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jerryking : commoditization   8

The Limits of Amazon
Jan. 1, 2018 | WSJ | By Christopher Mims.

Amazon’s core mission as a data-driven instant-gratification company. Its fanaticism for customer experience is enabled by every technology the company can get its hands on, from data centers to drones. Imagine the data-collecting power of Facebook wedded to the supply-chain empire of Wal-Mart—that’s Amazon.

There is one major problem with the idea that Amazon-will-eat-the-entire-universe, however. Amazon is good at identifying commodity products and making those as cheap and available as possible. “Your margin is my opportunity” is one of Chief Executive Jeff Bezos’s best-known bon mots. But this system isn’t very compatible with big-ticket, higher-margin items.....

How Amazon Does It
Amazon now increasingly makes its money by extracting a percentage from the sales of other sellers on its site. It has become a platform company like Facebook Inc. or Alphabet Inc.’s Google, which serve as marketplaces for businesses with less reach of their own.....Eventually, Amazon could become the ultimate platform for retail, the “retail cloud” upon which countless other online retail businesses are built....Think of Amazon as an umbrella company composed of disconnected and sometimes competing businesses, though critically they can access common infrastructure, including the retail platform and cloud services.

Ultimately, these smaller businesses must feed the core mission. Amazon’s video business isn’t just its own potential profit center; it’s also a way to keep people in Amazon’s world longer, where they spend more money,

What Amazon Can’t Do
Ultimately, the strategies that allow Amazon to continue growing will also be its limitation. “If the platform needs to be one-size-fits-all across many, many different product categories, it becomes difficult to create specific experiences for different kinds of products,”
contra-Amazon  Amazon  strengths  data_driven  instant_gratification  customer_experience  platforms  one-size-fits-all  limitations  Jeff_Bezos  weaknesses  commoditization  third-party  Christopher_Mims 
january 2018 by jerryking
Private equity looks to differentiate
November 21-December 4, 2005 | Chemical Market Reporter | Joseph Chang.

WHILE PRIVATE-EQUlTY will always seek to buy assets cheaply and sell them at high prices, the role of private equity is changing. Larger and more players are entering the game, and as competition increases, financial buyers must differentiate their strategy to create value.
"About 60 percent of the value from private­equity deals cornes from buying low and selling high." said Timothy Walsh. partner at JPMorgan Partners, at the Competitive Chemical Enterprise Conference held in New York last week. "The other 40 percent-improving the business­is becoming much more important."
JPMorgan Partners looks for speciality businesses that are on the verge of commoditization, where it can improve operations.
"We in private equity are price takers-so how do we create a return?" asked Walsh. ln the case of silicas firm PQ Corp. JPMorgan Partners brought in an experienced management team and enhanced focus on cost structure and processes.
Over the past few years, private-equity funds have gained in size and number. The number of funds over S1 billion
has grown from just five in 1989 and eight in 1994 to 97 today, Walsh noted. "The numbers and size will continue to grow," he added.
private_equity  chemicals  differentiation  commoditization  specialists  specialization  value_creation  financial_buyers 
january 2013 by jerryking
Wealth Creation in the 21st Century
October 9, 1995 | Forbes ASAP | William Davidow.
In the information age, much of the wealth will be created by those who add layers of intangible cpaital on top of commoditized goods and services....The rapid pace of technological change will reshape many of the institutions that are so familiar and create new ones. My guess is that much of the wealth in the future will be created by companies and individuals who build differentiated products and services by assembling commodity layers in unique ways and adding value to them.
wealth_creation  21st._century  technological_change  semiconductors  software  commodities  commoditization  value_creation  layer_mastery 
july 2012 by jerryking
How to Brand Sand
April 1, 1998 | Strategy + Business Issue 11 | by Sam I.
Hill, Jack McGrath, and Sandeep Dayal. In commodity-goods markets,
price is usually the only differentiator. But if you can brand those
goods and bundle them with services, even bricks and sand can command
premium prices. Here is how to turn commodities into branded goods.
howto  branding  commodities  commoditization  market_research  market_segmentation  differentiation  bundling 
october 2009 by jerryking
Introduction: Customer Focus - HBR.org
May 2007 | HBR | Customers are the real employer—the people
who fund our paychecks, the only guarantors of our jobs. Because the
customer’s power is very real, the dynamics of business drive everything
toward commoditization. As surely as springtime melts snowbanks,
markets erode profits. A company can respond to melting margins in one
of four ways. It can surrender, giving up differentiation and competing
on efficiency and cost. It can consolidate power by buying its rivals,
figuring that the biggest snowbanks survive longest. It can innovate,
leaving behind the commoditized old and making money from that which is
still fresh and profitable. Or it can differentiate not just its
offerings but its approach to customers as well: It can cleverly define
segments of customers and sell only to those for whom it can create
especially valuable offerings or work with individual customers to
combine its products and services into unique packages, often described
as “solutions.”
HBR  customer_focus  commoditization  customer_centricity  consolidation  innovation  differentiation  bespoke  personalization  customer_segmentation  value_propositions  solutions  solution-finders  packagers 
october 2009 by jerryking

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