‘Amazon Effect’ Stings Consumer-Staples Stocks as Pricing Woes Mount
Digitize or Die: Follow on to yesterday’s post about the decline of iconic brands in a digitized world: If you have invested billions in building a brand and are now cutting prices to compete with low cost direct to consumer providers like Amazon, you are no longer a brand but a commodity. Bezos’ stated strategy is to be the lowest cost provider. He can do this because of scale, like WalMart, and, because he doesn’t sell products, but service, the essence of the customer experience. Walmart, the previous master of razor thin margins is now starting to get its own lunch eaten by Amazon. Why? The customer experience. If you don’t want to have to constantly compete on margin, you have to recreate your brand. And in today’s digitized world, that means focus on the customer experience. “What’s happening is that these firms are struggling to pass on rising costs to consumers,” said Shawn Cruz, manager of trader strategy at TD Ameritrade. “Big brands have counted on their brand name drawing customers in, and that’s not necessarily happening anymore.” Watch out Unilever, P&G, Kimberly Clark and Avon!
Read the article:‘Amazon Effect’ Stings Consumer-Staples Stocks as Pricing Woes Mount on WSJ.com
