In a recent episode of “What The Teck Show,” former Amazon leader James Thompson, now an e-commerce advisor and co-founder of the Prosper Show, offered a deep dive into the ever-evolving world of Amazon. Thompson, who was the first Fulfillment by Amazon (FBA) account manager, shared his expert perspectives on topics ranging from Amazon’s fundamental identity to the challenges faced by brands navigating the platform and the importance of in-person collaboration.
Amazon: More Than Just a Marketplace
Thompson began by challenging the common perception of Amazon as merely a marketplace or a shopping destination. He asserted that Amazon is fundamentally a data company. According to Thompson, Amazon possesses an unparalleled wealth of data, knowing “everything you’ve ever searched for, everything you’ve ever looked at, and everything you’ve ever purchased.” This vast collection enables Amazon to understand consumers on a profound level, arguably even better than they understand themselves.
As a data company, Amazon leverages this information to enhance customer experiences and to refine its advertising capabilities. While the extent of this data collection may be concerning for some consumers, Thompson clarified that Amazon is adept at collecting this data and does not share granular individual purchase behavior with other companies. Instead, Amazon licenses “double-blind versions” of this data for advertising, enabling companies to target specific customer groups without knowing their identities. This first-party data, unique in its granularity, positions Amazon to potentially become the number one advertiser in the next decade as it finds new advertising channels. Technologies like AI further refine Amazon’s ability to analyze this data and predict consumer preferences.
Navigating the Amazon Ecosystem as a Seller
Thompson acknowledged that as a seller on Amazon, their interests may not always perfectly align with Amazon’s data-driven strategies. Sellers might feel apprehensive about Amazon’s use of data and AI in product searches, which could impact their visibility. However, Thompson maintained that Amazon remains the premier platform for reaching a vast customer base. He pointed out that other major players, such as Google and Walmart, also collect and utilize user data for advertising purposes.
Despite seller concerns, Amazon’s core objective is to maximize product exposure to consumers, ensuring a wide selection, in-stock availability, and competitive pricing. Brands must recognize that success on Amazon requires understanding the platform’s specific “rules of the game.”
Amazon’s Strategic Partnerships in Social Commerce
Thompson discussed Amazon’s recent partnerships with platforms such as TikTok, Pinterest, and Meta, highlighting the rise of “social commerce.” He explained that Amazon, having reached a saturation point in directly acquiring new customers, is now seeking growth through other online channels. By integrating its fulfillment, advertising, and logistics capabilities with these platforms, Amazon aims to be part of online transactions regardless of their origin. Simultaneously, these partner platforms can leverage Amazon’s superior logistics and advertising data capabilities
Amazon vs. Walmart: Distinct Online Strategies
Thompson offered a crucial distinction between the online strategies of Amazon and Walmart. He refuted the notion that walmart.com is directly trying to compete with amazon.com. Instead, Walmart’s primary online focus is on serving its existing physical store customer base by providing online shopping options. Their goal is to be the top online choice for their in-store customers who are increasingly shopping online. While walmart.com is experiencing growth, its fundamental strategy is rooted in its physical retail presence, contrasting with Amazon’s emphasis on vast online selection and rapid delivery via a dedicated fulfillment network. Thompson emphasized that Amazon and Walmart are “not running the same horse race,” possessing different assets and pursuing distinct customer groups and definitions of success.
Thriving on Amazon: Essential Advice for Brands
For brands venturing into the Amazon ecosystem, Thompson emphasized that selling online requires a distinct approach from physical retail. Success in traditional retail, such as securing shelf space, doesn’t guarantee online success. To win on Amazon, brands need to:
• Master keyword optimization.
• Maintain competitive pricing.
• Provide comprehensive product education for online shoppers.
• Be prepared to invest in advertising.
• Actively address unauthorized sellers.
Thompson highlighted that on Amazon, with its “infinite shelf selection,” most sales occur on the first page of search results. Established physical retail brands often face challenges competing with “Challenger brands” that are adept at the online game. Amazon prioritizes “incremental selection, in-stock availability, and competitive pricing” over a brand’s history or offline market share. Brands must embrace a culture of continuous improvement, adapting their products based on customer feedback, as the “cost of search is low for customers online.” Ultimately, brands must “learn the rules of the game before you jump into Amazon.”
Leadership and the Importance of In-Person Collaboration
When asked what single question he would pose to Andy Jassy, Thompson’s response was, “Why did you wait so long to require people to come back to the office?” Drawing on his experience at Amazon, Thompson emphasized the crucial role of in-person interactions with colleagues in fostering collaboration and resolving complex problems. He argued that the spontaneous discussions and problem-solving that occur organically in an office environment are challenging to replicate in a remote setting, where every interaction requires scheduling. Thompson believes that maintaining Amazon’s culture of tackling complex challenges necessitates in-person presence. He valued the professional learning derived from weekly business reviews conducted in person.
Protecting Your Most Valuable Asset: Time
On a personal note, Thompson shared his strategy for maintaining a work-life balance: proactively protecting his calendar. By blocking out time for family and personal commitments, he ensures work demands do not overshadow these priorities. While this may necessitate starting the workday earlier, it provides control over one’s schedule and prevents being solely at the mercy of others’ availability.
Final Thoughts
James Thompson’s insights provide a valuable perspective for anyone involved in the e-commerce landscape, particularly within the Amazon ecosystem. His emphasis on understanding Amazon as a data company, learning the unique rules of online selling, and recognizing the distinct strategies of major players like Walmart offers crucial guidance for brands aiming to thrive. Furthermore, his views on leadership and the enduring importance of in-person collaboration in fostering innovation and problem-solving offer valuable insights for the evolving world of work. Brands and leaders who heed his advice to be adaptable, data-driven, and customer-centric will be better positioned to navigate the complexities and opportunities of the digital marketplace.
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