrimeNow
innovations to offer a range of fast cheap
delivery options. Lower prices. PL on
Amazon.com. Amazon Lockers.
17% traffic increase
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
Photo Source: Google Images
36. @johnbatistich
“We want Prime to be such good value, you’d be irresponsible not to be a member.”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
38. 2 5
12
25
40
53
66
90
100
2010 2011 2012 2013 2014 2015 2016 2017 Apr-18
Members ($M) Revenue Per Customer
$700
$1,300
$10,000
Non Member Prime Member Ambition
PRIME MEMBERSHIP & VALUE
Source: Business Insider. L2. Amazon Company Reports. Recode.
Drivers
Faster fulfilment
Better pricing
Private Label Discounts
Video/Music streaming
Alexa
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
39. Photo Source: Google Images
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
40. "When Amazon grows we grow”
David Potts CEO Morrisons
Prime Now customers can order one-hour deliveries. Orders
picked at local Morrisons store and delivered the same day by
Amazon within one hour for £6.99 or in a two-hour slot for free.
Photo Source: Google Images
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
41. Photo Source: Google Images
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
42. “Prime Video offers exclusives from some of the world’s most passionate storytellers. These shows are
great for customers, and they feed the Prime flywheel – members who watch Prime Video are more likely
to convert from a free trial to a paid membership, and more likely to renew their annual subscriptions. We
measure engagement and obtain data to make better customer recommendations”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
@johnbatistich
43. “When we win a Golden Globe, it
helps us sell more shoes.”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
Photo Source: Google Images
44. DISRUPTING CONTENT TO DRIVE PRIME FLYWHEEL
Source: L2 Inc. via The Economist
$2.5
$4.0 $4.3 $4.5
$6.0
2017 Content Budgets ($B)
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
45. @johnbatistich
“Alexa is primarily about identifying tasks in the household that would be
improved by voice. (For shopping) Alexa is good for reordering
consumables, where you don’t have to make a lot of choices.”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
46. “Alexa, the voice service that powers Echo, provides
capabilities, or skills, that enable customers to interact with
devices in a more intuitive way using voice. Examples of
these skills include the ability to play music, answer
general questions, set an alarm or timer or order needs.”
Photo Source: Google Images
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
48. Spending increases by +10%.
84.9% 82.4%
66%
45.9%
40.9%
25%
34%
17%
31%
10%
Tell Time Play Music Read News Control Lights Shop/Order
Source: Experian, Creative Strategies (Based up on a survey of 180 Amazon Echo users conducted May 2016)
Echo Usage (%)
ECHO USE CASES
Tried once
Used frequently
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
49. 70.6%
23.8%
5.6%
Amazon Echo Google Home Other
User Share of Voice Enabled Speakers in the US
2017
AMAZON LEADING ON VOICE INTERFACE
Source: EMarketer
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
51. @johnbatistich
“AWS has become the world’s most comprehensive, widely adopted cloud service with
more than a Million customers. AWS offers more than 70 services: compute, storage,
databases, analytics, mobile, internet of things and enterprise applications”
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
52. 4.6
7.9
12.2
20
2014 2015 2016 2017
AWS Net Sales ($B) Significant Product Features Released
Source: Amazon Company Reports.
61 82
159
280
516
722
1000
1400
2010 2011 2012 2013 2014 2015 2016 2017
AWS REVENUE AND INNOVATION
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
53. COMPETITIVE POSITION FOR CLOUD SERVICES
40%
25%
35%
Source: Gartner. L2 Inc from Synergy Research Group
2016
Other
Gartner Cloud Infrastructure Comparisons Market Share ($)
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
68. LOWER TAXES
Source: S&P Global Market Intelligence. L2 Inc.
39% 38%
35%
31% 31%
27%
24%
21%
17% 16%
13%
Lowe's Home Depot UPS Starbucks WalMart S&P 500 FedEx Microsoft Apple Alphabet Amazon
Tax Rate Covering US Federal, State and Local and Foreign Taxes
2007 - 2015
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
69. 1%
-4%
-5%
0%
1%
-3%
-5% -5%
0%
1%
-4% -4%
-5% -5%
2%
-5% -5%
-7%
-9%
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
AMAZON INTENTION EFFECT
Impact of Stock Price in First 24 Hours Following an Amazon Announcement
Dental Supplies RX Drugs Sporting Goods Grocery
Source: L2 Analysis of Yahoo Finance Data
70. POLITICAL INTERFERENCE
Source: Center for Responsive Politics. L2 Inc.
17.0 16.4
15.4
14.3
13.6
11.8 11.4
10.1
8.7 8.7
Boeing AT&T Alphabet Comcast Dow Exxon Amazon Verizon Microsoft Facebook
Top 10 Lobbying Spenders 2016
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
71. 9 DRIVERS FOR THE NEW
MODEL FOR GROWTH
8
@johnbatistich
72. S&P 500 Companies with Above Average Revenue Growth
Past 5 Years
56%
50%
37%
32% 30%
26% 25% 25%
22% 21% 19% 18% 18%
Source: L2 Inc. S&P Global Market Intelligence, USA Today Research.
Technology B2B
Technology Algorithm
Outsourcing
Health
FASTEST GROWING COMPANIES
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
73. NEW DRIVERS FOR VALUE
Source: L2 Gartner
AWESOME USER EXPERIENCE
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
79. AMAZON’S PLANS
1. Build Team/Partnerships
Create Amazon Culture
Appoint Partners/Engage Retailers/Brands
Tech build/converge .com & .com.au
4. Build Out Distribution Centre
Network & Partner with Aus Post
8 Distribution Centres likely
Aus Post manages last mile
6. Launch Prime
Membership Mid 2018
Guarantee Next Day delivery
Support with free video/content
3. Focus on Input Drivers
Wide Range
Equal lowest Pricing/No undercutting
Improve Fulfilment (but not solve)
Exceed Customer Expectations
7. Learn Grocery
Hold to find best route to market
5. Expand Range
Increase First Party Product Mix
Focus on Apparel/Footwear
Expand longtail
2. Measured Staged Low
Investment Strategy
No owned last mile distribution
Staged Category Roll-out
No Grocery first 5 years
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS
Best single day launch in history
Traffic almost doubled to 3.8M Visits
48% Books 31% Consumer
Electronics
90% Third Party
81. INCUMBENTS FUTURE
Innovation Platform Invention
Path to Purchase Eliminate Stages. Magic Delivery
Competitor Focus Customer Obsession
PowerPoint Presentations Narrative Recommendations/Decisions
Profitability Reinvest for Growth Storytelling
Products Dominate Open Platforms
Assets Capabilities & Super Powers
Next Quarter Long Term View
Win Share. Make Budget Day One. Make History
LEARNINGS FROM RETAIL’S DISRUPTIVE FORCES
CULTUREECOSYSTEMPERFORMANCEAMAZONALIBABACOMPETITORSCONSEQUENCESREALITYLESSONS