Q&A with Brittain Ladd on Amazon
Internet Retailing editor Heather McIlvaine recently spoke to Brittain Ladd, who led the global expansion of AmazonFresh at Amazon until February of this year. A lightly edited version of the interview is published below.
Short on time? Here are three key takeaways from the interview:
- Retailers don’t protect market share by not selling on Marketplace because Amazon is more than capable of identifying products for private label on its own.
- Amazon is successful because it works tirelessly to delight customers.
- Amazon will open bricks-and-mortar stores overseas if it thinks doing so would delight customers.
Heather McIlvaine: Amazon is officially launching Marketplace in Australia and has said it’s currently looking for a large distribution centre. How does this fit in with the roll-out of small, city-based distribution centres that an Amazon source previously described?
Brittain Ladd: In order to fulfil products faster to customers, Amazon will need to be as close to their customers as possible. This is best achieved by opening smaller distribution centres throughout cities. A larger distribution centre will hold products that will feed the smaller distribution centres as well as store inventory for additional use.
HM: Some retailers say they are wary of selling through Marketplace because of Amazon’s track record of identifying successful product categories on Marketplace, launching their own private label in the space and pushing out the sellers. Is this a valid fear?
BL: No, it is not a valid fear. Amazon has an extremely talented group of individuals working for the company. On their own they are more than capable of evaluating product categories and identifying products for private label. Amazon created the marketplace because they saw an opportunity to help all sellers achieve their goals and sellers should feel welcome and safe partnering with Amazon.
HM: So Amazon isn’t out to ‘destroy’ Australian retail?
BL: I have used the terms ‘destroy’ and ‘disrupt’ interchangeably since 2010 when I started speaking publicly and writing about Amazon entering Australia. A publication repeated my comment and they tried to make it sound like what I said was negative.
I want to defend Jeff Bezos and Amazon. Jeff Bezos never talks about destroying any company or market and neither does any other executive at Amazon. Jeff Bezos always says the same thing – focus on the customer.
Amazon is not afraid of competition and Amazon does not operate with an unfair advantage as some analysts claim. I want everyone in Australia to understand that the men and women who work for Amazon have one desire in mind – delight customers through superior customer service. They will work tirelessly to delight consumers in Australia.
HM: But they will still have a huge impact on Australian retail…
BL: This is what I refer to as being unfair criticism of Amazon. Amazon is only successful because consumers are delighted with the Amazon experience.
If Australian’s are unhappy with Amazon and they prefer to shop at other retailers, Amazon will fail. Based on my experience, I believe consumers will be very happy with the service provided by Amazon.
There is nothing preventing established retailers in Australia from competing against Amazon on service and price. Established retailers have the advantage over Amazon so it is disingenuous for retailers to complain about Amazon. The playing field is level and only consumers can decide the winner.
HM: New research from Hitwise recently showed that Australians are most likely to view and purchase products in the technology space on Amazon, including Kindles, personal computers, video games and other electronics, while US and UK customers are also very interested in beauty and home products. Does this reflect how Amazon shoppers develop over time?
BL: Yes. Consumers across the globe have different interests and incentives when shopping online and in retail stores. What’s interesting about Amazon is that once consumers realize how many products are available […] and how great the experience is, consumer behaviour changes and they gravitate more and more to Amazon.
Amazon has effectively created an ‘endless aisle’, which means that regardless where a consumer is located, they will most assuredly find a product on Amazon that they will want to buy.
When I speak about online retail and Amazon at conferences I make sure to point out that the reason why Amazon is so successful is because they make it easy for customers to be delighted. Delighted customers buy more.
HM: The Hitwise data also showed that certainly product categories are more appealing in some regions than others. For instance, in the US, grocery products are the fifth-most purchased product category, while they’re only the tenth-most purchased products in the UK. What could be behind that difference?
BL: The density of grocery stores has a direct impact on the desire of a consumer to order groceries, as Brits can easily walk to any number of stores.
Due to the density of grocery stores in the UK and the ease of finding and buying groceries, consumers don’t see the value of ordering groceries online. In the US, consumers are looking for convenience, and more consumers are willing to order groceries online to eliminate having to drive to a grocery store. Also, consumers in the US were early adopters of e-commerce and they have embraced e-commerce on a large scale.
Understanding consumer behaviour in Australia as it relates to online grocery retailing will be critical to Amazon successfully designing and implementing a strategy to convince Australians to buy groceries online.
Amazon will be successful because they’re masters at understanding consumers. Amazon will also be successful because Coles and Woolworths failed to invest in online grocery ordering and delivery, so Amazon has little in the way of competition.
HM: There has been some noise lately that Amazon search rankings are becoming more important than Google. How does this impact retailers?
BL: If a company understands what consumers are searching for, algorithms can be utilised to push ads for the desired products to consumers. I am a fitness fanatic and whenever I search for certain products such as pre-workout drinks, within a short period of time, ads for pre-workout drinks begin to appear, when I am on Google, without me having to search. This makes it easier for consumers to make a decision to buy.
HM: Amazon is experimenting more and more with physical stores in the US. When can we expect Amazon to start opening stores overseas?
BL: Amazon will only open stores when doing so will delight customers. In some regions, customers are happy only interacting with Amazon via e-commerce. In other regions, customers may want to have a choice of interacting with Amazon through stores. If Amazon believes it is in the best interest of customers to open stores, stores will be opened.
HM: What else is on the horizon for Amazon?
BL: I believe what we will see in the coming years is that CPG [consumer packaged goods] companies and manufacturers will determine it is in their best interest to sell direct to customers instead of leveraging online and bricks-and-mortar retailers. P&G and Unilever are already using such a strategy for some products and the trend will increase.
I also believe Facebook will move into e-commerce at some point, either through a partnership with an e-commerce player or by creating their own platform. With nearly two billion users and more using Facebook every day, [they] have a significant opportunity to turn Facebook into an easy-to-use platform for e-commerce. I can’t predict the future but it will be very interesting to watch how retail will evolve.
Brittain Ladd is a strategic advisor in Brazil. He previously worked at Amazon, where he led the expansion of AmazonFresh globally.
Ladd first wrote about Amazon’s arrival in Australia in the 2013 article, A Beautiful Way to Save Woolworths, which has been referenced in The New York Times, The Wall Street Journal, The Financial Times and other major publications. The article explains how Woolworths could apply game theory to lead the grocery market Down Under.
Amazon has noted that Ladd’s comments do not reflect its own views. Ladd left the company in February and was never involved in its plans for the Australian market, the e-commerce company said.