Risk Versus Uncertainty
Risk is exposure to danger while uncertainty is the unknowing: risks can be evaluated and potential outcomes predicted, while uncertainties are just that—unknown, unpredictable, ambiguous. Risks can be managed while uncertainties are uncontrollable; risks can be measured and quantified while uncertainties cannot.
Throughout my career, I have always found that it’s better to trade risk for uncertainty and one particular example is the decision to work for yourself or for a company.
When you work for yourself, there’s much exposure to danger—it's inherently a high-risk venture. However, there is often relatively little uncertainty: you know how many weeks and months of production are required to sustain your business. When working for others, there is much less risk—the organization may be exposed to danger, but your job is still secure—but there are incredible amounts of uncertainty: did your division just get sold off to another organization? Is leadership considering consolidating your department, leading to a redundancy and ultimate reduction in the work force? Will leadership remain stable and consistent?
Risk versus uncertainty. Many of our clients and vendor partners have developed strong businesses on the Amazon platform where there has been greater risk, but little uncertainty. This is changing. Fast.
Right now, both on Amazon and in ecommerce more generally, there are several forces collapsing down on brands which will force them to either stop participating in e-commerce altogether, or significantly restructure their internal operations to support the new requirements.
Amazon is making a hard course-correction in terms of the company's relationship with vendors, unfortunately at a time when states are demanding payment of sales tax from companies selling via e-commerce channels—a precursor to business and operating taxes. Additionally, Amazon has initiated this course correction at a point in time when we all recognize that e-commerce is the future of sales: millennials are shopping online and this shift in platform has fundamentally changed the shopping (and selling) experience.
With e-commerce, consumers now have the ability to get just about anything delivered directly to their front door, eliminating their need for certain long-standing tools (e.g. cars) in favor of tools better suited to this new platform. Any brand owner who fails to stay relevant will fail to grow as the shift to e-commerce only accelerates.
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