Amazon-no-just say no!

by Feed Engine

Recent news reports highlight retailers making deals with Amazon to sell products through their site. This is basically an extension of services Amazon has offered to smaller retailers for several years. If you are considering this stop and think. The temptation may be great, and looking at a few of the brands on the list I can see why they think they need this, but it smacks of desperation. Let me put an image in your mind. Think of the devil sitting on one side of your shoulders and an angel sitting on the other. One is saying “come over to the dark side, we have cookies” while the other is saying “they look good but there will be a price to pay.”

Does this sound too extreme? Amazon is like heroin, delivering a major rush at first. New visibility for your brands and products leads to higher sales. The problem being the high wears off, the devil wants his due, and you can’t get free by saying the devil made me do it. Once Amazon has you in their grip they will use every piece of information they gather to build their business at your expense. Literally, everything they do is done for a reason. Think you have unique products? What will they do with the information? Can they do a knock-off and produce it themselves? What about similar products in their assortment, they will use this data for pricing tests. And don’t forget they are using you to help fund their Amazon Prime program.

Sure Amazon has brand power, but it’s not your brand power. Do you believe in your brand? If the answer is no then go ahead because the handwriting is on the wall. Some brands that are on the downhill slope may extend themselves long enough to garner revenue. If the answer is yes then the question is a different one. Have you developed a strategically placed marketing plan to drive digital business growth? Ecommerce is growing exponentially for many retailers. Is digital growth what you want to do? If so what’s your strategy for physical retail? How much of your business do you want to transfer from bricks to digital? If you can’t answer these questions then don’t make the leap.

If you decide to partner with Amazon I wish you all the best. Make sure you have a clear goal in mind for how dependent you want to become. Do you want 10% of your digital revenue to come through Amazon? Or is 20% the right number? Just make sure you know what the number is and that you go in with an understanding of how you will replace the sales volume should your plans change. Start with an exit plan in mind. Structure a deal on your terms not theirs. Good luck with that as they know you need them but they don’t need you. If you’re not desperate just say no.

Global In-house Center Landscape in Malaysia and Trends in Offshore GIC Market 2013 - I4

India dominates the global GIC market, accounting for 43% of the world’s GICs. Portions of the rest of APAC and parts of Europe also account for significant GIC activity.

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Enterprise Cloud Adoption - I4

For providers, having an in-house IP and platforms is a differentiator in the nascent cloud services market.

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Enterprise Cloud Adoption - I2

Though adoption drivers vary for small and large buyers today, they will converge as cloud offerings become more pervasive and stable. This convergence will create multiple opportunities for cloud service providers.

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Wednesday, March 19, 2014 | 10 a.m. CST, 11 a.m. EST, 4 p.m. GMT, 9:30 p.m. IST

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Everest Group is to provide an IIAR Webinar covering the Market trends in BPO and ITO Services with a deep dive on selected markets. Everest Group is an advisor to business leaders on the next generation of global services, who have a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their front-, mid-, and back-office business services. Its research is the central source of strategic intelligence, analysis, and insight for business leaders within the global services market. Research areas covered include a range of information technology, business processes, locations, and service delivery models.

Overview Agenda:

  • Overview of market trends in BPO and ITO services with a deep dive on select markets
  • How technology’s role in services is disrupting the model
  • Implications for service providers

Speakers:

 

The primary drivers for moving data into private, public, or hybrid clouds are the efficiency and capabilities that clouds can bring. Enterprises have never seen such efficiencies and capabilities in traditional database technologies, including those from Oracle and IBM.

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The Great Degeneration – How Institutions Decay and Economies Die, by Niall Ferguson, 2012, Penguin Press.   Having read some of Ferguson’s other works (Civilization, Colossus, and others) this book is not a shock.  His ideas are honed and rounded, and very much up to date.  If you do not know his ‘history’, this book might shock you.  “Public debt…has become a way for the older generation to live at the expense of the young and unborn.  Regulation has become dysfunctional to the point of increasing the fragility of the system.  And civil society withers into a mere no man’s land between corporate interests and big government.”  These three threads, debt, regulation/state, and civil society, are all in the wrong place and Ferguson explores history (Adam Smiths’ stationary state, Alexis de Tocqueville, and more) very well to show where this pattern has been seen before.  From a political perspective this book, only 153 pages long, is scary.  There are virtually no signs of any public body that is able to argue the case, let alone begin the change needed to “fix” our ills.  We, the people, have become accustomed to the drug (we might call “statism”) and we are hooked.  I wish the book had been longer; I enjoy listening to Ferguson’s ideas.  But I guess his point is, at last, simple and does not need much more.  If you have an interest in the economic, political and institutional malaise that we experience, you have to read this book.  Maybe when enough of us have, we can start a new civil movement.  More than recommended.  15 out of 10.

In Assessing the Cloud’s Clout to Disrupt the Outsourcing World, Peter Bendor-Samuel suggests that cloud-based IT services will be highly disruptive to the IT infrastructure space. I agree – and assert that the impact will occur faster and be more game-changing than we might imagine at this time when its $10-20 billion of projected annual revenue seems quite modest compared to estimates of “traditional” IT services of $200+ billion.

To support my point, I would encourage you to consider an analogous industry-changer – the “invention” of the low-cost airline by Freddy Laker in the late 1970s. Laker Airlines pioneered low-cost airfares, offering pricing at one-third to one-half of the cost of traditional carriers flying across the Atlantic. With only a handful or two of long-range aircraft, Laker broke the industry’s rules, securing permission to compete head-to-head with the likes of British Caledonian, TWA, and Pan Am, among others. Applying innovative operating practices, implementing sacrilegious pricing models, adopting unique sales, and marketing techniques, Laker opened new markets and changed customer buying habits forever. While the early 1980s recession across the U.S. and Europe forced Laker into bankruptcy, the airline industry was changed forever.

The parallels in today’s IT services market to Laker’s world are quite striking:

  • Upstarts coming from outside the traditional industry drive innovation
  • Standardized offerings providing different kinds of value to customers both open new market segments and change buying behavior and decision centers for traditional market segments
  • Different operating practices and business models deliver fundamentally different value to customers
  • Traditional players struggle to respond, pulling levers that put their long-term health at risk (note how many of the traditional transatlantic airlines Laker went after are still flying!)
  • Very small market share shifts can change the playing field for the entire industry (remember, Laker deployed relatively few planes filled to near capacity – low single-digit market share from an industry perspective – but was able to force the leaders to play by his rules)

Some will challenge whether the Laker analogy is a fair comparison, but can today’s large IT services firms afford to risk not taking heed of lessons from Freddy Laker?

 

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Eric Simonson, Managing Partner – Research, will be speaking at the 14th Annual European Shared Services & Outsourcing Week in Dublin, Ireland. A frequent speaker at SSON events, Eric will be moderating a panel discussion on location optimisation on 14 May. Learn more.

 

In the past, infrastructure deployment and application updates both slowed the development lifecycle. Now that cloud computing lets organizations provision resources in minutes, not months, it’s time to alter the application lifecycle accordingly. DevOps can help — but only if it extends beyond ‘culture change’ to actually achieve continuous deployment.