Walmart used to be the menace of main street. But now, small mom-and-pop retailers (along with their big box brethren) have a new punching bag: Amazon.com.
The Seattle online retailer has been taking it on the chin this holiday season after releasing a new mobile application that encouraged shoppers to check out goods at brick-and-mortar stores, and then make their final purchase on Amazon. The company added a bit more salt to the wound by offering a one-day discount for those who completed a “price check,” presumably while shopping in physical retail stores.
Large retail associations and brick-and-mortar stores shot back, saying that Amazon was taking advantage of tax loopholes and turning physical retail stores into showrooms for the online powerhouse. U.S. Senator Olympia Snowe even got into the fight, calling it “anti-competitive behavior that could shutter the doors of America’s small businesses.” An “Occupy Amazon” Facebook page emerged, and an Oregon bookseller offered a one-day discount and $5 gift certificate to any shopper who canceled his or her Amazon.com account.
One would think that Amazon had a public relations nightmare on its hands, one that came amid the key holiday shopping season. And so how did the online retailer react?
We’ve watched Amazon for a long time now, and this public-relations strategy is pretty customary. Amazon’s reaction to the massive AWS outage back in April is a perfect example, with many developers feeling as if they were left out in the cold by a company that wasn’t clearly communicating what was going on.
What makes the PR approach so fascinating is that Amazon prides itself on satisfying customers, and one would think that translates directly to a proactive PR effort.
But that’s never been the approach at Amazon — in deep contrast to companies such as Starbucks or Costco or Microsoft. It even flies in the face of one of its very own units: Zappos.
I’ve been wondering about this approach for a long time now, and it didn’t entirely click until I read a piece in Forbes last week by columnist Venkatesh Rao.
It is a fascinating analysis on the “Amazon Way,” one of the best I’ve ever read. Rao gets behind the PR strategy, writing that the company does not “immediately respond with knee-jerk PR damage control.” He continues:
“Where other companies might respond with overwrought displays of contrition and dramatic conciliatory gestures, Amazon will likely do the minimum necessary, wait out the storm, and move on. Amazon dealing with its market is the corporate equivalent of a patient, low-reactor parent dealing with a child throwing a tantrum.”
Amazon’s rise over the past few years has been absolutely fascinating to watch. The company is now being discussed along the lines of Apple and Google and Microsoft in terms of its new-found power in the tech industry. Its market value keeps growing and growing.
For a company that started as an online bookseller, this is an amazing transformation. And Rao, the columnist for Forbes, concludes that the Achilles Heel for Amazon might just be PR, something he dubs “relationship capital.”
“Nobody completely trusts Amazon. There is a degree of social isolation it suffers in the corporate landscape. Customers, suppliers, affiliates, partners — everybody has learned to be on their guard when dealing with Amazon. Nobody ever enters a relationship with Amazon with wholehearted enthusiasm. Only with a certain reluctance. You deal with Amazon mostly because you have to, not because you want to. This lack of relationship capital may start to matter one day. But today is not that day. Today we succumb. Today we welcome our Amazonian Overlords.”
Pretty interesting stuff. Language like that, coupled with Amazon’s recent battles with states over sales tax collection, could put a big target on the company’s back much as Walmart was derided over the past two decades. As I was writing this post, a news alert popped up in my email with a story from The Motley Fool. It was titled: “Is Amazon the new Walmart (in the ‘Evil Empire’ sense)?”
It will be interesting to see how Amazon responds — if at all — as the company’s power increases.