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EDGE 2017 - May you live in interesting times

Professor Mohan Sawhney | Aug. 14, 2017
Professor Mohan Sawhney of the Kellogg School of Management pressed pause to outline the future channel opportunities during the opening keynote of EDGE 2017.

 

Amazonization

Amazonization is the idea that I eliminate middlemen and restructure the channel in a fundamental way.If you look at the three dark horsemen in this equation - Amazon Web Services (AWS), Microsoft and Google - they are the three big players that are disrupting the channel.

The first disruption is around transforming the structure of the channel to create better economics and superior customer experience, essentially taking out low value-added middlemen.

Going further, one of the interesting paradoxes is that after Amazon went and destroyed grocery stores and destroyed the physical book stores, they are now opening book stores and grocery stores and they just bought Whole Foods.

Stores are coming back, but they are coming back in ways we don't recognise, with Amazon changing the structure and role of the physical retail channel by using logistics and customer data as a competitive advantage.

So, are you at risk?

  • What percentage of sales in your market are through e-commerce?
  • What percentage of your sales go through e-commerce? Do your retailers and distributors add enough value to justify their margins?
  • Is there a segment of customers that values low-touch and no-frills offerings?
  • Is Amazon already in your market?

But I believe every speech should consist of three parts - What? So what? And now what? And the flip of disruption is that there is opportunity and the opportunity we have is to explore digital transformation.

Remember, technology channels will come back but they will be transformed because different functions and capabilities are more valuable today.

 

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