And yet [Amazon.com's] dogged focus on “commodity commerce” may prove to be short-sighted. For over a decade, Amazon and eBay have enjoyed the fruits of a market that required a greater focus on scale than on innovation. But the rise of Groupon, Gilt, LivingSocial, Vente Privee and other social e-commerce sites have taught us an undeniable truth that customers are ready for something different. The question is whether Amazon will disrupt its own model in order to preserve its reign as the king.While it may be true they haven't really invested in social retailing (other than their oft-flagging Lightning Deals promotions), the article got me thinking about the "commodity commerce" voodoo that Amazon does so well, and their metamorphosis in scale from "The Internet's Largest Bookstore" into "We make Wal-Mart's sphincter twitch from time to time," and the unintended consequences of such a move.
In 1998, my Venture Capital professor at Columbia asked the class 'How many product category tabs are at the top of the Amazon.com page?' to which we dutifully rattled off three (yes, just three, back then): books, CDs, movies. 'How many more category tabs do you think they put up there?' was his follow-up, which is when the penny dropped for most of the students in the room... Why, there's no real limit to what they could sell. And I've viewed everything else that Amazon has pioneered from that point on, from 1-click purchasing (a laughable patent), to dynamic recommendations to recurring grocery subscriptions -- as an ongoing campaign to shorten the gap between shopping and buying.
Everything else, every product category expansion, the introduction of Amazon Prime and every acquisition that's followed is premised upon the notion that an Amazon.com shopper already knows how to buy online, has entered their customer data at Amazon and wants a low-involvement shopping experience that simply gets them what they want, when they want it, damn it, and Amazon's frictionless reviews, checkout and logistics make it happen.
If that's commodity commerce, please tell me where to sign up to be CEO, because there's a lot of money to be made as that guy. But social commerce is different, operates under the guise of community, and requires different investments and incentives for their respective shopping public. I can see Amazon owning a social commerce site, I can see them doing fulfillment for one, I can see them providing the product catalog and back office, but I can't imagine it branded with the Amazon.com name.
Amazon's brand and business ambition has been allowed to morph from "the Earth's Biggest Bookstore" to "the Earth's Biggest Selection," but they'll never be as cool as Woot, Gilt, or Groupon ever again.
