Buylyst

Published on 04/30/18 | Saurav Sen | 4,132 Words

The BuyGist:

Amazon exposed glaring flaws in many Retailers' business models. The main ones are:
- Too much Debt.
- The notion that slick advertising can mask ordinary, uninspiring products.
- The notion that traditional advertising still dominates.
Investing through the Amazon-induced Retail Apocalypse means looking for Retailers that:
- Make markedly better products or markedly cheaper products. Ordinary products, built at scale, is a risky strategy now.
- Manageable level of Debt.
- Have a fantastic "Online Game" in user experience and advertising.
- In sectors that Amazon is unlikely to bulldoze. Those sectors may be: Luxury Goods, Groceries, Entertainment Content.
- Or in sectors that will gain from the inevitable expansion of online shopping. They could be: Delivery Services and Trucking.
It's possible that Amazon won't dominate everything.

Welcome to the jungle: The Amazon effect

Amazon is the name of the tide that has indecently exposed a lot of “traditional” retailers. Just in 2017, many were discovered swimming naked. And now they’re trying to keep their head above water, gasping for breath with bankruptcies and restructuring plans. But here’s the thing: It’s not that people are “buying everything online”. There is some of that. But that shift to online-buying has just exacerbated 3 problems that existed when it was high-tide. These problems were symptoms of a refusal to adapt with the times. They were:

Too much Debt.
Ordinary products and a “be everything to everyone” strategy.
Pound everyone with advertisements about ordinary products on TV.

“Why not?”, CEOs asked. “This worked like a charm since World War II. And we have a website! It’s the Millennials. Why aren’t the millennials buying things? What a bunch of lazy, entitled, non-consumerist elitists.”

Yeah, Retail CEO. Keep telling yourself that.

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