Wednesday, April 14, 2010

Lessons Learned from Amazon

A few of years ago Amazon announced with great fanfare that it was going to go into the incentive and rewards fulfillment business. Companies would be able to take advantage of Amazon’s volume purchasing and free shipping. Recipients would have access to millions of reward items! Companies could become incentive suppliers without having to invest in the requisite supplier and distribution network.

WOW… too good to be true!

I admit Rideau explored the Amazon option. We even went to the considerable expense of integrating directly with Amazon (most companies went through third party integrators).
But we never flipped the switch on for any of our clients. We just weren’t comfortable with Amazon’s extremely short cancellation clause. It just didn’t make any sense. Logic said Amazon should try to lock us in for a longterm contract but they didn’t want that. We questioned their longterm commitment to our marketplace and the possible implications for our clients' employees.

We laid all this out to our clients in an open and transparent fashion. Fortunately, our clients agreed!

Last week Incentive Magazine reported that Amazon is exiting the Incentive fulfillment market and leaving many incentive companies hanging. Amazon’s departure has huge ramifications for our industry. Amazon made it easy for a lot of companies to jump into our business and become quasi competitors. These companies will either be forced out of business or have to invest a significant amount of time and money building their channel partner and distribution networks. More importantly, it will have a very negative effect on the companies and the employees they serviced.

I find it very amusing to see all the companies who so readily embraced this solution as the be all and end all, trying to distance themselves from Amazon.

As John F. Kennedy said, “success has a thousand fathers and failure is an orphan”!

BTW... I love Amazon. I was one of their very first customers when they opened their website. I bought their Kindle when it first came out and to this day believe that they are an amazing company that has forever changed the nature of the way we do business.