If we need something fast, and
don’t want to search through stores on the ground, we usually order it from
amazon.com. They have most everything you might want, the shipping charges are
reasonable, and they make it very easy to buy. We sent a college niece a
birthday gift card and found that Amazon offers an array of colorful covers to
pick from. You enter the recipient’s email address, make a couple of clicks,
you’re done and they’re happy.
Need a print book? Amazon
likely has it new or used, often for low prices like a couple of bucks, or even
a few cents, and you have it in a week to ten days. You want it sooner? Next
day, or two-day shipping is an option. The birthday girl who was mentioned
above loves to read and will immediately exhaust the birthday gift card we just
sent.
e-Book
Wars
Amazon Kindle won the e-Book
wars because it was first to market, the web site is intuitive making for easy ordering,
they have a huge inventory and ship mostly from partners on the same day. When
Barnes & Noble entered the e-Book competition with the Nook reader, Amazon
had already cornered 90% of the market. The Nook is a useful reader, but how
much of the 90% did they get? About 25% (now probably down to 20%), and that is
good, but not enough market share to build a profitable new-hardware business.
Know
Where the Elusive Profits Are
Amazon recognized that profits
come from blades (e-Books) and not from razors (e-Readers). Plus, Amazon kept
cutting the price of Kindle e-Readers, and the competition didn’t match them
quickly enough.
Barnes & Noble got in a
little late, priced the Nook e-Reader too high and reduced prices too slowly,
appeared to concentrate on the hardware and seemed to assume that the Barnes
& Noble inventory would sell itself. Moreover, B & N forecasted Nook
and e-Book sales too optimistically.
Business
Insights, Quality Intent, Discussion Topics: Amazon made long-term
investments in comprehensive product acquisition, warehousing, cloud computing,
quality customer service and ease of ordering. They shunted short-term
profitability and built a lasting business.
Abounding
Entrepots
Amazon recently applied for a
patent on “anticipatory shipping.” Given the ubiquitous warehouses around the
globe, Amazon can stock items that they think customers might need, based on
computer analysis of past orders, and have them in stock and ready for
immediate shipment. Theoretically, the anticipated goods could already be on a
truck near the customers’ home. It will take analytics of the highest order to
win the race for “last mile” delivery. The ultimate in customer service is to
deliver a useful version of what you want, where and when you want it.
It will operate something like this, say in a condo setting.
Vendor: “Today at seven PM
okay?”
Customer: “No, we’ll be out,
and the concierge leaves at six. Please deliver at nine-thirty AM tomorrow.”
Vendor “It will be there at
that time.”
This scenario is a reality in
the food-delivery business. Several companies are currently competing along
these lines in cities like San Francisco and New York.
Where
Have All the Bookstores Gone?
It’s no secret that Amazon and
other e-book distributors are killing off bookstores. Borders is gone and the long-term
future of Barnes & Noble may be in doubt. Amazon recently made an offer to
collaborate on marketing with small bookstores nationwide. Most didn’t accept,
apparently following the adage that you don’t play ball with those who are
trying to destroy you. Hey, as the old saying goes: if you can’t beat ‘em, join
‘em. Instead, the little guys, who by the way I love, are piloting their
clipper ships, adding more sail and peeking back with dread at the massive
electronics-loaded steamship bearing inexorably down on them.
Is Amazon a bully? That may be
a first reaction, but remember that this is how laissez-faire capitalism works,
especially in our innovative times. Most every company would like to put its
competitors in the ditch. Social Darwinism has a pejorative tone, but the
fittest and most adaptable usually survive, both in the business world and in
the biological universe.
“Do unto others as they would
do unto you¾and do it first.”
Henry Flagler, developer of
Florida and cofounder of Standard Oil with John D. Rockefeller
Abandon
All Despair Ye Who Enter Here
The City Lights’ slogan is a
nice play on Dante’s sign at the entrance to hell, with the word “despair”
replacing “hope.”
For a book lover, browsing in
a small bookstore is almost heaven. My favorite is City Lights in San
Francisco’s relaxed North Beach area. You walk in and everything seems okay
with the world. When the word ambience is Googled, a picture of the City
Lights’ interior should pop up.
Perhaps poet and founder
Lawrence Ferlinghetti planned it that way in 1953. In the early years, City Lights
(so-named for the Charlie Chaplin film) was a hangout and sometimes publisher
for prominent members of the Beat Generation like Allen Ginsberg, Jack Kerouac,
Neal Cassidy and William Burroughs. And many enlarged photographs of these
writers hang on the walls. I don’t know of anyone who can leave City Lights
with chatting up fellow browsers, sitting around reading or buying a book or
two. I know I couldn’t.
Back
to the Real World and Amazon’s Kindle Author Treatment
As a print and e-Book author
with four books on the Amazon web site, I wish sales were better, but that’s
the fault of the book-reading public for failing recognize my literary
genius—just kidding. On a more helpful note, the reporting to authors on sales
and royalties (which are generous) is prompt and thorough.
Amazon also has an Author
Central page. You can post questions, or ask for help and an intelligent reply that
usually solves the immediate problem comes back by the next day. Beyond the
obvious quality of Amazon’s customer and author services, they always come
across as reasonable people to deal with.
I tried their popular Amazon
Prime on a free trial, but found that most of the benefits didn’t apply to me.
Then I was inadvertently billed $75 for a year’s membership. I called the Amazon
customer service number, immediately got a live and helpful person on the
phone, received an apology, an immediate credit on my charge card and a
confirming email minutes later. That kind of service is rare in these
impersonal and fractious times.
Colliding
Giants
In order to compete with
Amazon in overall product distribution, Walmart and other legacy companies are
massively investing in online retailing. Will they pull it off profitably? Or
will they go the way of Barnes & Noble, Sears, Best Buy and J.C. Penney and
their declining fortunes? For sure, Walmart is late to the game relative to
Amazon. And with Amazon’s vast warehousing, marketing partners, distribution
apparatus (especially their excellence in last-mile deliveries), easy-to-use
web site and customers conditioned to buying from them, they enjoy a
competitive position that will be difficult to compete against.
Aerial
PR
On a 60 Minutes segment a few
days before Christmas, Amazon showed a clip of a small drone delivering a box
to the doorstep. This was a PR coup of legendary proportions. Media reaction
was not just widely viral, it was epidemic. The message clearly was: We don’t
have delivery drones now. We may never have delivery drones, but we’ll use any
conveyance at our current and future disposal to get the goods you need into
your hands fast.
Amazon
to the Rescue
I have the jones for Barbara’s
Shredded Wheat. Read the low-drama story that follows, and learn how Amazon
soothed my passion with its usual alacrity. Also learn how ground-based supply
chains are often dilatory in meeting individual needs, a policy that will fare
poorly against online competition going forward.
DESPERATELY SEEKING BARBARA
Trouble along the Supply Chain: Shredded Wheat
as Exemplar
You all know of favorite
products disappearing from store shelves. How about my loss of Barbara’s
Shredded Wheat? Don’t laugh. I discovered the product many years ago and have
become addicted, especially when the cereal is combined with milk and banana.
My wife suggested that I enter Betty Ford for treatment, but I assured her it
was a minor obsession that I could control if necessary. Her amused smile was
not comforting. We recently went on an extended business trip with an
insufficient quantity of Barbara’s Shredded Wheat, and I had to take a pill.
I’ve always bought my Barbara’s
Shredded Wheat at a local store, and a few months ago I scanned the shelves to
find my favorite had gone missing. Oh,
it’s just a temporary shortage, I thought, and since an ample supply was
stashed at home I didn’t think more about it. When I went back two weeks later
the Shredded Wheat was nowhere to be found among a fulsome supply of other
Barbara’s cereals, and I had a sudden flush of panic.
I queried a nearby employee.
He said, “Oh, we’ve never carried that product. Why don’t you try something
else?”
It’s amazing, that when it
come to inventory, how many store clerks are often wrong but never in doubt.
They usually jump to defend against any implied criticism of the store. Meanwhile,
they surely grouse to each other like soldiers in boot camp.
“How long have you worked
here?”
“Around three weeks.”
“I’ve been coming to this
store for over ten years, and this is the first time (a harmless little lie
that I’d checked two weeks earlier) I’ve failed to find Barbara’s Shredded
Wheat. I have three suggestions: Don’t guess; brush up on your inventory; and
while you’re at it brush up on your Shakespeare?”
“Shakespeare?”
I asked for the grocery
manager (not to report the rookie fibber), learned that he was on a break and
left for another store, only to find an absence of my adored cereal everywhere
on the shelves. This time the grocery manger was about and, attempting to
disguise an edgy tone, I asked: “I notice that Barbara’s Shredded Wheat is not
on the shelves”
“Oh, we don’t get that
anymore. They probably stopped making it.”
I was going to advise him not
to guess, but took a different tack, “Could you check?”
“I can probably do that. I’ll
ask the distributor who’s coming in tomorrow.”
“I come to your store about every
two weeks because I’m usually in the city for meetings at that time. Would it
be possible to call me?”
He took my name and number and
didn’t call. Two weeks later, and getting dangerously low, I stopped by the
first store and found the manager who had finally come back from his break and
repeated the sad tale followed by an exchange astonishingly similar to the one
I had with the previous grocery manager.
He did call a few days later
and said that the distributor no longer carried Barbara’s Shredded Wheat.
“Did you ask them to special-order
it for you?”
“Oh, we can’t do that. We only
get what they give us.”
“So you can’t respond to
customer requests?
“No, we have no control over
inventory.” Hmm.
Business
Insights, Quality Intent, Discussion Topics: I asked both grocery
managers whether they’d noticed, back when they were carrying it, that
Barbara’s Shredded Wheat was often in short supply with a few boxes in front
and a long stretch of empty shelf space behind it. Oh yes, they both said, it
was one of our bestselling cereals. At that instant, we exposed an urgent need
for demand-chain management, a system in which customer need, not the whims of
a distributor, controls the supply chain.
Who
Owns the Supply Chain?
Supply chain management is
rife with mysteries like this one. When will more companies with stores on the
ground move to individual, customer-demand inventory fulfillment? Not any time
soon I’m afraid, and they’ll continue to lose market share to online stores
where you can get most anything you want, just like in Alice’s Restaurant.
What are you doing in your
business to respond accurately and promptly to customer demand? Are your inventory
projections keeping customers happy? Who’s calling the shots? Is your inventory
stockpile based on customer need, or is a distributor, operating on the ground
and not in the cloud, running the supply-chain show? Store owners mired in
old-timey thinking are facing, as the song goes, “More clouds of gray than any
Russian play could guarantee.”
I also learned, through my
talks with the grocery managers, that the company distribution system was
divided into regions. This was confirmed by the loss of Barbara’s Shredded
Wheat in several Midwest stores. I recently had business trips to both San
Francisco and NYC. Sure enough, the local stores were stocked with my favorite
cereal. Why did the Midwest distributor delete the cereal of my life from the
supply chain? The answer is unknown and likely unknowable.
I spend a lot of money at the
neighborhood stores because the customer-support personnel are helpful and
pleasant, lots of good, fresh food is available and they’re trying hard to
charge competitive prices. That being said, I’ve got a long list of products I
like that they no longer carry. Where, for example, have two of my cherished yogurts gone, and the delicious, low-fat,
low-sugar vanilla cookies? I could go on for quite a while? How do they know
what I need and then take it away? Should I be taking these slights personally?
More supply-chain woes in other stores will be described in later stories.
Big
A to the Rescue
Sick of my singing the
breakfast blues, my wife suggested that I try to get the shredded wheat on
Amazon. With trembling fingers and a beat-skipping heart, I went to the
easy-to-use web site, and in a few days my shipment arrived from an Amazon
partner. How many out-of-stock traditional stores have partners who can
immediately deliver the goods?
Like a toddler on Christmas
morn, I tore at the cardboard container with glee. Bananas and milk were on
hand, and I even had my longed-for treat for lunch. Why is amazon.com taking
over the world? I’ll tell you why: Reread this story; and while doing it, think
of me happily munching my cherished cereal that arrived quickly with small
shipping charges. And they didn’t even need a drone.
Surfeit
of Shredded Wheat
When it was time to order my
next shipment, the Amazon web site suggested a regularly timed shredded wheat
delivery. I agreed, but then miscalculated my needs, surely due to greed and
fear of running out. Soon, an avalanche of shredded wheat boxes crowded high closet
shelves and piled up under beds. Since I lacked the computer skills to stem the
flow, the problem invaded my dreams. I called Amazon, and they promptly halted
shipments and said they would take some back without shipping charges. In lieu
of that offer, I ate my way out of the self-inflicted inventory crisis and now
order based on realistic needs.
Internet
of Things
This is the future for
companies wishing to survive. The customers will control the supply chain
(including Shredded Wheat and the billion other products) based on their
personal choices and demands. And they will control it with their smartphones,
pads, and a wide range of other devices connected to inventoried items tagged
through Radio Frequency Identification (RIFD), or barcodes, or some other
tracking device. In addition, apps are capturing customer preferences and tying
those to products.
Pinned
Down
Marketing to individuals is the future, and if you are in any
kind of product-delivery business you’d better gear up pronto. If you are a
shopper, you will be able to quickly find the products you need.
Simultaneously, companies are profiling you down to your underwear and
appropriating your data and pinning it to their data bases like butterflies on
a display board. And you’re worried about NSA spying?
The
Users and the Used
Outcome: the products you
might want, identified from the patterns of previous purchases, will be
advertised to you individually and relentlessly. Good idea? That’s your call.
Either way, it’s happening right now, and the big guys like Twitter, Google,
Facebook, Amazon and others are warring for the advertising dollars being spent
to reach you. Transmitters, or beacons, are or will be directly targeting your
smartphones with tailored ads. Some users (or are they being used?) are saying,
“Hey, you’re using my data and making money from it. How come I don’t get a cut
of the action?” For certain, there’s more to come on that sharp point.
"The
best way to predict the future is to invent it." -Alan Kay, American computer
scientist
NOTE: If it’s not live on the
page, please copy and paste the URL below to see fiction and non-fiction books
by Richard J. Noyes on amazon.com
http://amzn.to/19QmSVH
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