Scott Wingo: ChannelAdvisors: How Does Amazon Do It?


Some Notes Worth Keeping

Scott Wingo: ChannelAdvisors: How Does Amazon Do It?

Amazon's Flywheel: Growth, surrounded by selection and traffic, driven by lower costs through buying power, driving better customer experience.

Historically, Amazon is a price follower.  Only matching a lower price if they are undercut, and they believe they can make money at it.

    •    Traffic has doubled from 60m to 130m buyers between 2006 and 2010.
    •    Selection has quadrupled from $3b to $12b in selection of products

Walmart and Amazon match almost exactly in absolute revenue for the first 10 years.

    Technology is infused throughout the organization and is considered a differentiation by Bezos

Advanced Amazon Strategies:

    •    Amazon plans to increase from 50 to 75 (50% growth) fulfillment centers in 2011
    •    3rd party merchant selling on Amazon is growing faster than 1st party (Amazon's own) - twice as fast
    •    Amazon products ads program is an alternative (and good one) to comparison shopping sites -- this is a great option for retaining ownership of the customer, and getting traffic.  Converting about twice as well as comparison shopping sites.
    •    Best way to sell through Amazon:  1. Sell only a subset of products that are already on Amazon. 2. Unique selection -- little risk of competition.  You should never sell strategic selection items on Amazon -- especially if you are not exclusive.