Amazon Effect—you can’t blame the dinosaurs for the meteor

Today (18 March 2018) I went to a local business breakfast and listened to a very interesting talk about the effect of Amazon on modern retailing. It was thought-provoking as the presenter, Shayne Williamson, talked about the failure of major retailers to adapt to the “disruption” of Amazon operating in the Australian market.

What is the Amazon Effect?

He talked about how the big retailers in Australia are not competing and losing their share value rapidly due to the impact of e-commerce and perhaps the Amazon Effect. He also pointed out the failure of the Myers CEO to make any improvements and his recent resignation.

The Amazon Effect, according to Millenial Marketing is:

the impact the digital marketplace has on the traditional business model regarding consumer expectations and the new competitive landscape.

They go on to suggest that that consumers:

… now expect their buyer journey to be entirely frictionless and immediate, regardless of the particular industry or product in question.

What they are suggesting is that Amazon’s customer-focused, smooth, convenient and automated process has set a new benchmark. The benchmark for customer service is difficult for other businesses to replicate and thus these other businesses lose market share. This is even having an impact on businesses that are not directly competing with Amazon.

Businesses adapting to the Internet

It was an interesting discussion about how businesses need to adapt to changing conditions. We all seemed to be impressed with Jeff Bezos, Amazon CEO, for his foresight and visionary business strategies while the ex-Myers CEO was pilloried for failing to deal with the challenges of online shopping and e-commerce.

However, having trained as a biologist, I could not help seeing this another way. The fundamental for understanding the natural world is Darwin’s Theory of Natural Selection, known as survival of the fittest. As the environment changes those organisms best adapted for the new situation are more successful at surviving.

There are lots of interpretations of how evolution has worked and the circumstances that have produced the diversity of species. One of the most obvious scenarios is the end of the dinosaur age and the rise of mammals. Sixty-six million years ago a 15-kilometre wide asteroid hit the earth and produced a cloud of sulphur that created a toxic winter that saw the cold-blooded dinosaurs die out and the small, warm-blooded mammal survive.

Had this meteor event not happened life on earth would have been very different to the way it is now; dinosaurs would have continued to dominate the world and to slowly adapt as the climate and landscape changed, and mammals may never have gained the foothold to evolve into primates and eventually us. Similarly, had the internet not developed, the old, bricks-and-mortar retailers would have continued to dominate the marketplace.

Are businesses dinosaurs?

Like the meteor, the internet has caused a massive disruption. Most retailers, like dinosaurs, just may not be capable of surviving in the new environment simply because it can not sustain them any more. The moral of the story, then, is that you we can’t blame the dinosaur for not surviving the meteor and neither can we claim that the mammal was better because it did.

I originally published this on Linked IN.