hello everybody Tom Ellsworth here and
welcome to case studies at the dis da
k– this week we’re taking a look at
amazon because you asked for it many of
you said how about a case study on
Amazon and I looked at it there’s a lot
of ways you could go into that but I
thought that the best one was just to
take a look at the essence of retail and
the essence of retail for Amazon is
dominance so we’re going to take a look
at how are they dominating why are they
dominating dive in a little bit because
there are some lessons for you and me
even as we enter into the waters of the
digital retail ocean and maybe do
something whether you’re selling
t-shirts or doing something more
substantial today two core points we’re
watching history in retail we really are
watching history and we need to
appreciate what’s happening even if it
kind of makes this a little worried
about how big Amazon is getting there is
something to watch and understand and
actually appreciate point number two
digital sales for anybody is a three
front war and it’s not the army on the
land and the Navy in the sea and the Air
Force in the air it is search selection
and delivery and we’re going to look at
all three of those about Amazon is using
those and dominating actually in each of
the three areas to create an
overwhelming market presence well we
know Amazon’s been on a tear if you open
up the Wall Street Journal or any casual
magazine you see that they’re doing
something else or another big number
associated with them
okay let’s dive in and go from the
general to the specific today Amazon’s
worth three hundred and eighty five
billion dollars you know Facebook is
worth three hundred and seventy billion
dollars so you hear about social media
and all the things that have happened
and you hear headlines about retailers
having issues that vanity and Amazon
they’ve actually grown to be bigger than
Facebook in terms of their value on the
stock market if we take a look at the
playing field of retail I think it
really helps us understand just how
amazing this has been so we take a look
here in 2006 this little list of
retailers here was worth four hundred
million dollars and there’s people we
remember like Sears pennies Macy’s Best
Buy Target and Walmart pretty big if you
take Walmart off
list everybody else is only worth 186 so
with Walmart 400 million dollars without
Walmart 186 now looking to long ago is
just exactly 10 years ago now we go to
2016 serious is worth almost nothing and
by the way black & decker just bought
craftsman tools so when you think about
Sears used to go there for Craftsman
tools I did growing up because it was a
great tool at a great price it was
really sturdy stuff you know it wasn’t
some bargain basement bin you might find
inside of a Lowe’s or Home Depot next to
front door you went to Sears to get
Craftsman tools because they meant
something well now Craftsman tools are
now part of Black & Decker and serious
is worth 1 point 1 billion dollars you
know barely alive they probably have
real estate that they owned it’s worth
more than that you would have two
pennies Nordstrom’s down Kohl’s down
Macy’s under half best buy under half
Target jump and Walmart they’re the only
two that are holding on and Walmart’s
kind of flat but if you now this list is
only worth three hundred billion dollars
and if you take Walmart out this list is
worth eighty six however what happened
to Amazon that same point in time they
were worth 17 billion dollars over here
selling books doing things like that
now they’re worth three hundred eighty
five billion dollars you know I haven’t
said it in a while but there’s only one
word for that damn you know I think if
you take a look in retail and you see
where it’s gone you say to yourself how
did this happen
well this didn’t happen because we
decided we were going to buy online it
didn’t happen because we wanted to buy a
book there instead of going to Barnes &
Noble you’re watching Crown books and
Walden books and all those other places
and borders go out of business it’s more
than just books it’s what they did with
their bookstore engine and what they
were learning about how you and me
purchase if we step back a minute I’ve
got some more charts today I want to
talk about you know Black Friday used to
be all about remember Black Friday used
to all be all about let’s go shopping
and there were sales at all these stores
now Black Friday is it’s almost like
pay-per-view wrestling
get to tune in and watch which store in
America had a riot because some low
priced toy and caused all these people
to run in to get the one toy for two
bucks and there’s big mob scene or
they’re at Best Buy for that remember
that five dollar DVD player or that the
$50 46 inch plasma display and all these
people are in waiting by the doors it’s
not Black Friday it’s kind of like WWE
meanwhile everybody is at home sitting
there on their phone and on their tablet
and on their PC buying from Amazon and
getting it delivered you know so retail
is dramatically changed you take a look
at search it’s where it starts when we
want to buy something online because we
know we’re in the mall to go we drive
over here to this side the macy’s or
dillards or Sears we know where all that
is but online it’s all about search
that’s where you start your product
right here I’m going to show you
something really interesting okay
there’s a ten-year chart I’m about to
show you a three-year chart this chart
here is the percentage right of our
choice of where to start a search for
something we buy online in 2014 we chose
a search engine
55% of the time to go search for
something 38% of the time we went to
amazon.com and we searched right there
in the bar once we get to the home page
of Amazon over three years search engine
has gone to 26% meaning today a hundred
people decided they’re going to go buy
something online only 26% of them go to
the Google box or any other search
engine box and of course Google’s
dominant to start their search for a
product find me this find me that
whereas Amazon it’s risen to 52% so now
when people go to buy something online
52% of them go to amazon.com and search
right there on Amazon only 26% go to the
search engine so not only does Amazon
have a huge treasure of all of our
purchase histories we’re started with
books and goes on to other things now we
know what we’re searching for because
most people when you come there you’re
either cook Eid or you logged in so they
know what you’ve been searching for they
know what you bought and there’s this
huge
huge mountain of information I saw an
article it was back in 2004 2005 and
they said that the largest Linux
database in the world had been built at
Amazon and it was purchased data my
friends that was 2004 2005 I mean go
look that up hold me honest gang because
I’m pretty sure I’m right about that but
that was the largest Linux database all
this information of everything that’s
been purchase search is everything
knowing what you want when you want how
to put things next to you absolutely
tremendous and now we’re starting there
first
you think that and you think it’s bad
let me get out of the way and show you
one more thing 18 to 29 year old people
62% go to the Amazon box 21% go to
search engines 32 44 56% go to Amazon
box 26% you know I may have a new word
and the word is Oba you know I happen to
think that this war for online retail
when you’re going to find something is
close to ova because when you’ve got
this much data and an amazing search
engine when you go take a look at Amazon
they had a project it was called a nine
and a nine was only about building as
much intelligence as they could on their
servers about what you and I buy because
they wanted to make us happy if you ever
read about Bezos he’s up just that very
focused intense manager but you also see
he’s got a heart a big heart for the
customer and you’ll see that in things
he talks about he just wants to make it
easy and make you happy and if it
doesn’t work for you make it easy to
return he is all about you and I as
consumers more than you might think
so now that you’ve got all this search
then you go to selection selection most
people don’t know Amazon is not
operating as many of those warehouses as
you think now they get a lot of
warehouse space and they deliver from
that but they have all kinds of
secondary warehouses where maybe I sell
rare antique books in Atlanta Georgia
and I’ve got few thousand books in stock
I’m selling them on amazon.com you
just don’t know it’s me till you go to
checkout and say oh this will be shipped
by an on Amazon retailer and guess what
the boxes they give me the invoice is
going to derive SKU it’ll say Amazon so
you had an Amazon experience even though
my little antique bookstore in Atlanta
you know was the one that got you what
you wanted so the selection with all of
those stores that are locked in is huge
you know they don’t talk a lot about
certain metrics at Amazon they’re really
careful about that but it wasn’t too
many years ago they said they had over
1.4 million secondary stores connected
in to the Amazon environment Wow if you
can’t find a needle in the haystack when
you’ve got all that Amazon warehouse
space and then 1.4 million stores in
America then you’re just you just not
paying attention and you’re searching
for something that doesn’t exist because
it’s all there
it’s truly I think a marvel when you go
to find something that you dearly want
and you can just find it there you know
now we get to delivery and deliveries is
something I think is been spectacular
and also a little bit funny i’ma tell
you story this is a battery for my
laptop this happens to be a new battery
because my regular battery went dead was
only holding a charge for about 10
minutes
this battery arrived at my house on a
Sunday afternoon in 22 minutes
because when I went to check out the
Amazon thing says did you know you have
same-day delivery of this particular
product in Dallas I was searching for
something that was at a warehouse in
Dallas on a Sunday and in 22 minutes
this car drives up front it was someone
who looked like a lyft driver it was an
unmarked car and they came up to my door
and had little boxes you go I Amazon
brown box and this was in it
I couldn’t believe it it was almost less
time that would have taken me to get
this at Best Buy if I want the Best Buy
and they happen to have it in stock I
was absolutely blown away but you know
what they’re all about delivery and
their focus on delivery is not to be
trifled with a couple weeks ago there is
actually a funny news story and it
showed that there’s actually a patent
where they’re in the patent shed designs
of the
airborne blimps that were holding
inventory of certain things like
lightweight clothing and stuff like that
do you know whose patent application
that was that drawing
Amazon’s so everybody was like are you
kidding me they’re preparing a fleet of
blimps to carry kind of light weight
stuff that they could just have
delivered to you if I Cal it’ll drone
comes up to the blimp and grabs it comes
down well who knows that they are not
but lord knows man they invest in
technology and they invest deep one of
the things that I was most impressed by
that is it’s not enough just to have
some maybe a lyft driver whoever that
was delivered to me on a Sunday it’s not
enough to have Amazon Prime so dialed in
that you can get like one day or two day
delivery it’s not enough for that
they’re actually even thinking about
airborne warehouses and little drones
that would be delivering it to you that
just shows you that that today is not
enough for Amazon they want to do
evermore and bring it to you you know I
think when you take a look at those
three that we talked about search
selection and delivery
I think search and delivery where we’ve
had this innovation that’s been
tremendous because Amazon did make that
battery you know sanyo made that battery
apparently and so they’re not about
making the product but they’re about
helping me find it and getting it to me
at the best price as fast as possible as
easy as possible and that is the whole
that is the whole Amazon story you know
within this 385 million dollar valuation
is a lot of Amazon Cloud Servers and a
lot of Amazon IT but you know where that
came from
they built tools for themselves and then
said why don’t I have this tool work for
you the same way they’d built the
world’s most incredible retail store and
they said 2 million or million a half
whatever the number is today of small
people like my you know fictitious
example of an antique book store in
Atlanta that uses Amazon to show the
world all those wonderful books they can
get their hands on and when you put
those three together you get an industry
powerhouse and that’s that’s really the
story the story that blew me away
was this change in valuation the change
in Black Friday and
how they’ve use search to put it all
together and the proofs in the pudding
because the last chart is right here in
2006 all these retailers worth four
hundred million dollars two hundred and
fifty two billion dollars in sales
big-box retailers big boxes like a
Macy’s or our Kohl’s or our pennies you
know the big retailers they’re the big
anchors at the two ends of the mall that
you go to or the mall you used to go to
because apparently somebody’s buying
from Amazon but there it was and then in
2016
down to 156 billion so a hundred billion
dollars of sales in ten years no longer
happening at Sears at pennies at
Nordstrom’s at Kohl’s at Macy’s at Best
Buy and Target and Walmart you know what
I shouldn’t say Walmart because it’d be
fair they’re the one that manage to hold
hold level and I bet if you looked at
some of these numbers you would find
some figures that show that Walmart
being grocery first low-cost products
out of the urban areas and the suburban
areas in rural areas that’s still where
their play is but when you go to Amazon
this is I think a beautiful case study
and I’m going to show you what you want
you know practically before you know you
want it because I’ll know so much about
you that I could say oh you want that
book but there’s also this book too
you want those sneakers well there’s
also these warm-ups it’s an infinite
number of examples and that’s the Amazon
case study for this week just kind of
looking at the raw start numbers to
understand just how big and how bad
Amazon got so as we go back to our two
points man we’re watching history
whether you like what’s happening or not
you have to appreciate the fact that
you’re watching history and a seismic
shift and retail in America and the
second thing whether you’re Amazon or
you and me trying to do something search
selection and delivery and if you can
help people find it and you can get it
to them fast the quality’s in the middle
you’re going to get loyalty and in case
of Amazon they use a lot of data so
don’t give up your data you know whether
you’re selling t-shirts whatever you’re
doing don’t give up your data keep what
you got and try to sell them something
else and make them double happy for
working with you that’s it the sweet
that’s the case study and we need a
pillow
gosh oh wait wait wait wait hang on hang
after a throw like that Paul we got to
do this again are we are we doing this
again are we still on tape we’re doing
it okay both all right
thank you for watching that’s this
week’s case study please subscribe that
value came it the best channel on the
internet for entrepreneurial videos and
things will help you build a bigger
business in the future
until then I’m Tom Ellsworth I hope I
let you better than I can [Music]
welcome to case studies at the dis da
k– this week we’re taking a look at
amazon because you asked for it many of
you said how about a case study on
Amazon and I looked at it there’s a lot
of ways you could go into that but I
thought that the best one was just to
take a look at the essence of retail and
the essence of retail for Amazon is
dominance so we’re going to take a look
at how are they dominating why are they
dominating dive in a little bit because
there are some lessons for you and me
even as we enter into the waters of the
digital retail ocean and maybe do
something whether you’re selling
t-shirts or doing something more
substantial today two core points we’re
watching history in retail we really are
watching history and we need to
appreciate what’s happening even if it
kind of makes this a little worried
about how big Amazon is getting there is
something to watch and understand and
actually appreciate point number two
digital sales for anybody is a three
front war and it’s not the army on the
land and the Navy in the sea and the Air
Force in the air it is search selection
and delivery and we’re going to look at
all three of those about Amazon is using
those and dominating actually in each of
the three areas to create an
overwhelming market presence well we
know Amazon’s been on a tear if you open
up the Wall Street Journal or any casual
magazine you see that they’re doing
something else or another big number
associated with them
okay let’s dive in and go from the
general to the specific today Amazon’s
worth three hundred and eighty five
billion dollars you know Facebook is
worth three hundred and seventy billion
dollars so you hear about social media
and all the things that have happened
and you hear headlines about retailers
having issues that vanity and Amazon
they’ve actually grown to be bigger than
Facebook in terms of their value on the
stock market if we take a look at the
playing field of retail I think it
really helps us understand just how
amazing this has been so we take a look
here in 2006 this little list of
retailers here was worth four hundred
million dollars and there’s people we
remember like Sears pennies Macy’s Best
Buy Target and Walmart pretty big if you
take Walmart off
list everybody else is only worth 186 so
with Walmart 400 million dollars without
Walmart 186 now looking to long ago is
just exactly 10 years ago now we go to
2016 serious is worth almost nothing and
by the way black & decker just bought
craftsman tools so when you think about
Sears used to go there for Craftsman
tools I did growing up because it was a
great tool at a great price it was
really sturdy stuff you know it wasn’t
some bargain basement bin you might find
inside of a Lowe’s or Home Depot next to
front door you went to Sears to get
Craftsman tools because they meant
something well now Craftsman tools are
now part of Black & Decker and serious
is worth 1 point 1 billion dollars you
know barely alive they probably have
real estate that they owned it’s worth
more than that you would have two
pennies Nordstrom’s down Kohl’s down
Macy’s under half best buy under half
Target jump and Walmart they’re the only
two that are holding on and Walmart’s
kind of flat but if you now this list is
only worth three hundred billion dollars
and if you take Walmart out this list is
worth eighty six however what happened
to Amazon that same point in time they
were worth 17 billion dollars over here
selling books doing things like that
now they’re worth three hundred eighty
five billion dollars you know I haven’t
said it in a while but there’s only one
word for that damn you know I think if
you take a look in retail and you see
where it’s gone you say to yourself how
did this happen
well this didn’t happen because we
decided we were going to buy online it
didn’t happen because we wanted to buy a
book there instead of going to Barnes &
Noble you’re watching Crown books and
Walden books and all those other places
and borders go out of business it’s more
than just books it’s what they did with
their bookstore engine and what they
were learning about how you and me
purchase if we step back a minute I’ve
got some more charts today I want to
talk about you know Black Friday used to
be all about remember Black Friday used
to all be all about let’s go shopping
and there were sales at all these stores
now Black Friday is it’s almost like
pay-per-view wrestling
get to tune in and watch which store in
America had a riot because some low
priced toy and caused all these people
to run in to get the one toy for two
bucks and there’s big mob scene or
they’re at Best Buy for that remember
that five dollar DVD player or that the
$50 46 inch plasma display and all these
people are in waiting by the doors it’s
not Black Friday it’s kind of like WWE
meanwhile everybody is at home sitting
there on their phone and on their tablet
and on their PC buying from Amazon and
getting it delivered you know so retail
is dramatically changed you take a look
at search it’s where it starts when we
want to buy something online because we
know we’re in the mall to go we drive
over here to this side the macy’s or
dillards or Sears we know where all that
is but online it’s all about search
that’s where you start your product
right here I’m going to show you
something really interesting okay
there’s a ten-year chart I’m about to
show you a three-year chart this chart
here is the percentage right of our
choice of where to start a search for
something we buy online in 2014 we chose
a search engine
55% of the time to go search for
something 38% of the time we went to
amazon.com and we searched right there
in the bar once we get to the home page
of Amazon over three years search engine
has gone to 26% meaning today a hundred
people decided they’re going to go buy
something online only 26% of them go to
the Google box or any other search
engine box and of course Google’s
dominant to start their search for a
product find me this find me that
whereas Amazon it’s risen to 52% so now
when people go to buy something online
52% of them go to amazon.com and search
right there on Amazon only 26% go to the
search engine so not only does Amazon
have a huge treasure of all of our
purchase histories we’re started with
books and goes on to other things now we
know what we’re searching for because
most people when you come there you’re
either cook Eid or you logged in so they
know what you’ve been searching for they
know what you bought and there’s this
huge
huge mountain of information I saw an
article it was back in 2004 2005 and
they said that the largest Linux
database in the world had been built at
Amazon and it was purchased data my
friends that was 2004 2005 I mean go
look that up hold me honest gang because
I’m pretty sure I’m right about that but
that was the largest Linux database all
this information of everything that’s
been purchase search is everything
knowing what you want when you want how
to put things next to you absolutely
tremendous and now we’re starting there
first
you think that and you think it’s bad
let me get out of the way and show you
one more thing 18 to 29 year old people
62% go to the Amazon box 21% go to
search engines 32 44 56% go to Amazon
box 26% you know I may have a new word
and the word is Oba you know I happen to
think that this war for online retail
when you’re going to find something is
close to ova because when you’ve got
this much data and an amazing search
engine when you go take a look at Amazon
they had a project it was called a nine
and a nine was only about building as
much intelligence as they could on their
servers about what you and I buy because
they wanted to make us happy if you ever
read about Bezos he’s up just that very
focused intense manager but you also see
he’s got a heart a big heart for the
customer and you’ll see that in things
he talks about he just wants to make it
easy and make you happy and if it
doesn’t work for you make it easy to
return he is all about you and I as
consumers more than you might think
so now that you’ve got all this search
then you go to selection selection most
people don’t know Amazon is not
operating as many of those warehouses as
you think now they get a lot of
warehouse space and they deliver from
that but they have all kinds of
secondary warehouses where maybe I sell
rare antique books in Atlanta Georgia
and I’ve got few thousand books in stock
I’m selling them on amazon.com you
just don’t know it’s me till you go to
checkout and say oh this will be shipped
by an on Amazon retailer and guess what
the boxes they give me the invoice is
going to derive SKU it’ll say Amazon so
you had an Amazon experience even though
my little antique bookstore in Atlanta
you know was the one that got you what
you wanted so the selection with all of
those stores that are locked in is huge
you know they don’t talk a lot about
certain metrics at Amazon they’re really
careful about that but it wasn’t too
many years ago they said they had over
1.4 million secondary stores connected
in to the Amazon environment Wow if you
can’t find a needle in the haystack when
you’ve got all that Amazon warehouse
space and then 1.4 million stores in
America then you’re just you just not
paying attention and you’re searching
for something that doesn’t exist because
it’s all there
it’s truly I think a marvel when you go
to find something that you dearly want
and you can just find it there you know
now we get to delivery and deliveries is
something I think is been spectacular
and also a little bit funny i’ma tell
you story this is a battery for my
laptop this happens to be a new battery
because my regular battery went dead was
only holding a charge for about 10
minutes
this battery arrived at my house on a
Sunday afternoon in 22 minutes
because when I went to check out the
Amazon thing says did you know you have
same-day delivery of this particular
product in Dallas I was searching for
something that was at a warehouse in
Dallas on a Sunday and in 22 minutes
this car drives up front it was someone
who looked like a lyft driver it was an
unmarked car and they came up to my door
and had little boxes you go I Amazon
brown box and this was in it
I couldn’t believe it it was almost less
time that would have taken me to get
this at Best Buy if I want the Best Buy
and they happen to have it in stock I
was absolutely blown away but you know
what they’re all about delivery and
their focus on delivery is not to be
trifled with a couple weeks ago there is
actually a funny news story and it
showed that there’s actually a patent
where they’re in the patent shed designs
of the
airborne blimps that were holding
inventory of certain things like
lightweight clothing and stuff like that
do you know whose patent application
that was that drawing
Amazon’s so everybody was like are you
kidding me they’re preparing a fleet of
blimps to carry kind of light weight
stuff that they could just have
delivered to you if I Cal it’ll drone
comes up to the blimp and grabs it comes
down well who knows that they are not
but lord knows man they invest in
technology and they invest deep one of
the things that I was most impressed by
that is it’s not enough just to have
some maybe a lyft driver whoever that
was delivered to me on a Sunday it’s not
enough to have Amazon Prime so dialed in
that you can get like one day or two day
delivery it’s not enough for that
they’re actually even thinking about
airborne warehouses and little drones
that would be delivering it to you that
just shows you that that today is not
enough for Amazon they want to do
evermore and bring it to you you know I
think when you take a look at those
three that we talked about search
selection and delivery
I think search and delivery where we’ve
had this innovation that’s been
tremendous because Amazon did make that
battery you know sanyo made that battery
apparently and so they’re not about
making the product but they’re about
helping me find it and getting it to me
at the best price as fast as possible as
easy as possible and that is the whole
that is the whole Amazon story you know
within this 385 million dollar valuation
is a lot of Amazon Cloud Servers and a
lot of Amazon IT but you know where that
came from
they built tools for themselves and then
said why don’t I have this tool work for
you the same way they’d built the
world’s most incredible retail store and
they said 2 million or million a half
whatever the number is today of small
people like my you know fictitious
example of an antique book store in
Atlanta that uses Amazon to show the
world all those wonderful books they can
get their hands on and when you put
those three together you get an industry
powerhouse and that’s that’s really the
story the story that blew me away
was this change in valuation the change
in Black Friday and
how they’ve use search to put it all
together and the proofs in the pudding
because the last chart is right here in
2006 all these retailers worth four
hundred million dollars two hundred and
fifty two billion dollars in sales
big-box retailers big boxes like a
Macy’s or our Kohl’s or our pennies you
know the big retailers they’re the big
anchors at the two ends of the mall that
you go to or the mall you used to go to
because apparently somebody’s buying
from Amazon but there it was and then in
2016
down to 156 billion so a hundred billion
dollars of sales in ten years no longer
happening at Sears at pennies at
Nordstrom’s at Kohl’s at Macy’s at Best
Buy and Target and Walmart you know what
I shouldn’t say Walmart because it’d be
fair they’re the one that manage to hold
hold level and I bet if you looked at
some of these numbers you would find
some figures that show that Walmart
being grocery first low-cost products
out of the urban areas and the suburban
areas in rural areas that’s still where
their play is but when you go to Amazon
this is I think a beautiful case study
and I’m going to show you what you want
you know practically before you know you
want it because I’ll know so much about
you that I could say oh you want that
book but there’s also this book too
you want those sneakers well there’s
also these warm-ups it’s an infinite
number of examples and that’s the Amazon
case study for this week just kind of
looking at the raw start numbers to
understand just how big and how bad
Amazon got so as we go back to our two
points man we’re watching history
whether you like what’s happening or not
you have to appreciate the fact that
you’re watching history and a seismic
shift and retail in America and the
second thing whether you’re Amazon or
you and me trying to do something search
selection and delivery and if you can
help people find it and you can get it
to them fast the quality’s in the middle
you’re going to get loyalty and in case
of Amazon they use a lot of data so
don’t give up your data you know whether
you’re selling t-shirts whatever you’re
doing don’t give up your data keep what
you got and try to sell them something
else and make them double happy for
working with you that’s it the sweet
that’s the case study and we need a
pillow
gosh oh wait wait wait wait hang on hang
after a throw like that Paul we got to
do this again are we are we doing this
again are we still on tape we’re doing
it okay both all right
thank you for watching that’s this
week’s case study please subscribe that
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until then I’m Tom Ellsworth I hope I
let you better than I can [Music]
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