Why would Amazon rush up to a #2 position in a category? (Hint: it’s the money.)

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One of the basic tenets of marketing, (and what almost all of my students are sick of hearing about already,) is that brands need to strive for a leadership position. You may not always be able to achieve category leadership, but you can certainly attain positional leadership: quality, price, availability, etc. Heck, leadership is so important, the concept of loss leaders is a thing.

And while leadership is the coveted spot, there happens to be some pretty cushy seats in the #2 position as well. Just ask Avis, Burger King, and Pepsi how they’re doing. Avis is the quintessential case study here, having turned their #2 status into a promote-able benefit nearly 50 years ago, and successfully positioning themselves in their category. (It turned into some pretty great advertising from Doyle Dane Bernbach, too.) Sure, these companies have never beaten out their category leaders on the key metrics, (revenue, profits, number of locations, etc.) but they have consistently beaten out EVERY OTHER player in the space.

I’m most interested in this positioning battle model since hearing the news that Amazon is entering the video content space with a new platform called “Amazon Video Direct.” This platform will allow users to upload their own content, and will even have revenue-sharing models for those who upload premium content that other users may be willing to pay for. If it sounds familiar, that’s because it’s YouTube under a different name. [PS – if you think you can be a video star, this may be your big chance to get in on the ground floor.  Just sayin’.]

Amazon has made a history (and quite a good living, thank you) by exploring opportunities outside its core competency as an online retailer. While purchases of companies like Audible and Zappos make perfect sense as extensions, development of electronics devices (like Kindle and more recently, Echo,) cellular enablement services (like Amazon Wireless,) and original content (Amazon Studios) really didn’t. That those products may have performed fairly or even very well is beside the point.  T

Just as a sidebar, let’s think on that for a moment:  Amazon, an online retailer, delivers original programming content. Could you imagine if, 30 years ago, K-Mart (a one-time very successful retailer,) launched a dramatic series on television? Who would have ever taken that seriously? So yay for the tech revolution and skewed boundaries!

Video content is really far from what we might consider Amazon’s sweet spot. Sure, Amazon Studios may have a mild hit with “Transparent,” as a piece of original content, but they’re not going to catch Netflix any time soon. And that may be precisely the point.

Nor is Amazon Video Direct going to catch YouTube and its billion-user infrastructure any time soon. But with Amazon’s 130 million unique visitors per month (just let that sink in a moment,) they can rush right up to a cozy #2 spot in the category, maybe disrupt a few long-held market beliefs, and add a few more zeros to their bottom line and their $700 per share stock price.