How Amazon trumped Apple
Despite the unprecedented disruption caused by e-commerce, all players — digital as well as more traditional retailers — realise that ultimately the customer calls the shots when it comes to growing brand strength and value
Not unexpectedly Amazon, for a third successive year, is the world’s most valuable brand. What makes it astonishing is that it’s now worth over $200bn, giving it a place in business history.
Amazon edges out its closest rivals, Google and Apple, by over $60bn and $80bn respectively. The annual calculation is done by global branding agency Brand Finance.
Brand value is the net economic benefit a brand owner would achieve by licensing the brand in the open market.
Expansion seems to be the key to Amazon’s success. Apart from being the world’s largest online marketplace, it has also branched out into cloud computing, artificial intelligence, consumer electronics and digital streaming and logistics, and is looking to enter other industries. David Haigh, CEO of Brand Finance, says: "Amazon continues to impress across imperishable consumer truths: value, convenience and choice."
In total, 44 retail brands feature in this year’s ranking alongside Amazon with a combined value of nearly $800bn, making the sector the third most valuable behind tech and banking.
US retail giant Walmart’s brand success might offer some solace to beleaguered local retailers like Edcon and Massmart. Its brand value is up 14% to $77.5bn, and it employs a strategy SA retailers might heed: Walmart, says Brand Finance, has focused on an innovative digital proposition in a partnership with Microsoft and with the launch of Alphabot — robots that pick and pack online grocery orders at high speeds.
"Despite the unprecedented disruption caused by e-commerce, the popular assertion that entering digital operations brings instant success while brick-and-mortar stores are doomed for extinction is being proved wrong," says Haigh. "As digital operators find they need to remain attentive to consumers and traditional retailers such as Walmart successfully adapt to change, we are back to normal as all players realise that ultimately the customer is king."
In a clear sign of a slowdown, the combined value of the ranking has increased by less than 2% year on year. And while 244 brands increased their brand value, 212 are down — 95 of them by 10% or more.
Brand Finance also says excitement alone cannot carry a brand; it must deliver on its promise — something Uber is battling to do, as its brand value fell by a third to $15bn.
In a separate measurement and for the second year in a row, Ferrari, the Italian luxury sports car manufacturer, has retained its spot as the world’s strongest brand.
Brand strength is measured on a scorecard of metrics evaluating marketing investment, stakeholder equity and business performance.
Ferrari announced five new models in 2019 and established a manufacturing agreement with the Giorgio Armani group to help push Ferrari collections into a more premium space.
For years, Ferrari has also used merchandise to support brand awareness.
The question asked of SA brands is why they don’t feature on the list, which measures 500 brands in total. Jeremy Sampson, MD of Brand Finance Africa, says: "The continent remains dislocated economically and physically, with local rather than pan-African brands. This is a reason to call Africa the most unbranded continent. The mentality of many managements remains commodity-rooted rather than brand conscious."
But it is a continent with huge potential.