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How Safe is Your Industry From Amazon?

The value of speedYour industry is dying. And it’s all Amazon’s fault.

Many existing companies, and entire industries, exhibit a siege mentality. Travel long ago shifted away from travel agents and towards online players. Newspapers and magazines seem locked in a race to the bottom, competing for fewer and fewer ad dollars. Big-box retail is screwed. Just this week, Derek Thompson at The Atlantic noted,

“[JCPenney] …is just the latest bold-faced retail brand on the brink of extinction. Circuit City is dead; Best Buy is dying. Borders is gone; Barnes & Noble is shuttering storefronts. Kmart has closed 40 percent of its stores in the past decade. As recently as 1998, Sears was in the Dow 30. Today, Sears Holding isn’t even in the S&P 500. “

And it doesn’t matter how strong your brand is. During a recent panel discussion, Hollywood legend Steven Spielberg sat in front of a rapt audience and,

“…predicted an “implosion” in the film industry is inevitable, whereby a half dozen or so $250 million movies flop at the box office and alter the industry forever. “

George Lucas echoed that point, stating,

“‘You’re talking about Steven Spielberg and George Lucas can’t get their movie into a theater,’ [George] Lucas said.”

Back in the “Web 1.0” world of 1995-2001, people called this trend “getting Amazon’d.” Meaning, of course, that the web retailer (or similar players in other industries), was making off with your customers by offering lower prices, product innovations, or, more rarely, improved customer service.

To be fair, it wasn’t/isn’t just Amazon. It’s also Apple, Google, Facebook, and Microsoft (or, as I call ’em, AGFAM). And it’s their smaller competitors, nipping at these larger players’ heels — or, more commonly, building on their platforms.

I’ve been talking about these changes for a while (for example, here and here). But Daniel Burrus on LinkedIn succinctly explains the importance of these changes,

“Three digital accelerators have been driving the transition from change to transformation for many years, but due to their predictable exponential rate, they have now reached an inflection point — a point where processes, products, services, and careers no longer change; rather, they transform. The three digital accelerators are processing power, digital storage, and digital bandwidth.”

Or, as they’re also known, Moore’s Law, Kryder’s Law, and Butter’s Law, respectively.

Because these laws foliow an exponential curve, they get bigger, faster, than most people can get their head around.

For instance, Moore’s Law effectively says that a given amount of computing power doubles once every 18 months. That means in practice that computing power gets 10 times more powerful every 5 years and 100 times more powerful every ten. The corollary states that the price for a given amount of computing power will decrease by half in 18 months.

Put another way, the mobile phone in your pocket will be 10 times as powerful in just 5 years and almost 100 times more powerful within 10 years. You can see why that’s tough to grasp. So, to put it more simply, the current top-of-the-line iPhones, iPads, and Android devices will cost between $1.99 and $6.99 within a decade.

Don’t believe me? Microsoft recently placed a print ad in Forbes magazine that functioned as a T-mobile wireless router. Even with Microsoft’s deep pockets, you wouldn’t throw away hundreds or thousands of brand new routers, would you? Of course not. But you could afford to throw away 10-year old ones.

But the real question is whether this has to be this way.

I say of course not.

Now, obviously, advances in computing power and storage and bandwidth will change the way your customers interact with your business and your industry. I don’t dispute this fact. And of course many companies (such as the AGFAM-ily) will seek to exploit the opportunities these advances provide.

But as Thompson notes in the Atlantic piece, while highlighting customer-focused retailers like Costco, Trader Joe’s, Wegmans, and QuikTrip,

“Increasingly, there seem to be two kinds of stores—those in a race to the price bottom, and those closely guarding the patina of a shopping experience. Perhaps that’s because, more and more, there are two distinct kinds of customers.” [Emphasis mine]

Marketing is always about meeting your customers’ needs. Period. It doesn’t matter whether two types of customers exist, three, or a dozen. Technology advances offer an opportunity to meet the needs those customer types have head on.

A former boss of mine used to talk about “the power of ‘and’.” Meaning, that most things weren’t “either/or.” For example, it’s not Amazon or you, Google or you, Facebook or you. It’s all of these at the same time.

Don’t run in fear from Amazon (or Google, Facebook, Apple and Microsoft). Embrace the realities that Moore’s Law (and Kryder’s Law, and Butter’s Law) create. Take a good look at what your customers are doing, how their needs are changing, and how the tools offered by the big boys (and their smaller competitors) help you address those customer needs.

Your industry undoubtedly faces challenges from the folks directly in the AGFAM group and those using their platforms to challenge the status quo. Those efforts will likely cause your industry, at least as you know it today, to die. But by focusing on recognizing and adapting to your customers’ changing needs, no one says you have to die with it.

Interested in learning more about the future of marketing? Register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

And you might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

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