The main crux of this post is about whether a company can remain innovative as it ages. I want to use Sears and Amazon as study points. Being a U.S. history buff I can’t help but draw a parallel between Sears in the early 20th century and Amazon a hundred years later. Here with the help of Wiki here is a little history of Sears:
Farmers did business in small rural towns. Before the Sears catalog, farmers typically bought supplies (often at high prices and on credit) from local general stores with narrow selections of goods. Prices were negotiated, and depended on the storekeeper’s estimate of a customer’s creditworthiness. Sears took advantage of this by publishing catalogs offering customers a wider selection of products at clearly stated prices. The business grew quickly. The first Sears catalog was published in 1888. By 1895, the company was producing a 532-page catalog. Sales were greater than $400,000 in 1893 and more than $750,000 two years later. …
In 1993, Sears terminated its famous general merchandise catalog because of sinking sales and profits…
Source: Sears – Wikipedia, the free encyclopedia
The parallels between Amazon and Sears startups are quite striking. Jeff Bezos started the company in 1995 with the idea to sell books on-line. It quickly grew in both sales and product offerings so that today it is by far the number one retailer on-line.
According to recent industry figures, Amazon is the leading e-retailer in the United States with more than 107 billion U.S. dollars in 2015 net sales. The majority of the company’s revenues are generated through the sale of electronics and other products, followed by media and other activities. As of the fourth quarter of 2015, the e-retailer reported more than 304 million active customer accounts worldwide. Due to Amazon’s global scope and reach, it is also considered one of the most valuable brands worldwide.
Source: Amazon – Statistics & Facts | Statista
One of the striking things about Amazon beside their explosive product line is the speed at which they deliver their products. For $79/year you can get unlimited 2 day delivery at no cost. I must admit I am a major customer who places orders probably 30+ times a year for the last several years.
Because it wasn’t available on-line I recently ordered a drawer unit for my micro-RV remodel from Sears. I was told that it would take 2 – 3 weeks for delivery. In Amazon time which is now the norm for me that is an outrageously long. Somewhere along the line Sears just lost their innovative edge. The Sears store in Bloomington just closed down so now I have to travel about 50 miles to pick up my cabinet. It is either that or pay $70 to have it delivered!
I find it ironic that just as Sears was terminating their catalog sales a young Jeff Bezos was planning on starting one on-line. For 2015 Sears revenue decreased by $6.1 billion to $25 billion while Amazon revenues were $107 billion. I wonder what would have happened in 1993 if Sears had decided to aggressively take their catalog on-line instead of abandoning it? I am personally convinced that on-line sales is the wave of the future. Why do I need to get in the car, drive to a store, and lug my purchases home when all I have to do instead is just click a few buttons and in two days it appears on my doorstep.