Amazon at 20: The brand, the challenges and the future
As it celebrates 20 years in business, it’s fair to say Amazon has transformed the world of online retail. However the consensus among marketing experts appears to be that its branding success has had little to do with advertising.
Amazon holds a special resonance among British consumers. Two in three Brits would be upset if the Amazon brand was to disappear according to Havas Media’s latest Meaningful Brands metric of brand strength.
The study also places Amazon as the UK’s most meaningful brand due to its unique Prime delivery model which it says “genuinely improves the quality of lives.” This figure comes despite the same study showing that Brits would not care if 94% of all brands disappeared.
The Amazon Group posted a strong performance in UK last year with overall takings up by 14% to £5.3bn, which represents 9.4% of its global sales.
Verdict analyst Patrick O’Brien says he fully expects Amazon’s global retail sales to more than double to $137bn by 2019 even if “UK sales growth is slowing”. However he doesn’t feel advertising is its greater strength.
He explained: “They’ve managed to get top of mind on every category without doing anything creative – Amazon’s 20 years isn’t a marketing story, it’s all about availability and scale.”
O’Brien’s views are echoed by M&C Saatchi’s group chief strategy officer Mark Sinnock who says Amazon is far from a “classic advertising brand.”
“It’s not a classic advertising brand, but the playbook of personalisation, targeting, retargeting and sweating every opportunity to connect and reconnect with its audience to drive up front of mind presence and relevance has to be admired,” said Sinnock.
“It’s given the brand an intuitive feel, while giving the customer a strong sense of value – where the needs of the individual are always met.”
Speaking to Marketing Week, Amazon’s UK Prime lead Lisa Leung said its success was more to do with providing consistently speedy shopping solutions.
She said: “I believe that our success comes down to knowing what our consumers want – it’s all about faster and easier access to shopping.
“Also, shopping peaks are no longer saved for the holidays. Consumers are constantly on the lookout for ways in which to secure trending items and the best bargains, and we want to help consumers get to these.”
Amazon has succeeded because no other company has been able to match the scale of its online operation, until now. In the latest BrandZ global brand power list, Chinese e-commerce company Alibaba made its debut in 12th spot, worth $66bn.
That was one place ahead of Amazon, which fell four places to 13th with a valuation of $62.2bn.
There are also questions about Amazon’s profitability. Last year Amazon’s revenues hit $88bn but it posted a loss of $240m as it continues to plough its profits into improving the delivery infrastructure at the core of its business.
Yet despite the increased overseas competition, O’Brien is convinced Amazon will continue to prosper over the next 20 years.
“I think you’ll see Amazon commercialise its delivery expertise to rival the Royal Mails and embrace Internet of Things with Amazon Dash, which allows people to press a button to automatically order in products if say their dishwasher runs out of tablets,” he added.
“The key to Amazon’s success is that it isn’t afraid to try out new things even if they fail. That urgency and scale is hard not to admire.”
Another focus is competing with the likes of Netflix through Amazon Prime Instant Video. Amazon Studios announced today (16 July) that director Spike Lee’s next major film Chi-Raq will be exclusively produced and distributed by Amazon Original Movies.
Speaking on the move, Bob Berney, head of marketing at Amazon Studios, says: “For future projects, we will look to collaborate with a top-tier theatrical distributor who shares our vision and passion. We will work together to craft bold and distinctive marketing and distribution approaches for all our films.”
Addressing image concerns
Movies and TV streaming aside, the Amazon brand has prospered despite constant questions about its tax commitments.
Verdict’s O’Brien theorises: “Amazon has delivered what customers want from a retail experience and that’s allowed it to hide its questionable ethics up until now but it will have to address its image at some point.
“There is an appetite for stories and ethical behaviour from big retailers among consumers and as Amazon matures it must fill that void.”
However Mark Holden, head of strategy at Arena Media, says this will not be a hindrance to its future growth.
He concludes: “Amazon does get bad press for its tax status and working practices but the reason it remains meaningful to customers is that it has become an indispensable part of their daily lives.
“Simply put, the choice and convenience that Amazon provide cannot easily be substituted and they provide ‘meaning’ to millions of users every day. It is for this reason they keep growing stronger and are likely to continue doing so.”