Amazon=Sears catalog

Contemplating the success of Amazon seldom brings to mind any thought of the epic failure of Sears, except in the sense of an example of the best and worst of retail.

But I read a piece today that made the incredibly insightful point that Amazon is in fact basically a digital version of the analog Sears catalog.

Few remember that Sears had its origins, as did Montgomery Ward, as a purely catalog retailer, with no retail stores. Sears revolutionized marketing by enabling anyone, anywhere to buy virtualy anything via mail order. In what was then (in the 19th century) still a largely rural nation, with many small farmers, this was hugely disruptive, and raised standards of living nationwide.

The key to the catalogers' success was trust. As Sears, Wards, and the other catalogers evolved into retailers with physical stores, that trust was broken. Shoddy goods, sold with dubious promotional techniques, shattered the bonds between retailer and customer.

By the time the Internet came on the scene, the catalogers' brands were tarnished. Enter Amazon, which upon reflection is nothing more than a "Big Book" catalog in html. Amazon has built a reputation for delivering quality goods that are excellent values. It has out-priced the bricks-and-mortar competition.

The flaw in the business model as I see it is profitability--the low prices are made possible by razor-thin margins. So far, the stock market has made this unsustainable business model possible. Presumably at some point, Amazon will have to increase margins, which may be possible based on the power of the brand and the value it provides through a convenient, trustworthy shopping experience. 

The tragedy is that the old-time catalogers such as Sears and Wards squandered their dominance by disrespecting their customers. Had they maintained the  trust of their clientele, they could have made the transition to the online era, and Amazon would probably not have achieved the success it has enjoyed.   

Herein lies a lesson for all marketers. The most important asset a business has is a trusted brand. Focus on maintaining that, and you can survive any disruptive technology, as long as you don't develop a fetishistic devotion to the means of distribution. Sears was not in the catalog business, or even the retail store business. It was in the business of delivering value by providing affordable goods and services. Many American business, including the auto industry, lost sight of that in the 60s and 70s, By abusing customer trust, they sealed their fate, the the detriment of the customer, the company, and the country.