Amazon changed the rules of retail. It is the factory, wholesaler, retailer, producer, and delivery mechanism for the product. It controls the entire value chain. This is not just an incremental change, it is a revolution. The factory knows who buys the product, what they buy, why they buy, when it is easier to sell, and which customers are satisfied. This gives Amazon more power and influence than Walmart, Target, and Bloomingdale’s combined.
The revolution is not a change in technology from one stack to another. It is a change in mindset. Amazon taught us that a bookstore that controls the value chain can understand and analyze the end customer. Amazon focuses on customer success, easy onboarding, self-service, captured value, and perceived value for the customer. Think how easy it is to start using Amazon delivery, Alexa, and Prime, and think about the level of engagement and customer satisfaction compared to any other retail network. Consider what could happen if an insurance company was no longer a factory that manufactures policies but was instead a service provider to a client who needs risk management. Instead of a premium, think of a subscription to a risk management solution.
Insurance companies that focus on providing services would be eager to change the product to make sure it meets the customers’ needs in real time. They focus on the alignment of incentives and interests to make sure the organization is compensated based on customer happiness. They reduce friction in the onboarding process and turn the product from a push product to a pull product because people need insurance. They just don’t like to buy the service that is currently offered.
The market fit is not good enough since the insurance company focuses on the wholesaler and distributor, often at the expense of the policyholder, the end customer. As long as the wholesaler is happy, who cares about the customer?
Amazon optimized the assembly line. Unlike their competitors, they focused on customers’ happiness, retention, and satisfaction. Amazon does not have better products, in many cases, they even sell the same products, but they have a service focused on the customer and not on the intermediary. This makes a profound difference.