Amazon is seen as so disruptive because people think they’re getting something for free (2024)

Amazon is seen as one of the world's most disruptive companies because people love it so much they forget they've even paid for some of its services.

While Amazon Prime costs $119 a year as of Saturday for existing annual subscribers, or $156 in total for monthly subscribers, many people forget the charge because of services such as delivery, music and movies being included.

According to Doreen Wang, a senior executive at research consultancy Kantar Millward Brown, research shows that Prime customers are the e-commerce giant's most loyal. "Kantar monitors data and finds that (Prime customers) are nine times more loyal to Amazon and spend around 50 percent of their personal care budgets on Amazon (for example), so they are super loyal. They tend to forget they have paid for prime because of free delivery and returns for free," she told CNBC by phone.

The company scored highly in new research by Kantar Millward Brown that looked at the companies and brands people rate as being disruptive or creative.

Technology and entertainment brands such as Disney and Amazon are seen by consumers as the companies that are both creative and "shaking things up" in the research published Monday — and they are among the world's most valuable brands too.

Apple, the world's second most valuable brand at just over $300 billion, is seen as one of the most "disruptively creative" in the study, scoring 135 for creativity against an average of 100. Amazon, which has a brand valuation of $207.6 billion, scored 128.

Netflix also scored highly for being a creative and disruptive company and its brand value has also rocketed this year, up 71 percent to $20.8 billion, according to the research presented at the Cannes Lions international festival of creativity in France.

The link between creativity, how disruptive a company is and its brand value was analyzed by the consultancy based on interviews done with 3.6 million people over the past 12 years. It also took into account financial and business performance to come up with the brand valuation figure, part of its BrandZ rankings, an annual list of the 100 most valuable brands, originally released in May. Businesses use the BrandZ methodology to assess how much their brand names are worth, which helps them put a premium price on them if they are being licensed or sold.

Amazon is seen as so disruptive because people think they’re getting something for free (1)

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China brands are the big gainers on this year's BrandZ 100

While advertising also helps to improve a brand's valuation, according to the research, it is the experience people have of companies that also changes perceptions. "The most innovative brands are constantly looking at how they can continue improving the life of the consumer. Shaking things up means never being satisfied with today," said Wang, global head of BrandZ, in an emailed statement.

Disney scores highest on the new creativity and disruption measure, with 137, and its brand value has increased by 3 percent this year to $53.8 billion. It has made a reported $1 billion investment in digital transformation for its theme parks, including a digital wristband that creates itineraries for theme-park goers, is linked to their credit card and replaces tickets for rides — people just tap and go.

"Now you must create experiences that make the consumer say, 'That was so easy, I can't believe I didn't have to wait two hours in line.' We no longer create that bond by communications alone," said Dayoán Daumont, a consulting partner at agency OgilvyRed, writing in the BrandZ report.

Companies whose creativity correlated with their brand valuations also included Tesla, Tencent and Chinese liquor brand Maotai. JD.com also scored highly on the creative measure, and its brand valuation increased by 94 percent to $20.9 billion in the BrandZ list.

Amazon is seen as so disruptive because people think they’re getting something for free (2024)

FAQs

Why is Amazon a disruptive company? ›

Amazon has spent the better part of a quarter century forcing retailers of all stripes to innovate, speed up and compete. The company premised its great disruption on its laser focus on the customer — easing the process of shopping and paying, winnowing delivery times to a couple days or less, and slashing prices.

What is an example of a disruptive innovation Amazon? ›

Amazon provides a clear example of disruptive innovation. Jeff Bezos, in 1995, subscribing to the notion that the internet could significantly boost commerce, launched Amazon to sell books to a growing, but largely ignored online shopping community. In doing so, he forced many bookstores to go out of business.

How is Amazon disrupting the retail industry? ›

The Amazon Disruption

Amazon played a pivotal role in popularizing e-commerce. Its vast product selection, competitive pricing, and user-friendly shopping experience drew consumers away from brick-and-mortar stores to the convenience of online shopping.

What is the problem with Amazon? ›

Amazon.com has been criticized on many issues, including anti-competitive business practices, its treatment of workers, offering counterfeit or plagiarized products, objectionable content of its books, tax and subsidy deals with governments.

What makes a company disruptive? ›

Disruption is the process by which a smaller company—usually with fewer resources—moves upmarket and challenges larger, established businesses. In both low-end and new-market disruption, incumbent businesses are motivated by higher profit margins to not fight the new entrant for market share.

How does Amazon tackle the three stages of disruptive innovation? ›

The answer is in how they have mastered ideation, incubation, and scaling to both exploit their existing assets and capabilities and to leverage these into new businesses. The essence of their innovation process begins with Bezos's belief in three big ideas that pervade Amazon's organization and culture.

How does Amazon exploit new ideas? ›

Amazon has a toolbox of concepts to support its innovation process. The most important concepts are about “working backwards,” which drives any process change through the lens of the customer. Defining who and how users will benefit before settling on what needs to change is the starting point.

Is Amazon an example of creative destruction? ›

Presently, there are a number of industries that have been on the decline from the effects of creative destruction. For example, streaming services like Netflix (NFLX), Amazon (AMZN) and Hulu have negatively affected brick-and-mortar movie and gaming rental stores, as evidenced by massive store closings.

What company uses disruptive innovation? ›

Amazon. Amazon's online marketplace, innovative logistics, and customer-centric strategies have reshaped the retail industry, forcing traditional retailers to rethink their approaches to remain relevant.

Is Amazon Go disruptive? ›

Amazon Go has had a significant impact on the traditional retail model, introducing disruptive changes that challenge long-established norms and practices. the checkout process. By eliminating the need for cashiers and checkout lines, Amazon Go fundamentally changes the way customers shop and pay for their purchases.

What industries have already been disrupted by Amazon? ›

To wit: Amazon has already disrupted businesses ranging from books, music, toys and sports to shoes and clothing. It also dominates the cloud-computing business, its biggest profit center.

Who are Amazon's biggest competitors? ›

Amazon's biggest direct competitors include Walmart, eBay, the Alibaba Group, Target, as well as more localized eCommerce marketplaces (such as Otto or Rakuten). In the video streaming segment, Amazon's biggest competitors are Netflix, Rakuten, HBO, Disney, and Apple TV+. Who are Amazon's indirect competitors?

Does Amazon treat their employees badly? ›

Physical exhaustion, work-related injuries, and mental health concerns are just some of the risks posed by these high-pressure environments. And a new Oxfam report reveals the brutal costs of Amazon's sophisticated surveillance tactics that constantly track workers from when they come to work to when they leave.

Is Amazon having a problem right now? ›

User reports indicate no current problems at Amazon.

Why is Amazon unsustainable? ›

Its carbon dioxide emissions grew an eye-popping 18 percent in 2021 compared to 2020, according to its latest sustainability report. Amazon generated 71.54 million metric tons of carbon dioxide equivalent last year, about as much pollution as 180 gas-fired power plants might pump out annually.

How has Amazon affected other companies? ›

Thanks to the Amazon Effect, eCommerce is changing, and in a big way. Amazon has rewritten the online selling world, making it more difficult for independent retailers to become digital providers. Every year, Amazon deepens its connection with consumers. As its online impact spreads, so does its popularity.

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