The pandemic has been a boon for Amazon. Worldwide.
Even in places like Italy where people prefer to shop in stores, Amazon has been able to assume a dominant role during the pandemic. When stores were forced to close, Amazon filled a genuine need for goods. As the economy reopened, the appeal of convenience triggered a sudden, but durable, consumer behavior shift. Can small merchants that depend on the “old world” image rethink their operations to survive e-commerce? Based on the video, many already have.
Video Spotlight: Amazon Academy’s ‘Made in Italy’ Program
This post is based on The New York Times article, Pasta, Wine and Inflatable Pools: How Amazon Conquered Italy in the Pandemic, by A. Satariano and E. Bubola, September 26, 2020, and the YouTube video, Amazon Academy ‘Made in Italy’ – Brussels 2019, by AmazonNewsEU, December 9, 2019. Image source: Pixtal / AGE Fotostock.
1. For Amazon, what are the threats and opportunities in Italy?
Guidance: The main opportunities are a change in consumer habits, a high unemployment rate, and a second wave of virus spread. The threats are an older population that might be more resistant to change, poor infrastructure in certain parts of the country, antitrust charges, protests, strikes, and unions that are more powerful than those in the United States. Amazon may have to make concessions that will get its workers’ attention around the world, which may cause future problems.
2. From an operations strategy perspective, what are the order winners for local Italian merchants? What are their weak points?
Guidance: Like in most countries, the small merchants’ emphasis has been on high quality (e.g. hand-made pasta). Their weak spots are cost and, as highlighted in this article, a lack of flexibility. Given the pandemic, it is difficult to make assessments regarding delivery, but traditionally, small merchants have lower inventories and smaller capacity, which make it difficult to respond quickly to surges in demand.
3. On what product and service quality dimensions can small, Italian merchants capitalize? On which ones do they fall short?
Guidance: On the product side, small, Italian merchants are known for performance, aesthetics, features, and perceived quality. On the service side, they tend to be known for responsiveness to customers’ inquiries, assurance, and sometimes, courtesy. If they want to maintain their niche in the new marketplace, they will have to “up” their game in terms of consistency, reliability, speed, and expectations. Partnerships with e-commerce giants give them global market exposure, in which case, they will have to scale their operations. For artisans, a marketplace like Etsy may be the right outlet, but based on the video, Amazon offers great opportunities as well. Yet, to maintain a viable presence online, they will need to adopt strict quality standards and meet them consistently. They will also have to create special customer experiences in their brick-and-mortar businesses to keep attracting customers who might otherwise buy online.