What’s Old is New, and What’s New is Old
Masterclass companies defy all conventional rules. We currently see that with Amazon. Amazon, after becoming the enemy of all brick and mortar, announced that it will open hundreds of brick and mortar stores. So how can Amazon be the anti brick and mortar company AND have physical locations?
Amazon started out selling physical books. By cutting costs it wouldn’t have brick-and-mortar retailers, it would utilize warehouses strategically placed around the country to optimize speed of delivery. Eventually, because of all these cost savings they were able to widen their offering to become the store that sells everything; from Electronics to clothing to baby diapers.
As Amazon began increasing its returning customer base it eventually got into its own products and white labeled goods. Amazon currently has a wide offering of its own ecosystem which allows people to control their home devices remotely, as well as shop Amazon in a very unique way.
However these new offerings require a storefront to be sold. Because these are Amazon’s goods, they cannot be “showroomed” anywhere else. So you have to literally see it to believe it.
When we hear that Amazon is opening a brick-and-mortar store, it should not appear crazy. It is not opening a store to compete with the bookstores that have destroyed decades ago. It is opening a store to sell its own goods such as Microsoft did with their retail locations.
Uber and the Future of Transportation
Uber has been become notoriously efficiently at moving people from one place to another. However they’ve been utilizing existing modes of transportation. They started out with cars, and promotionally they’ve used helicopters. All the while they’ve been building out an impressive customer base whose credit cards they have as well as mineshare. By commoditizing transportation, Uber is working on lowering the price and hence increasing the accessibility to these means of transportation.
We predict that in the very near future, Uber would be able to take over a city bus line or a supplementary bus line which services areas that are currently not being offered. Uber has immense data to see which neighborhoods are being underserved by existing public transportation offerings.
By providing a public transportation alternative they will be able to continue to acquire new customers which were previously put off by the existing price points of Uber.
There are lessons to be learned here. Both Uber and Amazon created an offering which people wanted. With Amazon, the commodity of a book was truly questioned. Did the place where one purchases a book matter to the buyer? The answer was no. Because of this, Amazon was able to take any savings from this new way of thinking and reinvested into a growing Marketplace of any good that could be sold.
With Uber, they challenged a similar assumption. Is a customer loyal to their existing mode of transportation? Is a New Yorker tied to a taxi or is it that that is their only option and that is why they choose it. Uber proved that when providing a superior product at a similar price point, the customer would choose the superior product.
One of the investments which both companies bought into was crunching the data of its users. By doing so they would smarten technology that has been around for decades.
Amazon is “making a button smarter” by allowing you to do really cool things with all the connected devices in your home as well as services in the cloud. Uber, is bringing public transportation to underserved markets and newly populated areas.
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