With all the talk of the Amazon Prime drone delivery plan, it made the fox think of this original post from July 20, 2012. Steve Jobs and Apple may have trademarked the “Think Different” slogan, but Amazon is living it out.
How do you turn a judicial ruling against your company into a catalyst for mass-scale market disruption? You deliver better service than everybody else on the planet. The fine folks over at Slate.com give us the inside scoop on Amazon’s compelling strategy to turn lemons into lemonade.
Amazon has long enjoyed an unbeatable price advantage over its physical rivals. When I buy a $1,000 laptop from Wal-Mart, the company is required to collect local sales tax from me, so I pay almost $1,100 at checkout. In most states, Amazon is exempt from that rule.
No one can deny this strategy has worked well for Amazon over the past decade. But now those ‘physical rivals’ are fighting back.
In response to pressure from local businesses, many states have passed laws that aim to force Amazon to collect sales taxes. Amazon hasn’t taken kindly to these efforts. It has filed numerous legal challenges, and fired all of its marketing affiliates in Colorado, North Carolina, Rhode Island, and California. It also launched a $5 million political campaign to get voters to turn back the California law. And when Texas’ comptroller presented Amazon with a $269 million sales tax bill last year, the company shut down its distribution center in Dallas.
This sounds like standard protocol. Powerful entities (local governments) begin impeding on your bread-n-butter business plan, so you push back with all your financial might. (Read: throw a giant bucket of lawyers at the problem.)
But suddenly, Amazon has stopped fighting the sales-tax war. Last fall it dropped its repeal campaign in California and instead signed a deal with lawmakers to begin collecting sales taxes later this year. That was followed by several more tax deals—over the course of the next couple years, Amazon will begin collecting sales tax from residents of Nevada, New Jersey, Indiana, Tennessee, Virginia, and on July 1, it began collecting taxes from Texans.
Short term legal wins can actually turn into a losing strategy, and Amazon knows it can’t win by holding onto the past. So, instead, they unleash their creative leaders and turn their sights on creating the future.
Why would Amazon give up its precious tax advantage? Amazon’s grand strategy has [always] been to set up distribution centers in faraway, low-cost states and then ship stuff to people in more populous, high-cost states. But now Amazon has a new game. Now that it has agreed to collect sales taxes, the company can legally set up warehouses right inside some of the largest metropolitan areas in the nation. Why would it want to do that? Because Amazon’s new goal is to get stuff to you immediately—as soon as a few hours after you hit Buy.
That’s right. Amazon wants to corner the market on same-day delivery, one of the last pillars holding up the roof on brick and mortar stores. Amazon wants to make buying something online at 10am and have it waiting at your door when you get home the standard Amazon user experience. And if they can pull it off (and who better than Amazon to try), this will likely change the way we buy stuff forever.
Fox Tip: Companies that survive are filled with leaders who think different.