What can sport learn from Amazon’s increasing retail power?

BY MATTHEW ENTWISTLE

How big will Amazon’s role be in shaping the future direction of the sports industry?

Bezos’ online retail giant has already bought live sports broadcast rights, commissioned sports documentaries, and even launched its own ticketing platform. With quarterly profits of $1.6 billion in the first quarter of 2018, my answer would probably be quite a big one.

What triggered my Amazon interest recently, however, wasn’t something with a direct link to sport – we can deal with that another time – it was the news Amazon’s private-label business could be worth $25 billion in sales by 2022.

Amazon pushes private-label products covering everything from tents to cat litter, and it’s sent shockwaves through many of the biggest consumer product categories – now selling, for example, more private-label batteries than both Energizer and Duracell. So with no marketing, Amazon has been able to pass 50-year incumbents in the space of a few years.

What this has to do with sport isn’t obvious at first glance, but as someone who spent 15 years in retail – and much of that time competing with Amazon – I can see huge lessons sport can learn from the challenges FMCG and retail brands have been facing.

1) BRAND AND HISTORY WON’T PROTECT YOU ON THEIR OWN

“History and tradition protect sport from being replaced in people’s emotions” – we’ve all heard that before. It’s only a half-truth.

I don’t think we’ll see Amazon Basics FC taking on the might of the Premier League any time soon, but don’t kid yourself that brand and history makes you invulnerable. Every brand that’s ever been lost believed its own myth of invincibility.

In 2006 the median viewing age for an MLB fan was 52; a decade on it’s touching 60. All rights-holders need to adapt their product to reflect what consumers want, otherwise they run the risk of becoming irrelevant to new audiences.

As an industry, we need to understand where and who the customers we don’t have are, and what products they are interested in. British horse racing, for example, has done a great job of shifting its customer base, staging concerts and advertising around fashion and Ladies Days. If potential customers are interested in “experiences”, sell them experiences.

2) ANY CONSUMER PRODUCT IS ONLY SUCCESSFUL IF PEOPLE ARE WILLING TO PAY FOR IT

Just because a business has sold the same product successfully for 100 years doesn’t mean it’s selling the product that’s right for today. Every successful business continually shifts its products from what it wants to sell, to what its customers want to buy.

To successfully grow its private-label business, Amazon looked at product reviews on its site, and used the information to build better products. Sports rights-holders need to be constantly talking to fans and adopting their products – and where they make investments – to meet their fans’ aspirations and demands for positive experiences.

Initiatives like those being taken by the NBA to actively change their rules and formats following insight from viewing data are the type of initiatives that will help sports remain relevant. My message: talk to your customers. Listen to the feedback, and be bold in acting on it.

3) RIGHTS-HOLDERS CAN HELP THEIR PARTNERS AVOID COMMODITISATION

Challenger brands from Amazon and others have created an unprecedented level of consumer choice at great prices. This puts a bigger onus than ever on value-driven brand-building and smart, long-term marketing as a way to get cut-through and loyalty. This presents a huge opportunity for sports rights-holders with strong sponsorship propositions.

Sports rights-holders can deliver huge value by working their assets – content, stories, influencers – harder and harder on behalf of partners’ brands but it has to be more than a media play.

Brands who sponsor sport derive value from a rights-holder’s ability to grow their brand connection with consumers. Rights-holders bring passion, relevance and, ideally, a whole set of brand values that can be reflected onto a partner. Thoughtful, impactful and innovative executions of sports partnerships are more valuable to sponsors than ever.

4) DATA CAN PUT ROI AT THE HEART OF PARTNERSHIP DEALS

Amazon’s success is underpinned by putting customer data at the heart of everything it does. Data on customer purchases, journeys, returns and review data builds the best products that can be sold to the right people at the right place and at the right time.

Sports rights-holders can and should have amazing known customer data, derived from ticket sales, gate entries, retail purchasing and more. What’s more, with the right technology, rights-holders can – and should have – five-to-10 times that amount of data from unnamed customers who visit their website and view their content.

With the right approach, all this data can be used to create a suite of owned digital assets that deliver strong engagement for their partners’ marketing messages, backed up with proven ROI metrics. Sit it alongside a values-driven brand proposition and you have a winning formula for brands.

5) GET INTO BED WITH THE 800-POUND GORILLA… CAREFULLY

Amazon is a truly phenomenal business that can bring reach, new customers and sales. It is legitimate for all sports organisations to think about how they can work together…but can’t for one second lose sight of the fact Amazon doesn’t exist to drive sales of anyone apart from itself.

In working with Amazon, Facebook, Twitter or any third-party channel you hand your audience and your brand over to a third party – so ensuring you get a fair value exchange in return is crucial.

Image via Robert Scoble

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