![[2021 컨슈머]⑦ “To confront Amazon the destroyer, you have to invest endlessly” Knights, author of’Amazon Retail Report’](https://image.chosun.com/sitedata/image/202101/10/2021011000066_0.png "[2021 컨슈머]⑦ “To confront Amazon the destroyer, you have to invest endlessly” Knights, author of’Amazon Retail Report’")
Enter 2021.01.10 08:00
“Amazon advances into Korea and advances into the Asian market.”
Offline → Online conversion already in progress… Accelerated by corona crisis
Amazon, which grew by 30% in sales in Corona… The secret is’digital innovation’
On-offline borders are broken… All-equipped companies survive
“Technology is breaking down the boundaries between the physical and digital worlds. Companies with differentiated and integrated online and offline stores will survive.”
Miya Knights, co-author of’Amazon Retail Report’, said in a written interview with Chosun Biz.
Knights has been paying particular attention to’Amazon’, an American IT company that has grown into a global distribution giant. He is a co-author of “Amazon Retail Report: How Amazon Changes People’s Shopping Patterns? .
Amazon has achieved unprecedented growth despite the coronavirus infection (Corona 19). In the third quarter of last year, sales increased by 37% from the same period of the previous year to $96.15 billion (approximately 108.84 trillion won). It is expected to be 136.97 trillion won). What is the secret of Amazon’s continued growth despite the Corona 19 crisis?
Knights said in the’Amazon Retail Report’, “We are at a crossroads between important technological, economic and social changes that will completely transform the retail industry.”
With the corona 19 pandemic that struck the world last year, the distribution industry faced another big change. I then asked him about the future of Amazon and the retail industry. Next is a question and answer with the Knights.
-Last year, Corona 19 affected the global distribution industry. What is the biggest change?
Corona 19 accelerated the transition from offline to online, and the distribution industry was hit directly. Over the past few months, the e-commerce market in some regions has grown on the par with nearly 10 years.
However, the trend of going from offline to online has been going on for quite some time. It is only an existing trend that Corona 19 has accelerated. The retail market that has finished growing is already saturated, and consumers’ purchasing habits have undergone a bad change.
-What is the secret of Amazon’s growth in the coronavirus outbreak?
The catalyst that has driven Amazon’s growth is’digital technology’. In response to the spread of the virus, most governments have shut down unnecessary offline distributors, which allowed digital-based distributors to thrive. On the other hand, companies that relied only on offline stores are struggling to survive.
This was possible because Amazon invested heavily in building its own information technology (IT) infrastructure, supply chain network, and shopping malls. Amazon continues to innovate in technology, including mobile and smart voice assistant devices, and will put the revenue generated back into the business to increase market value.
-In the book’Amazon Retail’, Amazon’s competitiveness is called’technology’. Will Amazon be able to maintain its current growth?
Offline retailers cannot operate without technology that automates the sales, purchasing, distribution and fulfillment processes. For example, barcodes and payment terminals (POS) have been used for over 50 years. For the past 25 years, consumers and offline retailers have been using and embracing digital technology at the same speed and manner. However, from some point onward, consumers have fallen behind at the speed of acquiring technology.
At that time, Amazon took advantage of technology. Amazon was the first to succeed in the e-commerce market and applied technology to offline stores. It introduced the world’s first unmanned automated store’Amazon Go’, and introduced the’Amazon Dash Cart’ service that automatically calculates the contents of the cart.
Amazon is constantly dissatisfied with the status quo. In a 2016 shareholder letter, Jeff Bezos, founder of Amazon, said, “Customers are always beautiful and wonderfully dissatisfied, and they want something better even if they are unaware of it. “I said.
The only factor that will hinder Amazon’s continued growth will be’consumer backlash’. When we start to focus on’conscious consumption’ and sustainability, Amazon can run into limits. It could also be hit by antitrust measures in Europe or the US.
-Which companies will survive the competition in the e-commerce market?
Companies that have both differentiated and integrated online and offline stores will be able to survive. Consumers want more control over the shopping process. For example, you search online first, check products in offline stores, and then buy them online again. In addition, consumers want to shop at companies that have good after-sale services such as returns.
Technological advances are breaking the boundaries between the physical and digital worlds. Retailers that do not now have physical stores will be very disadvantaged. E-commerce companies that started digitally will increasingly jump into the physical realm through flagship stores (representative stores), pop-up stores (temporary stores), shop-in-shops, and M&A. In addition, it will be able to secure competitiveness through functions such as live streaming, wish list, mobile app, and augmented reality that can connect online and offline stores.
-On the other hand, offline retailers are likely to continue to have difficulties.
The winners in the era of Corona 19 have both online and offline stores. This is because consumers think that it is more convenient to use the two forms together. In fact, according to the UK Online Retailers Association (IMRG) in October, multi-channel retailers (62.7%) in the UK recorded higher sales growth than online companies (19.6%).
Therefore, offline retailers will not disappear. However, companies with more digital capabilities are more likely to survive.
The offline stores of the future will shift from where the sale takes place to where the experience takes place. Amazon is good to buy, but it’s not very attractive for’shopping’. Thus, physical stores will transform from simple purchases into spaces where you can eat, work, play, discover, learn, and rent.
-Recently, Amazon entered the Korean market in partnership with ’11st Street’, an e-commerce run by a Korean company SK Group. Why did Amazon choose Korea?
Amazon tried to enter the Chinese market a few years ago but failed. This is because it does not take into account differences in consumer demand by region. Since then, emerging markets such as India and other countries in the Asia Pacific region such as Singapore have taken a very different approach. This is the same in Korea.
Amazon is the’best destroyer’. Competitors are threatened by Amazon’s advance. But the customer is definitely a beneficiary. As Amazon continues to innovate, customer expectations will rise, raising the level of its competitors, which ultimately leads to a better experience for buyers.
In other words, Amazon’s advancement means that the Korean e-commerce market is in turmoil. This is because Amazon only invests in markets that it believes could have a big impact. Therefore, Korean retailers will need to strengthen their investments and improve their services before Amazon can provide better for their customers.
-If you look forward to the future of the global e-commerce market in 10 years.
It is unlikely that the exponential growth as last year will continue, but for the time being, consumers will continue to shop online for convenience and hygiene reasons.
Prior to the coronavirus outbreak, it was predicted that the size of the e-commerce market would account for 30% of the global distribution market by 2030. However, as the e-commerce market grows rapidly with Corona 19, the growth trend is expected to increase further. It is expected to reach at least 40% this year.