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Retailers are Selling Their Soul and Giving Away Customers

In Jim Croce’s classic “You Don’t Mess Around With Jim” he warns “You don’t tug on superman’s cape, You don’t spit into the wind, You don’t pull the mask off that old lone ranger, And you don’t mess around with Jim.” If he were with us to update the ditty for some of today’s retailers, he might change the last caution to “And you don’t invite Alexa in.” (a doot doot dooda da bee bee beedy dee)

You see, a number of retailers are selling the Amazon Echo family of devices powered by Alexa on their store shelves. Some might think it’s OK to regain a few bucks lost to Amazon or that if you can’t beat ‘em, join ‘em, but these merchants are truly courting danger. Despite any claims to the contrary, the abundance of innocuous Alexa Skills, the developer program, and third party device/product manufacturers incorporating the interface, Amazon’s fundamental mission for the AI system is to drive purchases of Amazon goods. In a subliminal way (maybe not so subliminal!), she also increases brand recognition, familiarity, and comfort with the e-commerce giant.

So when retailers invite Alexa onto their shelves and into their web site, they summon the very soul of the company that’s leading the disruption of their market and the stymying of their sales.

There is no sound logic that can justify why these stores are traveling down this road. The net revenue from selling these devices is paltry. The win is all Amazon.

Just look at the stores selling Alexa/Echo: Walmart, Bed Bath & Beyond, Staples, Best Buy, Fry’s, Target, etc. These companies have had their market share clipped by the advent of m/e-commerce, specifically by Amazon. Staples is trying to sell itself because Amazon has hurt sales. Best Buy is in a constant fight to hold on to their customers and stay relevant, as is Bed Bath & Beyond. Target is in a high stakes logistical remake, trying to find a balance between on-line sales (which are costing them too much) and traditional retail. Walmart is waging brutal hand-to-hand combat with Amazon. Yet these companies have made the decision to expose their biggest asset, their customers, to the very nemesis they struggle against and incredibly, are pitching to their valuable customers, a device Amazon has developed to sell Amazon’s merchandise. What? Not a good long-term strategy.

It feels as if someone at an Amazon product meeting flippantly made a comment like “Hey let’s get our competitors to sell Alexa!” and after a good laugh, the staff looked at one another and pondered “Why not try?” And here we are today, witnessing the equivalent of Apple stores selling Windows PC’s, Starbucks selling Dunkin’ Donuts, or Chevy dealers hawking Mustangs. Maybe it’s a retailer’s version of Stockholm syndrome?

There is no sound logic that can justify why these stores are traveling down this road. The net revenue from selling these devices is paltry. The win is all Amazon.

Bottom line: brand erosion from this kind of “strategy” is unseen at first, but like a tiny fissure in a dam, it grows and when it becomes alarming, is irreversible and accelerates until everyone can hear the thunderous crescendo of failure.

Let’s put a pin in this one and see where things end up in a few years.