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Amazon is "eroding" the world

via:博客园     time:2017/5/19 15:31:45     readed:779


Editor's Note: Why can Amazon be bigger and bigger? Its technology and model can not be copied? What is its real advantage, is the excellent delivery capacity or advanced technology innovation?Zack KanterThe author of the profound analysis of the Amazon company "product" and the real value, and that the next decade will not have any retailers to go beyond Amazon.

December I and others co-founded a software company. Every month I send the latest information to our investors so that they can keep abreast of our progress. But some of the past month is not the same - we are in the industry (retail) is experiencing a change.

I have not only written in our mail, "I have also written an imminent crisis in the broader world retail industry. More precisely, I wrote some thoughts on the Amazon and why their lead will only be getting bigger and bigger. Amazon is now the world's most influential company, it is also the least understanding of the company. Some people suggested that I put this view out, and is there is this article.

I started the first company to be an auto parts manufacturer and at the same time as a supplier (Amazon and its purchase of large quantities of goods for purchase orders) and "market sellers" (Amazon from third-party sellers on Amazon.com Share) sell products to Amazon & mdash; so I understand some of the internal operations of Amazon and its motivations, those that are not often openly discussed.

I am also concerned about the AWS (Amazon Web Services) and other Amazon-supplied products / services that Amazon has become a personal thing that has become obsessed with me as a company. I have some far more understanding of Amazon and the immediate retail crisis, and want to share those who are interested in the whole retail future.

Public opinion agreed that we have reached a critical point, the retail industry has finally faced by the Amazon monster-like growth brought about by the heavy hit & mdash; while mainstream media / non-tech news also began to report a lot. So there are many discussions about whether Amazon's advantage can last long, or whether other retailers (such as Wal-Mart) can divide Amazon's market by copying the Amazon model.

Most of the analyzes I've seen are talking about the wide range of Amazon's strengths and mdash; and I have called the "important moat" and "od points" and "mdash" and estimate whether Amazon's projects are replicable In the same competitor as Wal-Mart. Amazon These projects are well known in the technology community, such as Amazon Prime two days arrival (or even 1 hour arrival), Amazon Amazon Marketplace (third party can put their goods on the Amazon site for sale), Amazon Under the store Amazon Go (you can not cash automatically in the customer's Amazon account checkout), and Amazon UAV delivery plan.


Amazon UAV

Indeed, copying the above projects is feasible for Amazon's large rivals, and Wal-Mart is also likely to be able to create and master these technologies over the next few years. The key to a two-day arrival (or an hourly arrival) service is the proximity of the customer to the distribution center of the goods. Wal-Mart already has more than 150 distribution centers & mdash; its total floor area is much larger than the Amazon logistics center - although these distribution centers are for its (11,500!) Stores through Wal-Mart (more than 6,000 vehicles!) The truck's logistics network is used for purchase.

I believe that Wal-Mart has the ability to build delivery capacity for the realization of e-commerce re-allocation of its logistics network is not a problem. At the same time Amazon is building the last mile of distribution solutions (through UAVs, distribution robots, and a called Amazon Flex artificial extraction services), in any of the above areas have many third-party start-up companies to Wal-Mart to provide a certain degree of similar technology.

Through the above facts, I would like to show that Amazon is the world's most defensive company, and we have not seen it really beyond the opponent's field and scope. Amazon's leadership will continue for the next few decades, and I do not think any retailer can stop it from moving forward.

The reason is not the previously mentioned "moat", nor is it an innovation culture or Bezos as a CEO's vision (although I do think that Amazon's culture is great and Bezos is the most People admire the CEO). But a very important fact - every part of the Amazon is based on the design of service-oriented design, and the use of this design basis, the success of the company every part of the company have become an independent platform, and then Thereby allowing each platform to compete with the outside world.

I remember reading the usual pitfalls that vertical integration companies would encounter when attending school. Often vertical integration will produce some very attractive overhead savings (or from within the package or from the acquisition of suppliers / distributors), but at the same time, the rising profits will typically be due to the "ralph lauren pas cher" In its exclusive internal "customer" and evaporate over time.

In the automotive industry there are many such examples in the car manufacturers to acquire the supplier stage and then divest their huge expense part of the stage, no external competition departments become bloated and inefficient. Attempts to correct by bids / external parity, meticulous costing, and quota systems ultimately lead to an increase in bureaucracy that has little impact on real cost.

The most notable example of Amazon's Service-Oriented Architecture (SOA) is the Amazon Web Services System (AWS). Because at that time Amazon was in an unprecedented scale of expansion in early 2000, high-speed development, and enterprise-class SaaS has not been able to widely used - Amazon had to create their own technology infrastructure. Turning its basic technology into an external product is simply a financial genius - Amazon has been unexpectedly huge gains, the annual operating rate of 14 billion US dollars. But the richness of income is only a footnote: it can prevent the company from falling into inefficiency and stagnation in the future by making the company's internal operations part of a platform, as compared to the organizational insights that Amazon has received from it (the outside world often ignores this) The


Amazon CEO

Since the start of AWS for more than a decade, Amazon has been systematically rebuilding each of its internal tools into an external consumer service. A recent example is AWS released the Amazon cloud customer service center Amazon Connect, which is a self-help set of cloud contact platform, is based on Amazon's own internal customer service technology to create. Amazon once again received a lucrative extra income & rdquo ;, but its most real value lies in the tempered of the internal tools of the Amazon.

If Amazon Center is completely a business failure, then the Amazon management will be from the quantitative indicators (gains, or income reduction) to understand their internal tools in the market competition is very backward. Amazon has replaced useless and time-consuming bureaucracies, such as internal investigations and audits, with a feedback loop that can be profitable when it works well - and when it's running poorly, it can quickly find the problem. Some people say that the money earned is a measure of the value of what you create for the world, and that Amazon has found a way to measure its own value in areas that were not visible in the past.

But these are obvious, we all understand AWS. The most amazing thing is that this strategy has penetrated every aspect of the Amazon, this strategy is the history of modern company one of the greatest efforts. Amazon has been the entire ecosystem of every corner and gap are connected with the outside, and I think it is almost impossible to copy this is a long external service chain.

One of the most well-known examples is Amazon Logistics (FBA). If you have bought from Amazon to write "by a company sold by Amazon and distribution" goods, then you have seen the operation of the FBA.


Amazon FBA

Through the FBA, the seller of their own Amazon on the sale of product inventory directly to the Amazon local market warehouse, the customer orders the Amazon system will automatically follow the delivery, and even deal with all the return and customer service. The annual operating rate for this service is highly competitive. And FBA is not limited to the sale of goods on the Amazon and sellers can also use Amazon's "multi-channel fulfillment" (non-channel fulfillment) to non-Amazon ordered goods shipped to its customers hands. For example, if Hydro Flask has a separate shop on Shopify, Hydro Flask can give the order to the FBA when the customer orders the Shopify, and the FBA will deliver the goods directly to the customer.

The benefits for Hydro Flask are obvious. They can produce their goods in China, through the Flexport such a large freight company to the goods directly to the Amazon warehouse & mdash; this eliminates the need for their own operation of a warehouse trouble (and cost). For Amazon, the benefits of the surface are also impressive: 1) Better use of excess capacity, 2) Increased amount of cargo / leveraged by UPS / FedEx, 3) Revenue from logistics (with Amazon) Marketplace and other third-party seller services "together, the first quarter of 2017 fiscal year total revenue of up to 6.4 billion US dollars, accounting for 25% of Amazon's total revenue)

In this case, the longer-term gain is the promotion of Amazon's internal distribution service after opening up. Distribution and shipping is Amazon's largest expense center, and because it is the most involved in the human sector, so easy to self-expansion.

For the multi-tenant, such as FBA, the standards required for an off-the-shelf service have created a great deal of efficiency for Amazon's internal operations. This is not a local tool for centralized intrusion, which is hard-coded only for Amazon's own The tool is almost impossible to get promoted.


Amazon transport aircraft

Xlt is a relatively clean, abstract and service-based interactive interface operated by an independent team & mdash; a team responsible for external customers. Bezos has instilled a sense of customer worship at Amazon (the most customer-centric company in the world), giving Amazon three different divine customer groups: consumers at Amazon.com, developers ( In AWS), and third-party sellers (at Amazon Marketplace / FBA).

Another point, I think other retailers want to copy FBA will be very difficult. It is unimaginable to mix the hundreds of thousands of sellers' inventory together with the technical and organizational complexity. In particular, it is necessary to take into account the permutations and combinations based on the different settings between the seller and the seller.

Automated systems for planning routes and splitting inbound goods can best allocate goods to individual distribution centers (based on capacity, customer's historical geographical distribution, and other conditions), which is a very important one for Amazon itself task. Amazon has had more than a decade of experience in this field (FBA was founded in 2006), and I think Amazon's huge investment in FBA has caused them to earn most of the money over the past decade.

Their mistakes are also very high. I personally know a few sellers, they do not ask any reason for the Amazon lost the goods reimbursed tens of thousands of dollars. Not to mention the huge technical challenges, which other retailers have such appetite to swallow the next project for so many years caused such a huge loss?

I am well aware that Amazon will turn to small packs (UPS / FedEx / USPS) for the next five years. They are checking their income statements and picking out the biggest categories to produce the first ("AWS") and then the logistics (FBA), again the COGS (through Amazon's own own branding project The actual production of the product), then the next is the freight. They have already started running their own transport teams, including 40 cargo planes and thousands of trailers. They have built dozens of parcel sorting centers to reduce the cost to the existing small parcel carrier. And freight and their service model is very fit & mdash; on the one hand they have a huge internal demand, on the other hand their existing customer service can be used first.

The important advantage of Amazon over other enterprise service providers (from UPS and FedEx to Rackspace) is that Amazon must use its own services. UPS will be knocked out due to loss / damage to parcels, shipping delays, bad software, and poor holiday traffic planning. The angry customer blames the retailer and the retailer roared to the UPS. If Amazon is the service provider, they will always use this service internally. This will make the weak links nowhere to hide. In addition, Amazon has built a feedback loop as a moat, the flywheel is starting to alarmingly speed up.

Amazon has put the idea of ​​the company's product implementation is very detailed. Even if it can not sell the service, Amazon is still pushing the service open to the public. A perfect example is the Amazon Marketplace Web Service (MWS) API, Amazon Mall sellers can use this service at any time with the Amazon exchange of data. Amazon created a service called "subscribe API & rdquo; that instantly informs the seller of any price changes in its competitors (including Amazon itself)!"

Amazon's open tool is actually used to set its own price to ensure that the goods on their website are sold to consumers at the lowest possible price. This developed an eco-system called a third-party price optimization tool called "Relricers", which automatically responded to price changes using the MWS API, thereby expanding sales to Amazon sellers as much as possible (Washington Times was March published a very good report, and appropriately compared it to high-frequency transactions). Wonderful is that Amazon does not care about the price of the third party seller's commodity is not lower than their own - because Amazon in any case have to receive 12-15% of each transaction commission, and at least there are from the distribution service revenue The

There are many examples. I list the Amazon Web Services System (AWS), the Amazon Mall, the Amazon Vendor Program, and a customer-oriented program that shows that they are systematically putting the entire company with mdash and mdash Good, fix those who have problems, and remove the rest. All this reminds me of Bezos's words:

I will often be asked this question: what will happen in the next decade? "This is a very interesting question, but also a very common question. I almost never been asked: & lsquo; what will happen in the next decade? "But I can tell you that the second question is actually more important & mdash; because you can plan a business strategy for things that do not change over time. In our retail business, we know that customers want To be low, and I know that from now on 10 years this will not change. They want to deliver more quickly; they want more choices. You can not imagine that in the next decade there will be customers say "l love" I love Amazon and I just want their prices to be high points again "or & lsquo; i love Amazon, i just want them to be dispatching a little more & rsquo ;.

Product classification, low price and rapid distribution is an important factor in Amazon's success in the retail industry. With the Amazon Mall, sellers can list millions of the hottest new products, far more than Amazon's supplier team to find these products much faster. Amazon has set up a high-priced trading platform to ensure price competition - and provide a minimum of 12% margin for Amazon. Rapid delivery performance and greatly reduced the cost of transportation, which is due to the opening of the FBA to external customers to achieve. I think anyone will not know more about Amazon than "The Innovator", who has created a system solution that will keep it unbeaten with respect to its competitors.

So my point of view is that Amazon can not go beyond. Amazon spent 10 years to build FBA, even if Wal-Mart can be shortened to 5 years, but then what will Amazon like it? And I have not touched on Amazon's less well-known projects that shook the industry, like Seller Fulfilled Prime and Direct Fulfillment. I do not think there will be any big retailers that can match the Amazon in my lifetime. & Mdash; although I still believe that vertical special retailers like Chewy.com can still grow in the short term and divide them into part market. Amazon will only be in the case of antitrust will be defeated (but it will be a very long way, not to mention that they now only occupy a small part of the entire retail industry), or we buy physical goods The transition will take place from the widespread use of VR technology and the development of intravenous nutrition (the development of Soylent in the next 20 years) and the general basic income that will completely eliminate the need for physical products. But it is also a very long way.

Editor: Yang Zhifang

This article comes from:Finance.yahoo.com

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