Service Providers Must Choose: Embrace the Mega-brands or Get Ready for Battle

Amazon continues to rise as a brand, assuming the place that Walmart once held in our subconscious — the 800-pound gorilla that can enter markets and dominate.

In 2017, according to research firm eMarketer, Amazon owned nearly half (43.5 percent) of American e-commerce spending, up from 38 percent in 2016. Although e-commerce sales represent a small share of overall U.S. retail sales, Amazon is by far the leader and their sales now represent close to 4 percent of ALL retail sales in America.

Media stories have referred to Amazon as a ‘Brand Buster’, pointing out how Amazon quietly enters a market and moves into a dominant position through the power of their website, search expertise, and growing brand. Recently, the NY Times published an article explaining that the company now carries roughly 100 of its own private label brands on its website.

Clearly, the market is embracing the notion of Amazon as a “one-stop-shop”, as demonstrated by its ascent in the online market for batteries, where it now holds nearly a one-third market share; a position obtained in less than 10 years’ time.

Amazon approaches all of their markets in the same way; “We start with what the customer needs and we work backwards.” (As an aside, I admire that statement; too few companies think the same way.)

In my recent talk at the Canadian Telecom Summit, which you can see in the video below, I walked through the ‘brand war’ that is erupting around the home and business subscriber experience. To me, service providers have a choice: embrace the opportunity and leverage the mega-brands (like Amazon) or engage in a David v Goliath-style battle that will be very difficult to win.

Companies like Amazon are not waiting. As one of the marketing directors on my team pointed out in a recent blog, Amazon is now offering ‘Smart Home Services’. For $99, Amazon will visit consumer residences, perform a Wi-Fi assessment, then provide one-on-one assistance to order products and services; likely from Amazon. That’s right. Not only will Amazon happily sell your subscribers a new wireless router, but they’ll also now sell them home network set-up services, extended warranties, and technical support.

Service providers need to prevent that initial networking relationship from being established and assume their rightful place in the smart home and smart business—moving from being an invisible brand to one that consumers seek out and trust for their daily communication needs.