Is Amazon the most innovative company in retailing?

Discussion
Source: Amazon
Feb 15, 2017
George Anderson

When it comes to Amazon.com, some people see a retailer driven to test new approaches and cut its losses quickly if those attempts don’t pan out. Others see a company that just throws things against the wall because it doesn’t have to worry about turning a profit. (That comes from its non-retail AWS business.) So, is Amazon an innovative retail juggernaut or a charlatan hiding behind world-class marketing and public relations? Fast Company thinks it is the former and has just named Amazon the most innovative company in the world.

Among Amazon’s most innovative qualities, according to the publication, is its emphasis on developing platforms that allow customers to fulfill their needs on their own terms.

“Our customers are loyal to us right up until the second somebody offers them a better service,” Jeff Bezos, founder and CEO of Amazon, told Fast Company. “And I love that. It’s super-motivating for us.”

Among the company’s innovations are its Prime subscription program, which has gone beyond free two-day deliveries to offer an array of perks that are both valuable to members and difficult for rivals to match. Bain Capital estimates that up to 60 million households in the U.S. have Prime members.

Superior execution in order fulfillment has also been key to Amazon’s success. The company’s huge automated fulfillment centers, which run using tech picked up in the acquisition of Kiva Systems in 2012, are essential to that performance.

Other innovations include Amazon’s voice-activated Echo devices, which have reportedly sold in the millions while becoming fixtures in many connected homes.

The company has also ventured into physical retail with Amazon Books and its Go convenience store pilot as well as a host of pop-ups around the country that feature its own-brand consumer electronics including Echo, Fire TV, Fire Tablets and Kindle devices. The company is also reported to be getting ready to open three pick-up grocery stores in Seattle and Northern California that are designed to build on its AmazonFresh service in those markets.

DISCUSSION QUESTIONS: Do you agree or disagree that Amazon.com is the most innovative company in U.S. retailing today? What are the true benchmarks for innovation in retailing? What other retailers that you think of when it comes to innovation?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"They are a driving force of innovation because they are always stretching the envelope and testing ways to put the customer first."
"Amazon has a strategy, understands its core purpose and relentlessly innovates to move forward. Innovation is not willy-nilly. "
"They are innovative in some areas, but let’s be realistic … it’s not rocket science to sell an enormous assortment at a loss."

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40 Comments on "Is Amazon the most innovative company in retailing?"


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Mark Ryski
BrainTrust

Amazon is fearlessly innovative and most deserving of the title and accolades. Two attributes about Amazon that truly standout are: 1.) willingness to pursue ideas well beyond their core competencies and 2.) viewing undesirable outcomes as learning rather than failure.

Sadly for many retailers today, innovation means having an app and/or trying to deliver positive same-store sales this quarter.

Sterling Hawkins
BrainTrust

Amazon doesn’t approach retailing like a retailer so they’re not limited by historical thinking or infrastructure. They can truly innovate in a space where technology and consumer experience come together to create completely new concepts. It’s one of the reasons they were able to triple in size over the last five years. The upside for the rest of the industry: they’re inspiring change everywhere.

Jon Polin
BrainTrust

No question! One of the more telling quotes I’ve seen lately:

“Amazon spends more on innovation than the twenty largest supermarket companies in America combined. If retailers don’t start investing at a greater level of innovation, they’re going to become lunch served for Amazon.” — Jerry Sheldon, retail analyst with IHL Group

Chris Petersen, PhD.
BrainTrust

What many retailers have yet to discover and fully appreciate is that omnichannel is the new normal. What the “new normal” means in practice is that customers EXPECT to be able to control their own experience and VALUE it.

Amazon may not be the most innovative in every aspect of retail. John Lewis in the UK is perhaps a better example of a fully integrated experience across all physical and digital channels of retail. But hands down, Amazon is one of the world’s most innovative at putting the customer first and in control of their own experience.

The other driving part of Amazon’s innovation culture is their mantra: “Tomorrow is day one.” They are a driving force of innovation because they are always stretching the envelope and testing ways to put the customer first.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
2 years 8 months ago

Amazon is a highly innovative company. But I don’t consider them the most highly-innovative company in retail — until these innovations show they can drive profits. Amazon remains a company that loses money in retailing.

Cloud services? Highly innovative and very, very profitable. Content provider? Somewhat innovative — pretty much the old school big dog with dominant market share and decent profits. Clever new devices? Innovative and profitable. Retail? They throw a ton of things against the wall and lose money at them all.

What we all need to be careful of is that their place of most dominant innovation is their PR campaign for themselves. It’s incredible how a whisper from Amazon can cause the world’s biggest retailers to jump — often causing them to jump into bad decisions in reaction to highly-publicized efforts by Amazon.

(To be honest, these declarations of “most” always seem misplaced regardless of company. My hunch is that the most innovative companies in retail are ones we haven’t heard of yet.)

Tom Redd
Guest

Doug, you are right on the money. The only profit for Amazon is their cloud operations. Most retailers do not sell cloud services, nor do they measure retail performance with cloud profits. Fast Company is just another PR channel that Amazon convinced to do a byline on them, and the press ran for it — as did some of the Millennial BrainTrust members….

Bob Phibbs
BrainTrust

Amazon has the luxury of innovating at a scale few can even dream of … because they don’t have the stodgy and cumbersome need to be profitable. Great when the stock market is betting you’ll be last man standing to make it so.

Max Goldberg
Guest

Amazon, through a willingness to experiment and succeed and fail, is the most innovative retailer in the U.S. today. Bezos and company are constantly trying to push the current limits of retailing, and in the process have given us countless innovations: from Prime to devices, from distribution through delivery.

Dick Seesel
BrainTrust

There may be more innovative retailers who are not as visible as Amazon, but it’s hard to think of a company with such scale that is less willing to rest on its laurels. I know that some panelists view Amazon’s push into new businesses and logistics methods as not much more than a well-oiled PR machine (see yesterday’s discussion of intimate apparel as an example). But it’s hard to deny that the company is anything but complacent when it comes to extending its reach and improving its execution promise.

The real test for Amazon will be its success in rolling out innovative brick-and-mortar retailing models. The bookstore and especially the C-store tests will be telling, because most other stores with “omnichannel” strategies have not succeeded in offering an innovative approach to the business of shopping.

Phil Masiello
BrainTrust

Amazon is a customer-centric company. It is driven by providing the most frictionless transactions for consumers. All of the programs they deliver are designed to create customer retention. Are they the most innovative? At this point they are. And only because no serious competitor has driven such a focus on the customer. The true benchmark of any business is retention and Amazon has one of the highest retention rates of any retailer or e-tailer.

Another point that many do not know: 82 percent of all sales on Amazon.com come from third-party sellers who are also held to delivering the same standards. In fact your seller ratings actually affect how you product ranks in search. That is how committed Amazon is. You could have the cheapest price on an item, but if you have a low seller rating, another seller will get the buy box.

Charles Dimov
Guest

Amazon is definitely keeping retail on its toes. They have been the loudest among the innovators due to their size. There might be more innovative retailers out there but, like them or not, Amazon has done an amazing job at making their innovations known throughout the industry and among consumers.

Lee Kent
BrainTrust

Based on the fact that Amazon spent over $15 billion on innovation in 2016, we would be hard-pressed not to agree that they are the most innovative. I know, I know, innovation spend is not the complete measure but the value through learnings and success are. I applaud what Amazon has done and the challenges they have thrown at retailer — however, and that’s a big however, I also applaud all the other retailers who don’t have an AWS to cover the expense of it all but still seem to be in the game. That’s innovation too, baby! And that’s my 2 cents!

Adrian Weidmann
BrainTrust

By giving shoppers a platform with the tools to find and fulfill their shopping journey on their terms, Amazon is revolutionizing retail. Their success is forcing traditional retailers to wake up and innovate or become a dinosaur. Speaking at the recent NRF, Richard Branson stated, “I think people who own retail stores should not think of themselves as forever being retailers. They need to be entrepreneurial and they need to spin off businesses off the back of their retail. I think there needs to be a perpetual revolution going on within a company because if you don’t have that happening, somebody out there is going to do it to you.”

Amazon is the catalyst behind this necessity — if not the company that will “do it to you!”

Lyle Bunn (Ph.D. Hon)
Guest

Amazon has changed browsing and buying and in doing so has pulled the entire retail sector forward with it. In leveraging the internet for supply chain efficiencies and added customer-facing interfaces, algorithms and customer engagement it sets a bar for digital-enabled experiences. The key message from Amazon is that the 3Ps of product, price and promotion as the pillars of physical retail have been changed to the new 3Ps of place, processes and people. And Amazon’s second message is, “compete with technologies.”

Shawn Harris
BrainTrust

Yes; Amazon is the most innovative company in retail. It’s not just about service and product introduction, but also how they have created/captured a pioneering investor base that supports their way of doing business. I’m a big believer in focusing on “how” to think, vs “what” to think. Amazon has the former down and it keeps them at the forefront of innovation, while too many traditional retailers are looking for what they should do.

Shep Hyken
BrainTrust

As a company, no doubt Amazon is one of the most innovative. From their online store to Echo to the Prime loyalty program to the distribution center, they have shown how to push the envelope and innovate to the benefit of both the customer and the company. I admire Jeff Bezos when he comments that so much of Amazon’s success is on platforms that others invented. Amazon didn’t invent the internet or online shopping. They took an existing platform and made it theirs. They didn’t invent the robots used in their warehouse. They didn’t invent drones, which will potentially be a game-changer in delivery. They just use what others have created and make it theirs. And maybe that is where innovation truly lies. It’s not with new inventions, although Amazon may have a few. It’s taking what is already there to the next level — or higher. That’s what Amazon does so well. And, at the same time, every decision that is made keeps the customer in mind. That’s powerful!

Gene Detroyer
BrainTrust

While the question is about Amazon being the most innovative company in U.S. retailing, I agree with Fast Company — Amazon is the most innovative company in the world. As a professor, they provide me with numerous examples of how a company should look towards the future and how they should handle experimentation and failure. Amazon plays dominoes in developing strategies to connect with customers and uses technology to extend their reach.

Ben Ball
BrainTrust

Is Amazon the most innovative retailer in the world? I’m going to give that one a qualified “maybe.” They are certainly the most efficient order fulfillment company in the world right now. They make it extremely easy to find, buy and receive products in practically every retail category available. But to me, retailing is about more than just selling the most stuff. Retailing (and maybe I should be saying “merchandising” here instead?) is as much art as science. And I don’t see much “art” at Amazon.

Kim Garretson
Guest
2 years 8 months ago

Warren Buffett seems to believe this if you read behind yesterday’s headlines: “Warren Buffett just dropped Walmart and signaled the death of retail as we know it.”

Brandon Rael
BrainTrust

Amazon has the scale, breadth and depth of both talent and revenue to be relentlessly innovative. Innovation comes in many forms, however, Amazon has amazingly found the “secret sauce” of keeping their extremely loyal Amazon Prime customers satisfied, with solutions and experiences that are beyond what the marketplace has to offer. Another distinct advantage they have is their ability to drive their innovations and spread their risks via diversification while having significant revenue streams coming in.

In a recent article I read, this one quote resonated with me. “Our job,” says Amazon CEO Jeff Bezos, “is to invent new options that nobody’s ever thought of before and see if customers like them.”

Sounds very familiar! Steve Jobs had a very similar philosophy on innovation while leading Apple.

Paula Rosenblum
BrainTrust

I agree with Doug Garnett (bring on those dislikes for nay sayers!). They are innovative in some areas, but let’s be realistic … it’s not rocket science to sell an enormous assortment at a loss. If any other retailer did that it would be called something other than “innovative.”

I had an epiphany yesterday as I was throwing away yet another mound of cardboard because Amazon had put the two litter boxes I ordered in two separate boxes instead of stacking them and putting them in one. Why doesn’t Amazon use some of that great innovation power to develop a custom box die cutter? They waste so much money on excess packaging, and then sometimes pack boxes so full (if they can) that the items arrive damaged. Before they buy their own airline fleet, why not learn to create their own boxes? Honestly, they’ll never make money the way they ship stuff today. Not today. Not ever.

Richard J. George, Ph.D.
BrainTrust

I agree with most of the comments depicting Amazon as the most innovative company in U.S. retailing today. At any point in time, the company is engaged in multiple experiments designed to reinforce its customer-centric focus. It is now experimenting with some bricks-and-mortar stores, which many people may question. However, I think the words of the late Malcolm Forbes are applicable here. He said, “the greatest obstacle to success in business is complacency.” No one will accuse Amazon of being complacent. Therefore, while some of its experiments will fail (the reason why we test alternatives), on balance the company will continue to advance itself and reap the benefits. I would not bet against Amazon.

gordon arnold
Guest
Amazon has been in ownership of a significant lead in the e-commerce market for a good number of years. This is often pointed to as a commanding lead among retailers in general. Countless exultations and accolades are lauded throughout all media devices about their business model. A lot like Sears in the 1980s. What isn’t all too often discussed is their insistence on being true to form, like Sears was. There is also little mention of just how much more the market is expanding than the company with many more competitors entering into e-commerce with newer and friendlier software. In the age of instant everything, the focus must be on a business plan with an infrastructure that can move into rapidly developing markets, both new and old, that are trending and profit taking. Discovering and creating the tools needed to effectively put product and service when and where it is wanted with money left over is the only way to stay in the fast lanes where the profits are. Like many other retail giants I… Read more »
Lee Peterson
BrainTrust

How about “easily” the most innovative retailer? The real question is, are they the most innovative company, period? Consider Tesla, Virgin, Uber, Google, etc. They’re in that conversation more so than the retail mix. In any case, while most retailers were focused on logistics, real estate and procurement, Amazon was bold enough to think of a customer’s life and what would make it easier, simpler, better. Hence Echo, Dash, one-hour delivery, drones, etc. It seems like bold thinking, but it’s actually old school — they just acted on that premise in a modern way.

Amazon is a runaway train that’s on a track with no obstacles. And the flip side is, Warren Buffet dumped all his Walmart stock yesterday. $900 million worth. ‘Nuf said.

Cathy Hotka
BrainTrust

Amazon thinks of itself as a technology company and very few other retailers do. It’s time to stop pretending that incremental tweaks will help traditional retailers, and instead mount an all-out offensive to save the industry. That’s the task, nothing less.

Camille P. Schuster, PhD.
BrainTrust

Amazon has a strategy, understands its core purpose and relentlessly innovates to move forward. Innovation is not willy-nilly. Implementation is in accordance with its core values. Amazon cannot be copied by just implementing a successful process. It is not one process that makes Amazon successful. It is the interconnection of processes designed to fulfill its strategy.

Ed Rosenbaum
BrainTrust

Amazon is absolutely the leader in retail today and probably many of the tomorrows to come. They lead because they listen to their customers and give us what we want. They lead because they are innovative and willing to gamble on the outcome. They lead because their leaders set the tone for others and are involved in the processes. They are many times the price leaders too. What more could we ask for? Could we ask for the other retailers to listen and look at what Amazon does and try to follow that lead? Sure we can. Now it is time for the other retailers to act or continue to be the next best thing.

Ryan Mathews
BrainTrust

I might agree that Amazon is one of the few genuinely innovative retailers today, especially if you define innovation as the desire to try new things without fear of embarrassment. Amazon is relentless — and very public — about its experiments with new platforms, supply chain innovations and uses of other retail technologies. Can’t think of anyone else quite like them.

Tom Redd
Guest

Nope. Many retailers do not send PR out on their innovative changes. But innovation in retail is truly end to end — like having 10,000 stores, a massive supply chain network, and complex internal operations — driving strong margins and customer satisfaction at the same time. Can Amazon do that? No way. Can they self market simple things that are catchy and catch loads of press? Yes.

True innovation in a retail world is not about PR. It is about serving your shoppers, no matter the channel and keeping shareholders happy. There are many retailers doing these things, you just do no hear them bragging.

Adrien Nussenbaum
Guest

It is difficult to argue that Amazon is not the most innovative company in retailing. If you ask retail CEOs what keeps them up at night, they will unanimously say Amazon eating their lunch. While certain retailers have made advances in certain areas, like omni-channel, few are committed to taking profits from one area of the company (in Amazon’s case, its marketplace of 3rd party sellers) and using those profits to grow innovation. Amazon’s strategic moves, like FBA, are truly innovative and game-changing. We don’t see moves like that from other American retailers.

Brian Kelly
Guest
2 years 8 months ago

Amazon is the most modern mass retailer. It is the most aware of shopper behavior and is abreast of how behavior shifts. Therefore they are most current.

At 23 years old, Amazon has experience to inform its decisions and how it manages risk. Its use of Media Relations is also a form of its leadership. The timing of messages is as innovative as the messages themselves. From sales to real estate acquisitions to distribution to store design, it manages to remain constantly newsworthy. At least the street buys it.

Lowe’s and Home Depot update and innovate in their sector. Best Buy continues to intelligently evolve under Jolie’s stewardship. REI is a lone bright spot in sporting goods. All seem to keep Amazon at bay.

Kai Clarke
BrainTrust

Amazon reflects the future of retailing. Its focus on logistics, excellent customer service, and deliverables that reflect real-time consumer needs, all wrapped in an easy to identify electronic platform make it a reflection of consumer needs of today and the future.

Richard Amari
Guest

Amazon may not be the innovation leader but given their size and pervasiveness, they are the ones we hear the most about, and for good reason. In fact, they are innovative. Their Amazon Prime is unmatched and an incredible value to consumers. Their delivery performance sets the standard for all others. But there are other lessor known retailers doing very innovative things. This is especially true around customer engagement, where it is a challenge for Amazon given their size and lack of physical presence (stores). You can make an argument that traditional retailers have to be more innovative in areas where Amazon is challenged to compete, in order to provide a value proposition against Amazon. So whether Amazon is leading innovation or causing innovation from others as a defensive mechanism, you have to recognize their innovation leadership.

Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
2 years 8 months ago
For years Amazon has been the poster child for innovation in retail and elsewhere. Their unswerving focus on applying technology to delight their customer as well as fully appreciating the role of trust and speed has created a virtuous circle and greater freedom to experiment in ways just not feasible for competitors. Internally, they are geared to risk-taking in order to continuously pushing the envelope of what’s possible — thereby creating opportunities where none were previously perceived. At their core, Amazon is a technology company that now happens to sell everything to anyone. In science, there’s theoretical and applied knowledge. The former is of little value without the latter which cannot exist without the former. Retailers do not need to own theory (technology), they need to own how they apply it to their customers. Combining the right technology with a laser focus on making the lives of their customers better, simpler, and more convenient will drive the retail innovation agenda. That translates to developing the right set of partnerships in the technology sector and creating… Read more »
Vahe Katros
Guest
Vahe Katros
2 years 8 months ago
Go to the US Patent Site here. In Term 1 enter Amazon Technologies, Inc., In Field 1 enter Assignee Name. Take a look around at the vast range of fillings and topics. The PTO site isn’t PR News. Each one of those listings suggests a deep culture of innovation … so let’s not argue hand size. To be sure, AMZN needs to reinforce the innovation narrative to keep investors happy, but think about what Cathy said: “It’s time to stop pretending that incremental tweaks will help traditional retailers, and instead mount an all-out offensive to save the industry. That’s the task, nothing less.” If as an industry we embraced the idea that we can innovate better together (and I include the tech vendors) like we did with the supply chain, what might we do? Jointly solve omnichannel retailing? Figure out how to deal with showrooming? Figure out how to design a BOPIS friendly format? Learn how to learn from customers? Share insights around AI and machine learning? I’m not suggesting we stop competing with each… Read more »
Cathy Hotka
BrainTrust

Thanks for the shout-out. Any organized effort to address existential issues in the industry won’t come from its trade associations….

Vahe Katros
Guest
Vahe Katros
2 years 8 months ago

Thanks for the response back and I know you are trying to rally the troops so good luck! All of this reminds me of the quote by Douglas MacArthur I heard again this week: “The history of failure in war can almost be summed up in two words: too late.”

Patricia Vekich Waldron
Staff
Patricia Vekich Waldron
Contributing Editor, RetailWire; Founder and CEO, Vision First
2 years 8 months ago

They have the best PR strategy….

Kenneth Leung
BrainTrust

I’d say they are definitely the retailer willing to take most chances in trying out new projects. They do have the advantage of not just selling goods but also technology and media, so their margins are higher than traditional retailers. I would say Amazon is the most innovative retail and entertainment company right now.

Ricardo Belmar
BrainTrust
Maybe everyone needs to agree on the definition of “innovative.” If it means creating and/or applying technology in new ways that make the Amazon retail experience better, then yes, absolutely they are innovative. In fact, they not only take a customer-centric view in defining their shopping experience, but they also innovate when it comes to operational improvements that most shoppers never see. Just look at how they run their warehouses. Innovative doesn’t automatically have to imply “profitable” either. It’s one way Amazon is fortunate and smart about their business. Are other retailers just as innovative when it comes to customer experience? Sure. One example already mentioned by Chris Peterson is John Lewis in the UK. I think we can find other examples in smaller retailers that are more nimble in their category like Indochino & Shoes of Prey, both of which presented at NRF this year and have innovated in delivering customized and personalized products in a unique way. Other examples like Hointer and their automated in-store processes can be found, too. Amazon is also… Read more »
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Braintrust
"They are a driving force of innovation because they are always stretching the envelope and testing ways to put the customer first."
"Amazon has a strategy, understands its core purpose and relentlessly innovates to move forward. Innovation is not willy-nilly. "
"They are innovative in some areas, but let’s be realistic … it’s not rocket science to sell an enormous assortment at a loss."

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