Mission incomplete?



October 1, 2018 | Peter Hocknell

As a self-confessed Amazon Prime ‘junkie’, I’m watching the accelerated rollout of Amazon’s Prime Day event from the US to other regions globally with excitement. But also with a nagging question about whether this is a missed opportunity?

First, as to getting excited, I’m not alone it seems. McKinsey’s recent article looking at Prime Day 2018 reveals a host of winners from what was the largest shopping event in Amazon’s history (yes, over 100 million items sold): https://www.mckinsey.com/industries/retail/our-insights/amazon-prime-day-what-the-real-lessons-are?cid=other-eml-alt-mip-mck-oth-1809&hlkid=2d704f0cd5d84c2f89effb185161e7ad&hctky=10186936&hdpid=f3d5ee7e-c7d1-4a8a-b1e1-97824a0306c3

Evidently, it’s good business for Amazon in the short-term. Six of the top ten products sold on Prime Day this year were Amazon devices, notably the Fire TV Stick with Alexa Voice Remote (at 50% discount) and the Echo Dot (at 40% discount) – all of which lock customers into Amazon’s ‘fly-wheel’ ecosystem. In addition, these hardware deals were complemented by deals on media and content e.g. Audible (audiobooks) and Amazon Music.

Less successful was Amazon’s push of its portfolio of 80-plus private-label brands (e.g. AmazonBasics) and its Whole Foods Market, the latter which saw some attempts at integrated in-store deals to create more of an ‘omnichannel’ feel about things.

Looking away from Amazon for a moment, other brands that partnered with the Prime Day event also saw benefits, from the overall increase in Amazon traffic – so long as they invested in SEO (products on the first page of a product search got two-thirds of all clicks) and discounted heavily. And some other brands that bravely chose to go head-to-head with Amazon’s discounting and push for membership were rewarded for their effort, proving that the combined pull of Amazon’s brand and ‘big day event’ management created enough of a halo from which others could benefit.

So with all this success, what is the one question that Huang et al.’s article doesn’t answer – which Outwith regards as a potential missed opportunity? While we learnt about what Amazon’s customers did as an immediate response to the ‘shopping holiday’ experience, we believe customer-centric leaders should be just as interested in what these customers thought and felt about it? Particularly during the event and subsequently. Enough has been written about the negative impacts of short-term sales growth for businesses participating in Black Friday and Cyber Monday similarly, and Amazon is unlikely to be bullet-proof.

Why should this matter to customer-centric leaders so much? When Amazon.com launched in 1995, it was with the now well-quoted mission “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors [sic] to offer its customers the lowest possible prices.”Amazon’s Prime Day further helps customers find and discover anything (pretty much), and at the lowest possible prices (not always but often enough).  So, mission accomplished?

Not quite, because something has changed since 1995. Amazon has refined its mission statement to:

“We aim to be Earth’s most customer centric company. Our mission is to continually raise the bar of the customer experience by using the internet and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximise their success.”

So – how well did Prime Day bring to life Amazon’s intended customer experience?  Is it raising the bar?

Huang et al.’s article doesn’t answer this ‘outside-in’ question for us sufficiently.  But there is a clue to the answer if we consider how Amazon’s leaders possibly faced up to the Herculean task of making Prime Day such a commercial success in the short-term.  Amazon has declared (again, in the public domain) that it is guided by fourteen ‘leadership principles’. Yes, 14 of them. However, I don’t think it’s a coincidence that the first listed is ‘customer obsession’:“Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers”.

So if we assume that Amazon’s mission has continued to be one singularly focused on customer-centricity, and has since evolved to regard the customer experience as central to that – we should also judge Amazon’s Prime Day on how well its leaders obsessed about, and executed on, intended customer outcomes at each stage of their customers’ journey. The ‘shopping holiday’ experience encompasses what customers did, what they thought about it and how it made them feel. Both during the event and beyond. While there’s an absence of insight on this from McKinsey’s analysis, I’m left wondering if Amazon’s Prime Day is a missed opportunity for Amazon’s leadership to raise the bar – or worst still, a moment where they fell into the trap of short-term sales growth over long-term customer value?