How Amazon is trying to control the basic infrastructure of the American economy
Continuing to acquaint Geektimes readers with current global trends in the field of e-commerce, we are in the processing company PayOnline publish material on the strategy of Amazon, systematically exciting retail in the United States.
Companies wishing to enter the market are increasingly faced with a situation where they simply have no choice but to use the Amazon platform.
We often talk about Amazon simply as a big retailer. This error is quite understandable. After all, Amazon sells more clothes, electronics, toys, and books than any other company. Last year, almost half of the money Americans spent online went to Amazon. And if quite recently, in 2015, most people who want to buy something online, began their search from search engines, today, most buyers immediately go to the site of the largest online retailer.
However, anyone who describes Amazon as a retail platform does not really understand what this company is. They do not understand such people and the seriousness of the threat that it represents for our freedom and the very idea of an open, competitive market.
Not only does Amazon do a lot of things besides selling goods, that is, it produces thousands of products, from shirts to baby wipes, it produces hits and television shows, delivers restaurant orders, offers loans, and soon even starts selling prescription drugs. The fact is, Jeff Bezos’s plans go much further. His vision of the company's future includes control over the country's basic economic infrastructure. The Amazon website is already the dominant digital commerce platform.
The Web Services division controls 44 percent of all the cloud computing power available in the world today, and its huge user base includes the largest organizations of all kinds, from Netflix to CIA. Recently, the company has built an extensive distribution infrastructure network to handle the delivery of both its own and those of others.
Companies wishing to enter the market are increasingly faced with a situation where they simply have no other options but to use the Amazon platform. With Prime, Alexa's digital assistant and a wide selection of suppliers, from kitchen appliances to GE appliances to Ford cars, Bezos lured most American families into their networks, arranging for Amazon to become the first and main supplier of everything they order online. Most Prime users no longer bother comparing prices. This has forced competitors of all kinds - from large brands like Levi and KitchenAid to small manufacturers, e-commerce innovators and independent traditional retail stores - to abandon the idea of direct appeal to consumers. Instead, they have to rely on the Amazon platform to sell their products.
The giant exploits this dependence by imposing conditions and prices on suppliers, and applying the collected data on the activities of companies on the platform to reduce their competitiveness. A company creating a popular product and building a market for it on the Amazon website may suddenly find that the owners of the platform soon present their own, almost identical version of the product , promoting it to the top search queries of the platform. The authors of one of the studies found that Amazon manages to copy brand ideas and replenish their own line only a few weeks after the appearance of merchants on the platform and offering them their popular products.
Being both a platform for serving the placement of other online stores and an independent retailer, Amazon gets into its hands an innovative weapon in the fight against third-party suppliers. Not so long ago, the company offered Nike its own control and removal services from the platform of fake brand shoes as a trump card, which helped her for the first time ever to incline the famous sports brand to offer a full line of its products on the platform. Similarly, when the publisher Hachette refused to accept Amazon’s demands during the book price negotiations, the “Buy” buttons disappeared from all Hachette titles sold on the platform, which made thousands of books instantly unavailable to both buyers and other sellers.
Amid the rapid movement of online business, Amazon is positioning itself as the lord of retail chains. As a result, the word “market” simply loses its meaning when it comes to the e-commerce market. Instead, there is a private online territory, the company owning which individually controls and determines not only any conditions for the exchange of goods between the participants, but also what products will be sold there, and which new creators and innovators will get access to a new audience.
Investors are well aware of the potential consequences of such changes. As venture investor from Silicon Valley Chamat Palihapitiya put it last year, Amazon is “a trillion-year monopoly hiding in a prominent place.” This conclusion well explains the origin of such a high, incomparable with the current income of the company valuation of the company's shares on Wall Street. Investors are already anticipating future impressive earnings figures.
When Amazon announced its intention to acquire Whole Foods, these same investors were able to make sure that the future began to take on an ever more tangible form. A few hours after the announcement of this news, Amazon shares behaved exactly the opposite of what usually happens in such cases: the company's capitalization jumped by $ 13.4 billion - the acquisition has already paid for itself.
And if investors were able to recognize the potential of Amazon’s activities, then the federal antitrust authorities still prefer not to notice anything unusual. A deal with Whole Foods, the completion of which requires approval at the federal level, will be a test of their vision. If regulators value an arrangement within the traditional model, they can make a positive decision on the basis that the traditional grocery business and online shopping are different, separate markets, and that as a result of this operation, Amazon will receive only a modest share in the supermarket industry .
However, if at the time of the appearance of the Internet, such an interpretation was still quite relevant, today, when the line between online and offline shopping is becoming increasingly blurred, and most of the commercial activities, one way or another, goes into digital space, such “analog” thinking is irrelevant.
Buying Whole Foods will help Amazon extend its control over the commerce market. The giant will receive a new stream of high-quality data, allowing it to "explore" consumers now and offline. By the way, the company recently filed an application for patenting technologies that allow it to monitor buyers' attempts to compare prices with other suppliers of goods from their smartphone while visiting Amazon's physical stores and blocking such attempts. In addition, Amazon will open the deal to a network of warehouses for storing fresh products, which it can use to quickly emerge as the only competitive leader in the online grocery market.
The Whole Foods chain of stores — 460 points across America — is located in very profitable, in terms of ultimate delivery, locations. This is a very important point, because control over the infrastructure that allows for the fast delivery of packages to the customers' doors is a key component, without which no retail online monopolist will be able to retain their positions. If Amazon succeeds in weakening its competitors in the face of UPS and FedEx, then other online sellers will suffer losses as they become addicted to the delivery of goods, neither more nor less, but from its largest competitor.
Jeff Bezos plays big: he hopes to simplify shopping at Amazon as much as possible to distract us from the implementation of his planned systematic capture of the commerce market and the infrastructure serving it, making us not even notice such domination and not knowing what it will cost us. The giant has at its disposal unprecedented power, which it uses to direct our decisions to the direction it needs. Ask Alex to send you the batteries and she will not ask you about Duracell or Energizer, but just send you a product released under the Amazon brand right away. Browse through the Kindle bestseller list and see many books published by Amazon. Forming a section of similarly popular products for you, Amazon’s algorithms will give preference to their own products, even if other products are actually available in the catalog.
Amazon’s attempt to acquire Whole Foods should be a wake-up call for us. Our antitrust policies have lost their effectiveness; as a result, large technological monopolies have taken advantage of this weakness, having concentrated too much power in their hands. As Senator John Sherman, co-author of the Sherman Antitrust Act, said in a speech before the House of Representatives: “If we don’t tolerate kings as political power, we shouldn’t tolerate kings in production, transportation, and the sale of any natural human need.”
Companies wishing to enter the market are increasingly faced with a situation where they simply have no choice but to use the Amazon platform.
We often talk about Amazon simply as a big retailer. This error is quite understandable. After all, Amazon sells more clothes, electronics, toys, and books than any other company. Last year, almost half of the money Americans spent online went to Amazon. And if quite recently, in 2015, most people who want to buy something online, began their search from search engines, today, most buyers immediately go to the site of the largest online retailer.
However, anyone who describes Amazon as a retail platform does not really understand what this company is. They do not understand such people and the seriousness of the threat that it represents for our freedom and the very idea of an open, competitive market.
Not only does Amazon do a lot of things besides selling goods, that is, it produces thousands of products, from shirts to baby wipes, it produces hits and television shows, delivers restaurant orders, offers loans, and soon even starts selling prescription drugs. The fact is, Jeff Bezos’s plans go much further. His vision of the company's future includes control over the country's basic economic infrastructure. The Amazon website is already the dominant digital commerce platform.
The Web Services division controls 44 percent of all the cloud computing power available in the world today, and its huge user base includes the largest organizations of all kinds, from Netflix to CIA. Recently, the company has built an extensive distribution infrastructure network to handle the delivery of both its own and those of others.
Companies wishing to enter the market are increasingly faced with a situation where they simply have no other options but to use the Amazon platform. With Prime, Alexa's digital assistant and a wide selection of suppliers, from kitchen appliances to GE appliances to Ford cars, Bezos lured most American families into their networks, arranging for Amazon to become the first and main supplier of everything they order online. Most Prime users no longer bother comparing prices. This has forced competitors of all kinds - from large brands like Levi and KitchenAid to small manufacturers, e-commerce innovators and independent traditional retail stores - to abandon the idea of direct appeal to consumers. Instead, they have to rely on the Amazon platform to sell their products.
“Amazon is a trillionth monopoly hiding in a prominent place”
The giant exploits this dependence by imposing conditions and prices on suppliers, and applying the collected data on the activities of companies on the platform to reduce their competitiveness. A company creating a popular product and building a market for it on the Amazon website may suddenly find that the owners of the platform soon present their own, almost identical version of the product , promoting it to the top search queries of the platform. The authors of one of the studies found that Amazon manages to copy brand ideas and replenish their own line only a few weeks after the appearance of merchants on the platform and offering them their popular products.
Being both a platform for serving the placement of other online stores and an independent retailer, Amazon gets into its hands an innovative weapon in the fight against third-party suppliers. Not so long ago, the company offered Nike its own control and removal services from the platform of fake brand shoes as a trump card, which helped her for the first time ever to incline the famous sports brand to offer a full line of its products on the platform. Similarly, when the publisher Hachette refused to accept Amazon’s demands during the book price negotiations, the “Buy” buttons disappeared from all Hachette titles sold on the platform, which made thousands of books instantly unavailable to both buyers and other sellers.
Amid the rapid movement of online business, Amazon is positioning itself as the lord of retail chains. As a result, the word “market” simply loses its meaning when it comes to the e-commerce market. Instead, there is a private online territory, the company owning which individually controls and determines not only any conditions for the exchange of goods between the participants, but also what products will be sold there, and which new creators and innovators will get access to a new audience.
Investors are well aware of the potential consequences of such changes. As venture investor from Silicon Valley Chamat Palihapitiya put it last year, Amazon is “a trillion-year monopoly hiding in a prominent place.” This conclusion well explains the origin of such a high, incomparable with the current income of the company valuation of the company's shares on Wall Street. Investors are already anticipating future impressive earnings figures.
When Amazon announced its intention to acquire Whole Foods, these same investors were able to make sure that the future began to take on an ever more tangible form. A few hours after the announcement of this news, Amazon shares behaved exactly the opposite of what usually happens in such cases: the company's capitalization jumped by $ 13.4 billion - the acquisition has already paid for itself.
And if investors were able to recognize the potential of Amazon’s activities, then the federal antitrust authorities still prefer not to notice anything unusual. A deal with Whole Foods, the completion of which requires approval at the federal level, will be a test of their vision. If regulators value an arrangement within the traditional model, they can make a positive decision on the basis that the traditional grocery business and online shopping are different, separate markets, and that as a result of this operation, Amazon will receive only a modest share in the supermarket industry .
However, if at the time of the appearance of the Internet, such an interpretation was still quite relevant, today, when the line between online and offline shopping is becoming increasingly blurred, and most of the commercial activities, one way or another, goes into digital space, such “analog” thinking is irrelevant.
Jeff Bezos plays big
Buying Whole Foods will help Amazon extend its control over the commerce market. The giant will receive a new stream of high-quality data, allowing it to "explore" consumers now and offline. By the way, the company recently filed an application for patenting technologies that allow it to monitor buyers' attempts to compare prices with other suppliers of goods from their smartphone while visiting Amazon's physical stores and blocking such attempts. In addition, Amazon will open the deal to a network of warehouses for storing fresh products, which it can use to quickly emerge as the only competitive leader in the online grocery market.
The Whole Foods chain of stores — 460 points across America — is located in very profitable, in terms of ultimate delivery, locations. This is a very important point, because control over the infrastructure that allows for the fast delivery of packages to the customers' doors is a key component, without which no retail online monopolist will be able to retain their positions. If Amazon succeeds in weakening its competitors in the face of UPS and FedEx, then other online sellers will suffer losses as they become addicted to the delivery of goods, neither more nor less, but from its largest competitor.
Jeff Bezos plays big: he hopes to simplify shopping at Amazon as much as possible to distract us from the implementation of his planned systematic capture of the commerce market and the infrastructure serving it, making us not even notice such domination and not knowing what it will cost us. The giant has at its disposal unprecedented power, which it uses to direct our decisions to the direction it needs. Ask Alex to send you the batteries and she will not ask you about Duracell or Energizer, but just send you a product released under the Amazon brand right away. Browse through the Kindle bestseller list and see many books published by Amazon. Forming a section of similarly popular products for you, Amazon’s algorithms will give preference to their own products, even if other products are actually available in the catalog.
Amazon’s attempt to acquire Whole Foods should be a wake-up call for us. Our antitrust policies have lost their effectiveness; as a result, large technological monopolies have taken advantage of this weakness, having concentrated too much power in their hands. As Senator John Sherman, co-author of the Sherman Antitrust Act, said in a speech before the House of Representatives: “If we don’t tolerate kings as political power, we shouldn’t tolerate kings in production, transportation, and the sale of any natural human need.”
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