The Amazon Brand Effect
It seems when Amazon sneezes, the financial markets of the world catch a cold. Interest in what Amazon announce they are set to do, or what they don’t announce, or even what others speculate they may or may not announce is having a significant impact on the share markets in the countries they are operating. In what seems like a massively disproportionate manner, the brand reputation of Amazon has come to carry so much weight, that markets sit and wait with baited breath, ready to react to the next step in Amazon’s growth.
In a recent presentation on top business trends of 2017 and what lies ahead for retail, CPG, and other sectors in 2018, business intelligence firm, L2 presented a compelling perspective on just how much impact Amazon’s announcements have on the stock performance of their competitors and the companies that manufacture products in the industries Amazon moves into.
“First and foremost you now see stocks trading on really three primary multiples; the first obviously the financial performance of the company, the second – overall consumer confidence, but the third – what Amazon has or has not announced over the previous 24 hour period” says Maureen Mullen, Co-Founder and Chief Strategy Officer for L2. “Everybody’s seen the data around what happened to retail stocks post (Amazon’s) Wholefoods acquisition. What alot of people haven’t seen is it had a similar impact actually to alot of the manufacturer’s stocks as well. Companies like General Mills, Nestle, etc. were down precipitously in that 24 hour period following that announcement of the acquisition” Mullen said.
“It’s happened literally in every single industry. You see them going into furniture, announcing moves into fulfillment, private label, you see Wayfair and Williams Sonoma down the next day. You look at moves that they’ve made into fashion apparel it’s absolutely decimated the stocks of the department stores as well as alot of the retailers. We’re seeing everything move in anti-gravity to Amazon.”
Following the media hype around Amazon’s entry into the Australian market the actual impact on consumer behavior here has been less than what the fuss may have suggested. Back in March this year Brad Banducci, the CEO of National supermarket brand Woolworths identified food delivery services such as Uber Eats as a bigger threat to supermarkets than Amazon. “We’re all competing for the family meal, and in that competition for the family meal the Uber Eats or the Deliveroos have made it very easy for you. There are a lot of competitors trying to compete for that, especially in a world where people are time-pressed and need a bit more convenience and ease.” You can read our article on Banducci’s vision here.
As a strategic branding agency, we spend all our waking hours (and quite a few of those sleeping ones) working to help brands build their reputation as leaders in their markets. We embrace the idea of ‘unlevelling the playing field’, creating an unnatural advantage through smarter brand positioning for businesses that have a significantly stronger and differentiated value proposition for their customers and clients. Even for us with our brand-centric way of seeing the world we are left somewhat perplexed by the disproportionate impact we see the Amazon brand leveraging on the commercial reputation of every business that finds itself on the opposite side of the table to this powerful, global brand.
David is the founder of Truly Deeply, a brand agency with 25 years experience working with brands to position them for growth. His deep expertise is in the creation of high engagement brands that attract the attention of their audience and stand out from their competitors. David has extensive experience working with corporate, retail, food & beverage and entrepreneurial clients. Find out more here
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Amazon CEO Jeff Bezos photo courtesy GeekWire
Graphic courtesy L2.