Is Amazon the most innovative company in retailing?

Discussion
Source: Amazon
Feb 15, 2017

When it comes to Amazon.com, some people see a retailer driven to test new approaches and cut its losses quickly if those attempts don’t pan out. Others see a company that just throws things against the wall because it doesn’t have to worry about turning a profit. (That comes from its non-retail AWS business.) So, is Amazon an innovative retail juggernaut or a charlatan hiding behind world-class marketing and public relations? Fast Company thinks it is the former and has just named Amazon the most innovative company in the world.

Among Amazon’s most innovative qualities, according to the publication, is its emphasis on developing platforms that allow customers to fulfill their needs on their own terms.

“Our customers are loyal to us right up until the second somebody offers them a better service,” Jeff Bezos, founder and CEO of Amazon, told Fast Company. “And I love that. It’s super-motivating for us.”

Among the company’s innovations are its Prime subscription program, which has gone beyond free two-day deliveries to offer an array of perks that are both valuable to members and difficult for rivals to match. Bain Capital estimates that up to 60 million households in the U.S. have Prime members.

Superior execution in order fulfillment has also been key to Amazon’s success. The company’s huge automated fulfillment centers, which run using tech picked up in the acquisition of Kiva Systems in 2012, are essential to that performance.

Other innovations include Amazon’s voice-activated Echo devices, which have reportedly sold in the millions while becoming fixtures in many connected homes.

The company has also ventured into physical retail with Amazon Books and its Go convenience store pilot as well as a host of pop-ups around the country that feature its own-brand consumer electronics including Echo, Fire TV, Fire Tablets and Kindle devices. The company is also reported to be getting ready to open three pick-up grocery stores in Seattle and Northern California that are designed to build on its AmazonFresh service in those markets.

DISCUSSION QUESTIONS: Do you agree or disagree that Amazon.com is the most innovative company in U.S. retailing today? What are the true benchmarks for innovation in retailing? What other retailers that you think of when it comes to innovation?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"They are a driving force of innovation because they are always stretching the envelope and testing ways to put the customer first."
"Amazon has a strategy, understands its core purpose and relentlessly innovates to move forward. Innovation is not willy-nilly. "
"They are innovative in some areas, but let’s be realistic … it’s not rocket science to sell an enormous assortment at a loss."

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40 Comments on "Is Amazon the most innovative company in retailing?"


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Mark Ryski
BrainTrust

Amazon is fearlessly innovative and most deserving of the title and accolades. Two attributes about Amazon that truly standout are: 1.) willingness to pursue ideas well beyond their core competencies and 2.) viewing undesirable outcomes as learning rather than failure.

Sadly for many retailers today, innovation means having an app and/or trying to deliver positive same-store sales this quarter.

Sterling Hawkins
BrainTrust

Amazon doesn’t approach retailing like a retailer so they’re not limited by historical thinking or infrastructure. They can truly innovate in a space where technology and consumer experience come together to create completely new concepts. It’s one of the reasons they were able to triple in size over the last five years. The upside for the rest of the industry: they’re inspiring change everywhere.

Jon Polin
Guest

No question! One of the more telling quotes I’ve seen lately:

“Amazon spends more on innovation than the twenty largest supermarket companies in America combined. If retailers don’t start investing at a greater level of innovation, they’re going to become lunch served for Amazon.” — Jerry Sheldon, retail analyst with IHL Group

Chris Petersen, PhD.
Guest

What many retailers have yet to discover and fully appreciate is that omnichannel is the new normal. What the “new normal” means in practice is that customers EXPECT to be able to control their own experience and VALUE it.

Amazon may not be the most innovative in every aspect of retail. John Lewis in the UK is perhaps a better example of a fully integrated experience across all physical and digital channels of retail. But hands down, Amazon is one of the world’s most innovative at putting the customer first and in control of their own experience.

The other driving part of Amazon’s innovation culture is their mantra: “Tomorrow is day one.” They are a driving force of innovation because they are always stretching the envelope and testing ways to put the customer first.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
5 years 4 months ago

Amazon is a highly innovative company. But I don’t consider them the most highly-innovative company in retail — until these innovations show they can drive profits. Amazon remains a company that loses money in retailing.

Cloud services? Highly innovative and very, very profitable. Content provider? Somewhat innovative — pretty much the old school big dog with dominant market share and decent profits. Clever new devices? Innovative and profitable. Retail? They throw a ton of things against the wall and lose money at them all.

What we all need to be careful of is that their place of most dominant innovation is their PR campaign for themselves. It’s incredible how a whisper from Amazon can cause the world’s biggest retailers to jump — often causing them to jump into bad decisions in reaction to highly-publicized efforts by Amazon.

(To be honest, these declarations of “most” always seem misplaced regardless of company. My hunch is that the most innovative companies in retail are ones we haven’t heard of yet.)

Tom Redd
Guest

Doug, you are right on the money. The only profit for Amazon is their cloud operations. Most retailers do not sell cloud services, nor do they measure retail performance with cloud profits. Fast Company is just another PR channel that Amazon convinced to do a byline on them, and the press ran for it — as did some of the Millennial BrainTrust members….

Bob Phibbs
BrainTrust

Amazon has the luxury of innovating at a scale few can even dream of … because they don’t have the stodgy and cumbersome need to be profitable. Great when the stock market is betting you’ll be last man standing to make it so.

Max Goldberg
Guest

Amazon, through a willingness to experiment and succeed and fail, is the most innovative retailer in the U.S. today. Bezos and company are constantly trying to push the current limits of retailing, and in the process have given us countless innovations: from Prime to devices, from distribution through delivery.

Dick Seesel
BrainTrust

There may be more innovative retailers who are not as visible as Amazon, but it’s hard to think of a company with such scale that is less willing to rest on its laurels. I know that some panelists view Amazon’s push into new businesses and logistics methods as not much more than a well-oiled PR machine (see yesterday’s discussion of intimate apparel as an example). But it’s hard to deny that the company is anything but complacent when it comes to extending its reach and improving its execution promise.

The real test for Amazon will be its success in rolling out innovative brick-and-mortar retailing models. The bookstore and especially the C-store tests will be telling, because most other stores with “omnichannel” strategies have not succeeded in offering an innovative approach to the business of shopping.

Phil Masiello
Guest

Amazon is a customer-centric company. It is driven by providing the most frictionless transactions for consumers. All of the programs they deliver are designed to create customer retention. Are they the most innovative? At this point they are. And only because no serious competitor has driven such a focus on the customer. The true benchmark of any business is retention and Amazon has one of the highest retention rates of any retailer or e-tailer.

Another point that many do not know: 82 percent of all sales on Amazon.com come from third-party sellers who are also held to delivering the same standards. In fact your seller ratings actually affect how you product ranks in search. That is how committed Amazon is. You could have the cheapest price on an item, but if you have a low seller rating, another seller will get the buy box.

Charles Dimov
Guest

Amazon is definitely keeping retail on its toes. They have been the loudest among the innovators due to their size. There might be more innovative retailers out there but, like them or not, Amazon has done an amazing job at making their innovations known throughout the industry and among consumers.

Lee Kent
Guest

Based on the fact that Amazon spent over $15 billion on innovation in 2016, we would be hard-pressed not to agree that they are the most innovative. I know, I know, innovation spend is not the complete measure but the value through learnings and success are. I applaud what Amazon has done and the challenges they have thrown at retailer — however, and that’s a big however, I also applaud all the other retailers who don’t have an AWS to cover the expense of it all but still seem to be in the game. That’s innovation too, baby! And that’s my 2 cents!

Adrian Weidmann
BrainTrust

By giving shoppers a platform with the tools to find and fulfill their shopping journey on their terms, Amazon is revolutionizing retail. Their success is forcing traditional retailers to wake up and innovate or become a dinosaur. Speaking at the recent NRF, Richard Branson stated, “I think people who own retail stores should not think of themselves as forever being retailers. They need to be entrepreneurial and they need to spin off businesses off the back of their retail. I think there needs to be a perpetual revolution going on within a company because if you don’t have that happening, somebody out there is going to do it to you.”

Amazon is the catalyst behind this necessity — if not the company that will “do it to you!”

Lyle Bunn (Ph.D. Hon)
Guest

Amazon has changed browsing and buying and in doing so has pulled the entire retail sector forward with it. In leveraging the internet for supply chain efficiencies and added customer-facing interfaces, algorithms and customer engagement it sets a bar for digital-enabled experiences. The key message from Amazon is that the 3Ps of product, price and promotion as the pillars of physical retail have been changed to the new 3Ps of place, processes and people. And Amazon’s second message is, “compete with technologies.”

Shawn Harris
BrainTrust
Shawn Harris
Board Advisor, Light Line Delivery
5 years 4 months ago

Yes; Amazon is the most innovative company in retail. It’s not just about service and product introduction, but also how they have created/captured a pioneering investor base that supports their way of doing business. I’m a big believer in focusing on “how” to think, vs “what” to think. Amazon has the former down and it keeps them at the forefront of innovation, while too many traditional retailers are looking for what they should do.

Shep Hyken
BrainTrust

As a company, no doubt Amazon is one of the most innovative. From their online store to Echo to the Prime loyalty program to the distribution center, they have shown how to push the envelope and innovate to the benefit of both the customer and the company. I admire Jeff Bezos when he comments that so much of Amazon’s success is on platforms that others invented. Amazon didn’t invent the internet or online shopping. They took an existing platform and made it theirs. They didn’t invent the robots used in their warehouse. They didn’t invent drones, which will potentially be a game-changer in delivery. They just use what others have created and make it theirs. And maybe that is where innovation truly lies. It’s not with new inventions, although Amazon may have a few. It’s taking what is already there to the next level — or higher. That’s what Amazon does so well. And, at the same time, every decision that is made keeps the customer in mind. That’s powerful!

Gene Detroyer
BrainTrust

While the question is about Amazon being the most innovative company in U.S. retailing, I agree with Fast Company — Amazon is the most innovative company in the world. As a professor, they provide me with numerous examples of how a company should look towards the future and how they should handle experimentation and failure. Amazon plays dominoes in developing strategies to connect with customers and uses technology to extend their reach.

Ben Ball
Guest

Is Amazon the most innovative retailer in the world? I’m going to give that one a qualified “maybe.” They are certainly the most efficient order fulfillment company in the world right now. They make it extremely easy to find, buy and receive products in practically every retail category available. But to me, retailing is about more than just selling the most stuff. Retailing (and maybe I should be saying “merchandising” here instead?) is as much art as science. And I don’t see much “art” at Amazon.

Kim Garretson
Guest
5 years 4 months ago

Warren Buffett seems to believe this if you read behind yesterday’s headlines: “Warren Buffett just dropped Walmart and signaled the death of retail as we know it.”

Brandon Rael
BrainTrust

Amazon has the scale, breadth and depth of both talent and revenue to be relentlessly innovative. Innovation comes in many forms, however, Amazon has amazingly found the “secret sauce” of keeping their extremely loyal Amazon Prime customers satisfied, with solutions and experiences that are beyond what the marketplace has to offer. Another distinct advantage they have is their ability to drive their innovations and spread their risks via diversification while having significant revenue streams coming in.

In a recent article I read, this one quote resonated with me. “Our job,” says Amazon CEO Jeff Bezos, “is to invent new options that nobody’s ever thought of before and see if customers like them.”

Sounds very familiar! Steve Jobs had a very similar philosophy on innovation while leading Apple.