Amazon.com, Inc. (AMZN) Survivors and the Lessons Learned

Pour a Cup of Profits
Who: Teavana, subsidiary of Starbucks (NASDAQ:SBUX).
What: Premium loose leaf teas and tea accessories.
How: Selling exclusive luxury products to underserved US tea market.

Although tea is the world’s second most consumed drink (second only to water), it is a distant sixth in the United States. That has been changing in recent years however, as increasingly health-conscious American consumers have been trending away from unhealthy soda and towards healthier tea. Despite these changing beverage demographics, there were not many companies looking to serve this underserved market. And that was precisely the thinking of Teavana’s founders when they started the company in 1997.

Teavana wants to change American tea much the same way Starbucks (NASDAQ:SBUX) changed American coffee. Before the arrival of Starbucks, coffee was simply a large tin can full of bland beans. Starbucks turned that product into the variety of coffee blends we have today. Modeled after tea houses found abroad, Teavana looks to similarly take the bland supermarket tea bag and transform it into a market for premium specially blended loose-leaf tea. Teavana stores have positioned themselves as a luxury retailer selling exclusive tea-concoctions blended with unique ingredients (fruits, chocolate, nuts, spices) or blended with many other types of tea to create a combination of flavors not found anywhere near the store shelves of a supermarket.

Foolish Bottom Line
What conclusions can be drawn from this? The things that appear to set these three apart from other brick and mortar stores are (1) combination of excellent customer experience, (2) regulatory hurdles (prescription products/services), or (3) creating a new market where there was none before.

In the time of Amazon.com, Inc. (NASDAQ:AMZN), it seems clear that a retailer needs to do more than simply sell the same types of products that can be found everywhere. To compete with Amazon.com, Inc. (NASDAQ:AMZN) you need something more. You need to offer something that Amazon.com, Inc. (NASDAQ:AMZN) can’t or give customers something Amazon.com, Inc. (NASDAQ:AMZN)Amazon.com, Inc. (NASDAQ:AMZN) is unable to give. When looking for investment opportunities in brick and mortar retail, search out for retailers with these and similar characteristics.