Has Amazon outgrown its 'e-commerce giant' label?
With forays into web and advertising services, original video content and AI-driven hardware, the business these days is about so much more than buying stuff.
Amazon is both a remarkable success story and something of a question mark with its expansion into numerous new areas of business like original content and digital assistants. The brand's continued diversification of offerings now begs the question of whether it's appropriate to continue calling it an "e-commerce giant" or to adopt another moniker entirely, like "digital goliath."
This question is a particularly important one for marketers because, as Amazon's triumphs mount, the company may be gearing up for a bigger advertising play. Brands, many of whom previously saw Amazon as a competitor or an important e-commerce distribution channel, might want to join in on that game. If Amazon were able to successfully sell ads across its expanding platform, it might shape up to be a worthy competitor for Google, which derives the vast majority of its revenue from advertising.
Alexa could be the linchpin in Amazon's plans here, as the technology provides the company with unique first-party data about users — information that is valuable for brands looking to target consumers. Alexa, a significant success that is already expanding into cars with additional touch points likely on the way, also lays the foundation for Amazon to play an important role in voice-driven consumer engagements, an area that is likely to grow as the Internet of Things continues to gain traction.
“Amazon is already associated with providing everything for everyone, so elasticity is uniquely in their DNA,” Dan Pappalardo, founder and CEO of Troika, told Marketing Dive. “The smile in the Amazon logo symbolizes this idea as it is also an arrow that points from 'a to z.' Amazon’s promise of everything for everyone is only enhanced as it adds new products and services to its ecosystem.
"There probably is a limit to how far Amazon can take it," he added. "But, from a brand point of view, Amazon is well positioned to push those limits.”
In 2014, Troika helped launch Amazon’s first attempt at original content, a kids' digital video platform, and has continued to work with the digital video group on strategic and creative brand initiatives.
Amazon started off as an online bookseller and eventually evolved to become an e-commerce giant where consumers can order just about anything online and get it delivered in as fast as a couple of hours. Amazon Web Services is one of the largest global cloud computing providers.
The company is also a major player in artificial intelligence as part of the Partnership on AI along with Google, IBM, Microsoft, Facebook and DeepMind; it’s turned that AI expertise into Alexa, a personal digital assistant powering its Echo and Dot devices, along with third-party hardware. Amazon is even a producer of original video content, some of it award-winning, for Amazon Prime Video. And that just covers the high points of different business areas where the company has a firm foothold and not its many investments in emerging technology, like drones.
Some companies might see their brand equity erode as they expand into non-core areas of business. This hasn't been the case so far for Amazon, which has deftly kept e-commerce at the center of its efforts by pairing free two-day shipping for orders with access to free Prime video content and giving consumers multiple ways to place orders via Alexa.
The brand never veers too far away from e-commerce, recognizing the central role shopping plays for U.S. consumers. Last week, The Wall Street Journal reported that Amazon is planning to sell its own line of women's intimate apparel, a move that would put it in competition with Victoria's Secret.
Tyler Riddell, director of marketing at eSUB, sees Amazon as a transformational business that is the “hub of post-digital interaction and resources” and is molding customer behavior rather than adapting to market changes.
“Amazon has really been pushing its boundaries with what they can do," Riddell said. "Did you know that they just patented actual floating warehouses in zeppelins for drone delivery services? C'mon, that is absolutely insane! But that's the kind of technology we dreamed of as kids for the future.”
One brand to rule them all
One constant across Amazon's various business interests is the core brand. Its cloud service is Amazon Web Services, its hardware devices are Amazon Kindle and Amazon Echo, its original video can be found on the Amazon Prime Video streaming service.
The Amazon name ultimately remains the glue between each of these different parts, a common enough branding strategy. What is more unusual is how quickly Amazon has been able to launch and build new businesses like original content — Amazon Studios was launched in 2010 — and Echo, which was introduced in late 2014.
“It’s a modern Masterbrand,” explained Pappalardo. “Amazon applies a traditional endorsement strategy, leveraging the equity of the Amazon name across new lines of business. What’s remarkable, though, is the speed of growth and adoption for Amazon illustrates how quickly consumers accept brand endorsement from today’s tech-based companies, even when they might be stretching far beyond the brand’s core business.”
Businesses such as iTunes, Waymo and Amazon’s original series “Transparent" all exemplify the accelerated model for new business growth in the digital era.
“The Masterbrand was afforded incredible elasticity in each of these cases: a computer maker embraced as an online record store, a search engine as a car marker and an online retailer as a TV network," said Pappalardo. "It’s as if we believe that tech brands are magical and perfectly capable of transforming at will.”
A clash of the titans?
In some ways, Amazon is similar to Google’s parent company Alphabet. In fact, Google created Alphabet to give its core brand distance from some of the more esoteric “moon shot” technology it was investing in and to keep Google focused on search, advertising and consumer technology like Gmail and Google Maps.
Amazon has taken a different route, keeping its core brand front and center, but its business areas are beginning to overlap with Google more. Right now the two are both major R&D investors in artificial intelligence and each have hardware in the home digital assistant space — Echo, Dot and other Alexa-powered devices for Amazon and Google Home for Google.
Riddell thinks a race for which big brand is most technologically advanced is looming.
With this in mind, Amazon could become more of a tech company than an e-commerce company because its innovative technological advances are putting it on a playing field alongside Google and Apple, per the executive.
Amazon's Prime membership model could be the key to the company’s future because it brings consumers into Amazon’s “massive commercial ecosystem” and keeps them there with the trade-off of membership benefits in exchange for captive consumption, according to Pappalardo.
“Let me tell you something, there is going to be mass competition in the tech world,” Riddell said. “These big companies such as Google, Amazon, and Apple are constantly trying to come up with innovative and trendy technologies. As far as marketing goes, marketers need to adapt for a more post-digital, collaborative consumption. In other words, an IoT-friendly marketing world.”