Jeff Bezos: The Ultimate Bottleneck Breaker
When Jeff Bezos launched Amazon to disrupt the book distribution business, many viewed it as a novelty. Bookstores were at their peak, libraries had faded, and most Americans didn’t read that often. Now that Amazon has acquired Whole Foods, they have evolved tremendously from selling the least perishable physical product with the lowest deliver cost to now include the most perishable products with some of the highest delivery costs possible.
Many analysts point to Amazon’s inventory management and lightning fast distribution systems as their biggest assets. I would suggest that it is a key factor, but it is coupled with another, more powerful and intangible asset — Bezos’s ability to identify and eliminate bottlenecks in every part of his multi-layered business model.
Finding and fixing bottlenecks is how all companies unlock sustainable growth. A bottleneck is any point of friction in your business that prevents you from generating more revenue or generating the same revenue more easily. And the first bottleneck Amazon faced was earning the trust of consumers to buy online.
It went beyond simply getting consumers to put their credit card info into an online order form. They had to make it easy to do, easy to understand, and back it with seamless customer service when something went awry.
As you can see on their prominently placed “How to Order” page from May 2000, they explain how the Shopping Cart works, their innovative 1-Click Shopping function for repeat customers, as well as their Safety Guarantee against credit-card fraud.
By solving this initial bottleneck of building trust, they have become the gold standard of trust for online buyers. Customers will actually pay more for something on Amazon than direct from the manufacturer.
With the Whole Foods acquisition, my prediction is that the biggest bottleneck to solve with the grocery business will be focusing on making the user experience as seamless as possible. This goes beyond what they are trying to prove with their Amazon Go pilot store in Seattle.
When you look at the overlap of current Whole Foods customers, Amazon Prime members, and the location of each store, there are many ways Amazon can add value to the customer. They will have to figure out how to do it in a way that doesn’t confuse the large non-tech and senior populations that drive significant revenue to Whole Foods.
Offering an in-store discount for Prime members, similar to the Target Redcard discounts at the competing retailer could be an easy benefit for Prime members. The customer purchase data captured could be used to evolve their ecommerce channel even faster, and open up a world of options with suggestions for additional products online.
The discount would drive even more Prime memberships from the stores. And since Prime members buy roughly twice as much from Amazon than their non-member counterparts, this integration with Whole Foods could secure US households for the retailing giant.
What do you think are the biggest bottlenecks for Amazon to overcome with Whole Foods now?
