How Amazon is recycling old ideas to boost business
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If a business idea worked in the past, there's every chance it'll work again, says Peter Sharkey.
As a 14-year old, I recall that, aside from earning extra cash (50p a round), the great thing about delivering Sunday newspapers was the bike.
Unlike their local evening counterparts, national Sunday newspapers have always been significantly heavier thanks to their multiple sections and colour supplements. In order to ensure his enthusiastic teenage personnel didn't buckle under the weight of august prose and glossy fashion pages, the newsagent who employed us also provided a delivery bike with a large, basket-like structure to the front, wide enough to accommodate perhaps a hundred Sundays.
Whiz through your regular round and there was always the possibility of doing another should someone fail to turn up for work; the bike plus the extra 50p were huge incentives.
Looking back, I'm sure his burgeoning fleet of delivery bikes made the newsagent immensely proud.
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There were certainly plenty of second-hand delivery bikes knocking around during the mid-Seventies as their previous owners, grocers, butchers and other small, high street shops, found their businesses undercut by rapidly expanding supermarket chains. This period probably represented the start of a dismantling process that has witnessed the high street's decline, a development that has gathered pace over the last decade.
It's ironic that the home delivery of groceries (or online grocery sales), once undertaken by young boys on delivery bikes, has become the supermarket sector's fastest-growing area of business. Nowadays, a refrigerated truck does the job, delivering to an average of ten addresses per hour. Aggregate online grocery sales continue to rise and are worth around £7 billion a year, a sum supermarkets expect to increase significantly.
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Technology will play a huge part in improving sales. In Holland, Dutch supermarket chain Albert Heijn is currently testing a rapid delivery system, known as Rappie, capable of taking orders and delivering within two hours. And here's another ironic twist: the same firm is also testing a service that offers delivery of the supermarket's popular 'food to go' items within 15 minutes via 'bicycle courier'.
The point of this partial meander down memory lane is to highlight how processes once cast aside as old-fashioned or out of date can be dusted down and put to very effective use once more.
I was reminded of this when reading a review of The Four, by Professor Scott Galloway, an analysis of operations at Google, Amazon, Apple and Facebook. Galloway maintains that Amazon, for instance, could initiate a 'zero-click' offering which enabled well-known brands to send free samples of products to customers, based upon their previous buying habits.
A similar operation has been around for a number of years. Soon after our daughter was born, my wife attended ante-natal classes where she was given a 'Bounty Baby Pack'. This comprised samples of products on which we would soon be spending small fortunes: disposable nappies, talcum powder, creams of every description, Vaseline and many others.
Bounty, founded by Bill Hopewell-Smith in 1959, is still going strong; the 'zero-click' offering currently being tested by Amazon was, to some degree, operating sixty years ago, proving there's little new under the sun.
But here's the rub. If a company presents you with a free sample of a product you're likely to find useful and expect to buy, perhaps over several years, there's a very good chance you'll buy the brand you've received as a freebie. Granted, you may in future decide to buy an alternative brand, but probably only after you've first tried the one you've been given. This was the genius of Mr Hopewell-Smith's idea. And, you could argue, it's precisely what Amazon plan to do when targeting audiences they believe will be interested in products supplied or manufactured by large brands.
Amazon has assembled mountains of personal data (it has more than 100 million people signed up to its Prime membership programme), the value of which is potentially mind-boggling. Why? It provides the online giant with up-to-date details of its members' buying patterns. Why wouldn't it team up with brands in the way that Bounty did six decades ago?
Amazon's share price has risen 11pc since Christmas and is widely forecast to continue its upward trajectory, growing its business by adding new products or, in the case of 'zero-click', finding an old one that worked extremely well and successfully applying it in today's market.
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THE WEEK IN NUMBERS
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For more financial advice, take a look at Peter Sharkey's regular column, The Week in Numbers.