Amazon is one of the world’s largest online retailers, trading products that range from electronics to books, toys to clothes, to buyers stretching across the globe. The company is known for their affordable prices but also for making sure they excel at meeting their customers’ needs. The ecommerce giant has positioned itself successfully as a “glocal” (go global, act local) retailing company where anyone can buy anything and have it delivered to any location, at any point in time. Their mission is: “To be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.” (Amazon.com, 2018)
As for Amazon’s vision statement, they aim “To leverage technology and the expertise of our invaluable employees to provide our customers with the best shopping experience on the internet” (Amazon.com, 2018). With this in mind, Amazon has been able to maintain a sustainable competitive advantage that is based off of low-cost-leadership, differentiation, focus and convenience. Amazon achieves low cost-leadership on a price-basis; Additionally, Amazon provides their customers with a vast variety of product ranges in almost every industry known to its customers. Also, their focus strategy takes that of a niche-based strategy; focusing on outstanding customer services. Finally, their strategy is built off of the aspect of convenience; where a customer need not visit a physical store to purchase anything, but simply surf their marketplace and pick and go as he/she pleases and anytime they want.
Repositioning Amazon
In the hypothetical situation, however, that Amazon decides to reposition themselves in the market, optimally utilizing their organizational resources, and capitalizing on the bolded attributes above that the company currently possesses, Amazon is recommended to shift their focus from a B2C firm towards a B2B one. Repositioning themselves in the market through leveraging their current knowledge, know-how and operational resources, will give Amazon a first-mover’s advantage as an affordable, reliable, diverse, fast-shipping retailer for businesses worldwide.
Maintaining relationships to build successful business liaisons with both customers, retailers and suppliers is now very important, should amazon choose to shift from B2C to B2B. Additionally, understanding what ‘good value’ means to consumers is the key to market B2B; the value proposition must be based heavily upon the purchasing behavior of Amazon’s future customers and must thus achieve something competitors are currently not doing. The rest of the report will continue to analyze the best possible way for Amazon to reposition itself as a B2B retailer.
A shift from B2C to B2B also entails that is very important to keep to it that Amazon must match the positioning of their brand to the new customer base, while still upholding and leveraging the technological capabilities that lead to its success. This current strategy has lead them to consistently recognized as the leader in the market segments in which it is present in, and should thus continue to sustain these standards, but now intended to position itself to businesses and firms instead of customers that are those of the general public.
Associations & Market Gaps
Amazon’s customers identify themselves with the brand through several associations. Some of these associations that resonate with a consumer need that amazon offers overlap with those of B2B consumers in the general marketplace and can be listed as the following:
Reliable commerce
Fast shipping/Timely delivery
Worldwide shipping
Quality goods
Variety of products
Price
Customer service
After-sale service
Quality assurance
In order to narrow the list of associations that would allow for effective brand repositioning and discovering the gaps in the market, an important first step is to analyze the competition. 4 very different in their corporate strategies, but simultaneously very successful brands in the B2B ecommerce domain are Alibaba, EC21, eWorldTrade and ThomasNet (Ilyas, 2018).
1. Alibaba
- Chinese-owned platform connecting Chinese manufacturers with buyers from overseas
- World’s largest e-commerce platform for small, medium and large sized businesses
- 18 million buyers and sellers in more than 240 countries selling in more than 40 industry categories
- Low cost and thus cheap priced products
- Unfavorable shipping conditions (slow delivery, discouraging after-sale service)
(Kelly, 2017)
2.
EC21
- South Korean-owned company
- Relatively new player on the market
- Online retailer aimed at small and medium sized businesses
- Wide product range for Korean buyers, but may not be as appealing of a range on a global scale
- Only recently began facilitating global trade
- Shipping time based solely off of the seller’s speed and therefore delaying process longer than a standardized delivery time
(EC21, 2018)
3. eWorldTrade
- US-based platform
- One of the newest players, founded in 2006
- Instead of high variety products, eWorldTrade offers features alongside such as consultancy services that are tailored to each company; explaining their relatively more expensive product portfolio Low cost and thus cheap priced products
- Operational units based around the world for easy and fast shipping services
(Ilyas, 2018)
4. ThomasNet:
- US-based platform
- Operates only in the US and Canada
- Relatively limited product range
- Local business therefore fast and timely delivery services
(Ilyas, 2018)
After analyzing each of the competitors, a few common themes are highlighted and allow for thorough comparison: price, shipping time and product variation. Consequently, 2 perceptual maps (figures 1 & 2) position the 5 companies on axes that address shipping time and product variation in comparison to the average affordability of the B2B retailers (considering Amazon as a potentially operating B2B firm as well that leverages the core competences it currently possesses):
Figure 1: Shipping Time vs. Price
Figure 2: Product Variety vs. Price
The three associations help us identify where, and if indeed, Amazon can fill a gap in the market. Alibaba is well known for having a massive product variety in B2C retailing, but as seen above, it serves a moderately varied product assortment, but still at a very affordable price range. EC21, as said before, is quite a new player and thus caters to niche SMEs at a relatively expensive price in order to realize profits. On the other hand, ThomasNet and eWorldTrade both cater a moderate-to-wide variety of products, but are yet quite pricey in comparison to Alibaba. Shipping time is far from quick when it comes to Alibaba, leaving them only with low-cost as their advantage as a player in the market. EC21 operates at a moderate-low speed shipping time, and both eWorldTrade and ThomasNet are relatively speedy and timely. Leaving us with an untouched are in both maps:
+ High product variation with low prices
+ Fast shipping time with low prices.
Both areas are an opening that allow Amazon to occupy, not only because it is an untapped market, but because Amazon can already be placed their based on their current portfolio. As mentioned earlier, leveraging their current competences and transferring them to this repositioning will allow them to make the most out of the brand’s transposition.
The gap that Amazon thus fills high product variation retailer, offering affordable process with the convenience of fast and timely shipping and delivery, and is an area that Amazon hypothetically fits in as an operating B2B online retailer.
Also, although the not all associations were considered in the perceptual maps, and only three were mainly focused on, it is worth noting that Amazon’s ‘shipping’ umbrella encompasses a wide range of attributes that are not only associated with fast, and timely delivery – but also with reliable shipments. Customers value:
⎫ the promise they get when the due date amazon announced on the order confirmation comes up on their email
⎫ the efficiency, practicality and convenience of their return policy
⎫ the reachability and most importantly the worldwide shipping options that Amazon offers, as opposed to one of their biggest competitors, ThomasNet,
and Amazon must thus work on maintaining this regardless of the repositioning, as it will strengthen the brand especially given that it will now cater businesses as consumers.
Market Segments
Amazon currently uses demographic, behavioral, psychographic and geographic segmentation to segment the market. A summary of their current market segments as a B2C retailer is seen below in Table 1, in order to understand how the repositioning will change its segmentation when targeting a separate consumer base, but also helps identify where the overlaps are.
Table 1: Summary of Current Market Segments
Demographic segmentation:
o Age: ranges from 18 year-olds and older
o Gender: males and females
o Occupation: ranges from students to professionals to unemployed.
Features
− People with internet access
− Age group of 25-50 years, as 45% of online buyers belong to the 35-49 age group
− Focusing on a younger audience
Behavioral segmentation:
o Benefit: products variety, convenience, affordable prices.
o Personality: curious, laid-back, experts, enthusiasts.
o User status: non-users, potential, first-time, regular or ex-users.
Features:
− Convenience as a major reason for online purchases
− Interest in new categories
− New lucrative deals every day, every hour even
− Low pricing as a major factor for purchasing online
Psychographic segmentation:
o Social class: working, middle, upper.
Features:
− Customers segmented by loyalty
− Customers who like innovations and changes to the website
− Those who value customer care first
− People who click on recommended and suggested products
Geographic segmentation:
o Region: Amazon covers over 100 countries.
o Density: both urban and rural areas.
− International appeal
− Digital sales over ‘real-word’ sales
− Focuses on developed areas
− For rural areas – smartphone and/or computer use is crucial
Finally, geographic segmentation should be aimed to span across the whole world, and if they want to compete with Alibaba and eWorldTrade, they will have to aim to even double the amount of countries within their reach.
Table 2: Summary of Market Segments After Repositioning:
Demographic segmentation:
o All businesses sizes; small, medium and large
o Industry: businesses in all industry categories
Features:
− Focus on all business sizes
Behavioral segmentation:
o Benefit: product variety, convenience, affordable prices, fast and timely shipping.
o Personality: sophisticated, determined, in a hurry, timely
o User status: non-users, potential, first-time, regular or ex-users.
Features:
− Convenience as a major reason for online purchases
− Interest in new categories
− Low pricing as a major factor for purchasing online
Psychographic segmentation:
o Business net worth: low to middle to high-income firms.
Features:
− Customers segmented by loyalty
− Customers who like innovations and changes to the website
− Those who value after sale services
− Businesses clicking on recommended and suggested products
Geographic segmentation:
o Region: Amazon today covers over 100 countries, and should continue expand to aim for 200 countries
o Density: both urban and rural areas.
Features:
− International appeal
− For corporations who prefer digital sales over ‘real-word’ sales
The B2B consumer base as a whole can be segmented into the 4 segments used to segment the B2C consumer base. Although it is harder to analyze each segment’s profitability and stability as Amazon targets the entire world as their consumer base, this is useful in order to see what features each of the segments value in as business shopping at Amazon for the firms and what it is that the consumer profile could be generalized as. Growth-wise, the B2B ‘segment’ cannot really diminish because millions of firms will continue to trade on the marketplace and are thus potential prospects for Amazon. Learning what it is that they value collectively is what will allow Amazon to tailor their brand repositioning effectively. Amazon, now shifting to a macro-level segmentation, should targets each firm individually treating it as if it were a sole customer, creating long-term loyalty to the brand.
Brand Positioning Statement
Amazon’s newly recommended positioning statement would thus be as follows:
Target Audience
To all businesses worldwide
Problem Statement
Who are looking to trade at on a marketplace so convenient and accessible
Category
Amazon offers companies an online retail shopping experience for customers looking for admirable price-quality ratios
Value proposition
That achieves consistent growth and profitability while catering the needs of every firm in every industry.
Differentiation
Unlike competitors, our services are reflect the lowest prices possible, shipping its products at the fastest time feasible, with the largest product variety attainable.
Brand Identity
Following the new strategy of positioning Amazon as a B2B provider of retail selling, as opposed to B2C, minor changes in brand identity are expected to supersede, while others fundamentally remain unchanged.
I. Product’s attributes & other concrete features:
Elements of Amazon’s product range are bound to change, given the nature of B2B products, shifting from personal consumer goods to corporate, industrial commodities and (spare) parts. The selection of goods is thus associated with the brand and may change the links that customers have with the Amazon brand.
II. Style & Design of the Products:
This element of brand identity applies more to firms producing their own goods and thus creating, designing and styling their products themselves. However, Amazon with being a retailer, the style and design of their products would all depend on the sellers on the marketplace themselves and what it is that they are selling. Of course, it is worth mentioning however, that yes indeed, the nature of B2B products would entail that the style of the products as a whole would generally shift towards more rugged and rustic designs, which could supposedly alter the vision of Amazon’s products’ ‘style’ as a whole.
III. Name, Logo and Packaging
Amazon’s brand equity revolves around the strengths of its brand name – which in theory translates to familiarity with the Amazon logo (both colors, font and the overall logo itself). The Amazon brand creates a differential effect on the customer’s response to ecommerce, breeding less risk and building more confidence in shopping through the retailer. This strong brand equity brings high market power, as discussed earlier, in terms of competitors, suppliers and intermediaries, but also instils loyalty in their customer base. For this reason, this element will remain unchanged.
IV. Brand Personality:
It can be argued here that Amazon’s brand personality would drastically change here. Conversely, it should be stressed that for Amazon to benefit from the value of their brand name, it is important that they stick to the brand personality they have built for themselves over the past 24 years and build on the existing equity. Slowly but surely, the Amazon brand will shift towards a more industrial personality, but this is merely a complexion and impression personified by the change in the product collection.
V. Other Elements: After-sale Service
After-sale is association that wasn’t addressed as a trait alone, but instead looked at as an add-on. To elaborate on this, B2B services are successful if, and only if, after-sale services are available and reliable. Amazon currently offers customer service that is a large value-added to its products; therefore, the after-sale services would be a great reflection of Amazon’s value proposition and thus emphasize the customer-centric approach they will take when addressing the various firms that shop on their marketplace.
As Amazon hits $1 trillion in value, it is safe to say that a brand like that of Jeff Bezos’s does not necessarily require any brand repositioning as of now. Theoretically, if they did consider such a move, a shift to B2B would tap into a customer base through needs that other competitors cannot currently fulfill, leading to unique, favorable and strong associations in the minds of Amazon’s new customers.