Gaining a Supply Chain Edge

Making Amazon your 'Frenemy'

Amazon is your competitor, whether you like it or not. But are they also your friend?

I see some companies suffering from an Amazon anxiety factor, so they shun the wildly successful company, or they try to copy Amazon’s innovations in the hopes that this keeps them competitive.

We’ve all seen the news daily about retailers dropping the Kindle from their shelves, bookstores refusing to sell books published by Amazon, attempts to match prices with Amazon for the holiday shopping season, and retailers testing same-day delivery just like Amazon is doing.

But in this new, multichannel world, not everyone is reacting the same way. There are companies establishing partnerships with Amazon, despite the fact that they are clearly competitors. The latest major example is Staples’ announcement this week that it is installing Amazon’s lockers into its stores.

Staples’ business is known for having a very strong e-commerce focus, making it a clear competitor for Amazon. Yet the two are entering into a partnership that can be best characterized as “coopetition.”

When a customer orders an item from Amazon, they can drop by their local Staples store and pick up the order in the Amazon locker. In turn, Amazon is able to use Staples’ stores as local fulfillment centers, amounting to great convenience for the customer and major cost savings for Amazon. Staples benefits from bringing in more potential customers into its stores, and it helps the Staples brand as the good customer experience is then tied in the customers’ minds to both companies.

While Amazon and Staples are both running the same race, they are helping each other along while they run it. This a great strategy, and clearly the wave of the future.

As Forrester Research reported, “For many businesses, Amazon is simultaneously a sales channel, a potential service provider, and a competitive threat.”

Is Amazon your friend? Your enemy? Or is there a potential partnership there as a third choice -- making Amazon your “frenemy” instead? It is time to think of new strategies that work for your business and supply chain in light of the challenges ahead.

You can learn more about the Amazon Effect here: http://www.tompkinsinc.com/amazon-effect/

 Jim

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Thoughts for today's global businesses and supply chains.

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