Recently, Amazon announced a $2B investment in Bharti Airtel, India’s third-largest wireless carrier. The investment gives Bharti Airtel a much-needed strategic partner to help strengthen its wireless business’s market position, and Amazon helps to turbocharge India’s digital economy. Yet, what if there is more?
In the consumer market, Amazon has a relatively singular focus: to enable digital purchases via its storefronts in as simple of a fashion as possible, with the most extensive reach possible. In the U.S. alone, 79 percent of smartphone users have made a purchase online using their mobile device in the last six months, with almost 40 percent of all e-commerce purchases during the 2018 holiday season made on a smartphone. In addition, Amazon has 112 million Amazon Prime members and growing.
Against this backdrop, we believe the move underscores several strategic possibilities:
Amazon may be leveraging its investment in India—a country seeking to grow its digital economy significantly—to test, trial, and plan for a complete mobile entrance into the U.S. market. Six years ago, Amazon created the Fire Phone in an initial attempt to enter the U.S. mobile market. While it failed to succeed, it did show that the company is willing, wanting, and capable of entering the U.S. wireless market.
Then, Amazon pivoted and created a partnership with Verizon to pre-load a customized, single sign-on, app suite onto all Verizon Android devices. Consumers didn’t mind, given that Amazon is widely considered a value-added provider that enables seamless shopping experiences across a spectrum of services. Amazon used this partnership to nudge more consumers towards mobile shopping experiences. Thus, Amazon knows that consumers are craving a simpler shopping experience on mobile, applying the integration of devices.
Amazon could use a wireless offering as a loss leader. If Amazon owns the wireless network, it could give it away for free to customers who are Prime subscribers and who spend above a specified annual threshold on the company’s services. For example, it might give you an affiliate fee for every transaction you make using a mobile device. Or, perhaps, it would donate the affiliate fee to a charity of your choice for all mobile purchases, providing you tax exemption forms at the end of the year electronically. These disruptive possibilities highlight Amazon’s unlimited potential in owning a wireless network.
In another example, consider the brick-and-mortar shopping experience. Imagine Amazon creating the ultimate shopping list application. You enter all of your items in the list application. When you approach a brick-and-mortar store, Amazon can allow companies in its store network to bid on whether it wants to beat a given price. With the help of Whole Foods, Amazon can even compete in the real-time pricing of produce, too.
Amazon could utilize the investment to launch a digital currency. For years, companies have attempted to crack the code on serving the underbanked, or those without a bank account. What if a digital form of Amazon cash becomes that means? By tying all types of shopping into a mobile device, Amazon can also incorporate digital currency. So, in addition to disrupting the shopping experience, Amazon also could use this investment to launch a true mobile, digital currency.
Right now, these are all “what-if” scenarios. But what if the hypothetical inches closer to reality? How should telecom operators plan and react to uphold market leadership?
- Solve customer problems in a meaningful way. First, legacy providers must deliver benefits on top of the network. Develop value propositions that resonate with your customers. Through partnerships, products, and services, solving customer problems is at the heart of delivering benefits and developing value propositions that resonate.
- Focus on a digital-first footprint. What Amazon, and companies like it, do so well is release products and services with a digital, self-serve mindset. Once digital, companies can layer in artificial intelligence at the core to predict issues and proactively resolve those issues before they lead to problems.
- Keep it simple. Digital-first companies like Amazon focus on simplifying every process to its core elements. By simplifying, you reduce fallout potential and standardize approaches to service and support, as well as purchasing, onboarding, and billing. Unnecessary processes add complexity to the customer experience, in turn, depleting the value proposition.
While Amazon has not yet entered the U.S. wireless market, its recent investment in Bharti Airtel illuminates a range of disruptive possibilities for the telecom industry on a global scale. Realistically, Amazon is likely years away from considering whether it makes sense to enter the U.S. wireless market. It could continue down the pre-load path and achieve a similar outcome. Regardless of the means, wireless telecom operators should take note of Amazon’s aspirations to use mobile to strengthen its position in shopping. If left unchallenged by legacy telecom competitors, the move could enable Amazon to transform the mobile experience, even more than it has already. To better understand these potential shifts in the market, telecom operators might consider utilizing scenario analysis software to anticipate and strategize for various outcomes.
