Cue the Imperial March

The Death Star is approaching! Run for your lives! All is lost!

I got an email the other day from Motivation Strategies Magazine and in the middle of it was a "click here" ad promoting Amazon's Incentive program. "Contact us today" it said. "We have a turn-key solution" it said.

Amazon presents us with a serious competitor at a time when Brands are already jittery from the Coach departure. Their catalog of product, and their aggressive pricing should create heartburn for several types of merchandise providers.

But more than that, Amazon's interest in our business may signal a sea change in the way programs are merchandised and/or fulfilled. Larger end-users are demanding more real-time solutions, more reporting capability, and a wider variety of products than they did. And as larger accounts go today, so goes the rest of us tomorrow.

I'm hearing that many Special Markets Managers are nervous--that what happened at Coach can happen to them. The general level of anxiety is as high as I ever remember it, and Amazon will only add to the stress. Amazon is already expert at the things many Brands hate to deal with--the one-piece shipments, the constant need for shipping information, and so forth. I am pretty sure that most suppliers would love to see Amazon succeed because in many cases they're already doing business with them--a single source for a large part of the Incentive business? It's a gift from the Gods.

But Amazon has "holes" in its value proposition. First, they are pretty inflexible as an entity. If you have the technological expertise to tie to them, things could be pretty groovy. If not, you may have to settle for an "off the shelf" experience that your clients might not prefer.

I was speaking to a major player in the Incentive market (not the one you might think) and he told me that the client base is asking for more and more customization in their programs. That reminded me of something they taught me in Grad School 11 years ago--that "mass customization" was something that would eventually take over consumer products. So far, Dell has been about the only company that has mastered it.

Our market, however, requires different solutions for different clients, and if you cannot customize your offerings you will find yourself irrelevant. Amazon's main weapon is price--a Weapon of Mass Destruction to be sure, but not the only one needed.

But what Amazon WILL bring us is more sensitivity to what clients want, which is CHOICE. It's not enough anymore to offer just merchandise--end users want travel, and experiences, and Gift Cards, and God knows what else. It reminds me of the advertising I hear on XM Radio--"it's everything, all the time".

We need to start re-thinking our definition of "competition". It's no longer "everything that costs what our product costs" but more of "everything that's provided to a consumer, regardless of whether the supplier is in our business or not." This change will cause tectonic shifts for the "typical" Incentive program provider over the coming months.

As if we needed another reason to stare at the ceiling at night...


Pete