Opinion

Amazon Launchpad: Just as powerful for Amazon as the startups on it

5 min read

02 December 2015

Stephen Morgan, co-founder of digital transformation business Squiz, explains why Amazon Launchpad makes the ecommerce giant as much of an innovator as the startups it’s supporting through the platform.

Amazon has just brought its Launchpad platform to the UK. Originally launched in the US, it now offers startups here the opportunity to sell and market their products to Amazon’s UK customers.

The idea is that Amazon’s brand influence will generate sales for these new companies, as well as provide them with the opportunity to work with crowdfunding platforms, venture capitalists and accelerators. For example, in the US, Amazon Launchpad partnered with crowdfunding sites Kickstarter and Indiegogo.

Amazon appears to be the giant providing a friendly helping hand, but the initiative is, in fact, just as helpful to its own business as the startups it’s aiming to support.

In my eyes, the move makes Amazon as much of an innovator as the startups it plans to promote through Amazon Launchpad.

Amazon has huge assets that will benefit Launchpad sellers: its customer base, brand name and financial stability to name a few, but the services that it is promoting fuel its reputation as a tech leader.

For instance, at the moment Amazon Launchpad is selling products including smart coffee machines, smartwatches and WiFi kettles.

Amazon’s mission is to be ‘something to everyone’. Its breadth, price point and the simplicity of its customer experience make it the go-to retailer for online shopping for every demographic. 

By partnering with startups, Amazon is simply extending its marketplace concept to a new type of seller, and is simultaneously growing relationships with a community that is particularly popular at the moment.

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For example, Knyttan, is a company that uses a software programme to let users design their own knits and have them delivered within weeks, rather than months.

The business model uses digital design to allow customers to create their own jumpers and scarves, and a tag is embedded in the garment to explain the individual manufacturing process. 

Through the service, customers can create a truly personalised product and the made-to-order business model is disrupted by a firm now able to make truly customised products available within short timeframes.

New companies like this are looking to alter customers’ expectations of business services by improving certain aspects of the customer experience.

They do this by creating technologies that fulfil a simple need, and combine this with low costs and upfront investment. Unlike the corporate giants they are competing with, they can be more nimble and excite with a fresh proposition.

With startups launching that deliver a world of new and disruptive customer experiences, many larger businesses are struggling to keep up. 

In fact, a survey conducted by a research centre at Swiss business school IMD, the International Institute for Management Development, said that business leaders believe four out of ten top-ranked companies in their industries worldwide won’t survive the next five years. 

They blame the accelerating change in technology, shifting business models and a need to merge to cut costs.

That’s why Amazon’s approach to support technological disruption, and continue innovation itself, stands to protect the ecommerce giant long-term.

Rather than fear the emergence of industry disruptors, the opportunity for established businesses lies within identifying the potential point of ‘disintermediation’ that could exist between their business and their customers, and solving those problems with a transformation strategy.

An ineffective process has to be identified and replaced for disruption to occur, so Amazon is preventing this from happening. By offering a valuable partnership, Amazon will be the leader of the startup scene who’s disruption could have unseated its power further down the line.

It’s true that startups are getting braver – they no longer appear to view big businesses as the obstacles they once were. Old market powers such as massive scale, control over distribution, brand power, and volume of customer relationships are still hugely influential to sustained success, but it’s absolutely crucial that businesses continue to innovate and look to the startup world as a source of inspiration.

Stephen Morgan is co-founder of digital transformation business Squiz