I read an interesting article in the Wall St Journal, Amazon Faces Taxing Time Ahead.
Amazon may be losing the online retailers battle that exempted them from collecting taxes where they did not have a physical presence. This was one of Amazons competitive advantages; Jeff Bezos originally located his company in Seattle since it offered a smaller population of customers who would need to be taxed.
Main street merchants rebelled because they became showrooms for the online retailers and they, of course, had to charge tax. The article cites some analysts who suggest it won’t change Amazon’s competitive advantage because Amazon’s prices will nearly be as low as Wal-Mart and 7% below Target. The price advantage would be somewhat diminished for Amazon products. There is speculation at this point about the overall impact of this on Amazon. However, a Stanford study of eBay customers suggested that “the higher the sales tax in a buyers home state, the more likely he or she was to avoid paying it and using a seller in a different state.”
I think this will be interesting to follow. There is a substantial population who has become accustomed to the “convenience” and “choice” offered by Amazon. The extremely price sensitive shoppers may move elsewhere for pennies in difference, but I believe what Amazon offers is worth the difference to the majority of online shoppers.
Wired Magazine in January 2012 agrees: “Why pack into Target when Amazon can speed the essentials of life to your door? ….We declare the obsolescence of ‘bricks and mortar,’ but let’s be honest: What we usually want to avoid is the flesh and blood, the unpleasant waits…” Wired Magazine points out that technology, ala our computers, keeps us out of crowds. Who and how many of us value that over price?
Well I, for one, am raising my hand! I dislike crowds, hate waiting in line, and have no interest in putting up with all that just to save some sales tax. The convenience is worth the very slight extra cost.
This is the point many businesses don’t grasp. It’s not about price, not always, not as often as you think, and not to as many folks as you assume. When customers highly value attributes like convenience, speed, and ease of ordering, they are willing to pay for it. My guess is Amazon will confirm its customers value the online buying experience sufficiently in spite of added sales tax. (How far out of your way do you go for the cheapest gas?)
What benefit do you offer that your customers value highly? How do you know?
Most companies “guess” what is important to their customers and prospects; our research on over 150 companies shows the company teams are wrong an amazing 90% of the time. This is a dangerous gamble! As a result they either don’t know which of their differentiators are relevant, or are very poor at articulating them (or both). So they are relegated to using price as the tiebreaker. Find out what is truly valued, and engage in Relevant Selling.
Cable TV ratings are plunging. Thank goodness for “Big Bang Theory “ reruns as they have boosted ratings for TBS; AMC is still alive and thriving thanks to “The Walking Dead”, ironic as it may be. These are among the handful of networks with increased ratings along with the History Channel according to the March 26, 2012 Wall Street Journal, Ratings Take Slide on Cable. Overall TV viewing is also down.
What I found so interesting in this article are the guesses as to the why viewership is down: viewers are fickle; on demand availability; syndicated favorite reruns; digital video recorders; etc.
Industry spokespersons cite reduced ratings are caused by Hollywood movies aired last fall which were supposed be aired this spring; some have blamed older reruns, saturation of pay TV; and web viewing; and finally warm weather let people out of the house so they didn’t watch TV. Really?
Ratings volatility makes it much more difficult to sell advertising which, of course, is the lifeblood of the industry.
I can’t help but notice all of the “excuses” offered by industry executives. This is often the case. Businesses will look for external factors to explain downturns. While external factors do have an impact, it is never the whole story. Not one of the executives talked about their own “product” - The shows themselves. So how relevant is TV today? What holds our interest? What demographic are they playing to? Do they have relevant programming for each demographic or are they stuck offering programs for the younger generation, when the older generation is bigger and has more money to spend on the products the advertisers promote. For example, the older generation is buying the car insurance for the younger generation a good percentage of the time. Do they have to watch some twenty something shows to be reached? I am sure they spend handsomely for viewer research, but are they listening?
The executives interviewed for this WSJ article didn't say anything about what the viewers (customers) want; they only talked about being victims of external factors. Many industries get caught in this trap. With more of an investment in the voice of their customers, they have a much better shot at getting the train back on the track. Being relevant is a lost discipline in so many businesses today. Don’t let it be so in yours.