How Amazon continually upgrade their core product
I personally experienced Amazon's latest upgrade to its core delivery service last week. Its called Amazon Prime Now and I have to say it blew me away. This new service delivers a range of products to your door in …. one hour! You do have to pay £6.99 for this incredibly fast delivery. Or for free you can get delivery in just two hours.
From the start Amazon has had a clear promise, summed up here as "delivering the broadest selection of stuff at the lowest prices with minimal hassle". It is a great example of a brand that is all about the product "sausage" rather than the emotional "sizzle". No expensive, fancy lifestyle ad campaigns for Amazon. Not much advertising at all, come to think of it. The company lets the product do the selling.
2. "Renovation Pipeline"
Most companies I know have an "innovation pipeline" of new product ideas that look to stretch into new categories. Far fewer have, like Amazon, a "renovation pipeline" of ideas to refresh and rejuvenate the core product or service offer.
Stage 1 – Amazon Prime: launched in the US in 2005, rolling out to the UK in 2007, initially offering 48 hour delivery for a $79 annual fee.
Stage 2 – Amazon Prime upgrade: delivery time subsequently cut to 24 hours
Stage 3 – Amazon Prime Now: 1 hour delivery on a range of items for $7.99, or free in 2 hours. Launched in New York in Dec 2014, and then rolled out to other cities including London
These constant upgrades have driven an increase in sign ups to Amazon Prime, from 25 % of customers in 2013 to 40 % today, according to this article. In the same article Amazon management are quoted as saying that growing Prime adoption was one factor behind second quarter 2015 sales growth of 20% to $23.18 billion.
This constant upgrading of the core service helps Amazon reinforce its leading position. Over time it has created and reinforced memory structure so that when people think "I need to buy something online" the brand they think of is Amazon. This is a good example of a company asking not "What does my brand evoke?", but rather "What evokes my brand?", as Professor Byron Sharp recommends.
This leadership position is shown in a poll by Harris quoted in an article here, where "more than half of respondents said Amazon was the first site they went to when shopping online. The next three runners-up—eBay, Google and Walmart—all scored percentages in the single digits."
In conclusion, Amazon is a great example of a company that relentlessly renovates to upgrade its core product to reinforce a leadership position and drive growth.