Eleven point nine billion U.S. dollars.
Say it slowly.
It’s the rough math of the next twelve months of Amazon Prime* subscriber revenue. The actual number will differ, of course, but it’s a good bet that it will be more than 2017’s reported $9.72 billion. Membership is now more than 100 million accounts, and the annual fee has jumped from $99 to $119.
Let’s say it again, together: eleven point nine billion.
If Amazon Prime* were a retailer, it would rank roughly 80th in the world as measured by revenue.
But the message here goes well beyond an income statement.
In truth, eleven point nine billion is the value currently assigned by Amazon customers to low-stress retail decision-making. It’s the value of friction-reduced retail.
For retailers and retail technologists, there’s a remarkable richness to be mined from the work of behavioral economists and decision scientists. I’m now studying Thinking, Fast and Slow, Nobel Prize-winner Daniel Kahneman’s 2011 summation of the best of decision research. A key concept explained early in the book is the Law of Least Effort.
In layman’s terms, it says that–in any decision situation–we’re predisposed to do the least amount of thinking we think we can get away with.
And, the corollary: We retreat from decisions that are difficult–decisions that demand what the psychologists would call cognitive stress.
Amazon clearly gets this. Every step of decision-making is either guided (ratings and reviews, recommendations, go-withs, other options), smoothed (payment detail and shipping addresses on file, pre-paid shipping), or completely removed (automatic replenishment of everyday items.) Note, it’s not 1:1 personalization; it’s simply eleven-point-nine billion take-it-to-the-bank votes in favor of this type of value.
Others Get it Too.
Dig out your copy of Why We Buy, by Paco Underhill. Read it again. Talk to Paco and his team for down-to-the-shelf applied decision science. And meet young, science-driven experience designers like the UK’s Luke Battye. For Luke, it’s all about easy and guided decisions that lead to confidence–confidence that you’ve a good buy, the confidence that will lead to a return visit. (Ask him about him about his recent work in a Leamington Spa cheese shop, and how reduction of decision doubt led to a 22% sales increase in non-traditional and new products.)
Friction Free. Think for Me.
The eleven-point-nine billion value proposition in a Retail Land of Least Effort.
Tell me what you think.