Minding The Gap: How Amazon Mastered the Market By Being Physical

This week, two would-be challengers to Amazon’s e-tail crown were humbled in one fell swoop. When Walmart pulled its products off Google Express, the position of Amazon as the undisputed owner of online sales was further consolidated.

When Google introduced Express in 2013 and then expanded the delivery service to the primary U.S. metro areas in 2014, the company was aiming directly at Amazon’s Prime service. But in the past five years, Prime has flourished, and Express -- well, it appears to be expiring. It may join a growing list of other shuttered Google projects: Google Plus, Google Glass, Google Waves, Google Buzz -- you get the idea.

Walmart, for its part, has certainly grown its online sales, thanks to a buying spree to help beef up its online marketplace. But according to the most recent numbers I could find (July of 2018), Amazon owns 50% of all retail ecommerce sales compared to just 3.7% for Walmart. What is probably even more discouraging for the Big Box from Bentonville is that Amazon’s year-over-year growth kept pace with Walmart's, so it wasn't able to make up any lost ground.

Why is Amazon dominating? In my humble opinion, this is not about technology or online platforms. This is about what happens on your doorstep. Amazon knows the importance of the Customer Moments of Truth.

The First Moment of Truth, as laid out in 2006 by  former CEO of Procter & Gamble A.G. Lafley, is the moment a customer chooses a product over the other competitors’ offerings.

The Second Moment of Truth is when the customer makes the purchase and gets her hand on the product for the first time.

The Third Moment of Truth is when the customer shares her experience through feedback -- or, today, through social media.

Since Lafley first defined these moments of truth, there have been a few others added that I will get to in a minute, but let’s focus on Moment One and Moment Two for now. Remember, a marketplace is really just a connection between producers and consumers. The home of Moments One and Two -- especially Moment Two -- is where Amazon is reimagining the Marketplace.

Amazon has out “Walmarted” Walmart at its own game. It has been all about logistics and consumer convenience in the Second Moment of Truth. Amazon has assembled a potent consumer offer that is very difficult to compete against, based on making the gap between Moment One and Moment Two as seamless as possible.

That brings us to another addition to these Moments of Truth: The “Actual” Moment of Truth, as defined by Amit Sharma, CEO and founder of Narvar. According to Sharma, this is the gap in online retail between when you hit the buy button and when the package hits your doorstep. Sharma has some street cred in this department. He helped engineer Walmart’s next-generation supply chain before heading to Apple in 2010, where he oversaw the shipping and delivery experience.

Why is this gap important? That's because it is the black hole of customer intent: a pause button that has to be hit between purchase and physical fulfillment.  It’s this gap that Amazon has grabbed as its own.

Google hasn’t been able to do the same. Why? Because Google failed to connect the physical and digital worlds. Amazon did, and reinvented the marketplace. And the company did this through branded fulfillment. That was the genius of Amazon, getting brown boxes with the ubiquitous Amazon Smile logo on your doorstep.

Yes, Amazon also ushered in the long tail of product selection, but that is an ephemeral ground to defend. It’s the branding of the moment of delivery that has made Amazon the most valuable brand in the world, according to Brand Finance, a brand consultancy firm. And now it can extend that into new areas, seemingly at will.  This is not so much a pivot as a sprawl. It’s a digital land grab.

The final Moment of Truth is the ZMOT: The Zero Moment of Truth, as defined by Jim Lecinski, who was with Google at the time. According to Lecinski, the Zero Moment of Truth is “the precise moment when they (the customers) have a need, intent or question they want answered online.” This is -- and will continue to be -- Google’s wheelhouse. But it remains firmly anchored in the digital world, far on the other side of the Actual Moment of Truth.

For Amazon, winning in online retail is all about Minding the Gap.

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