The World is
Owned by Gatekeepers
Because
they have massive amounts of data on what and how we buy, and the ability to
manipulate it, the megapowers threaten to overwhelm the competition.
Executive director, Ed Kaplan Family Institute for Innovation
and Tech Entrepreneurship, Illinois Institute of Technology
I'd rather have 10% of a watermelon than 100%
of a grape. A slice of the price of every purchase in almost any area of
commerce adds up to an impressive bundle of bucks in no time-- especially once
the underlying businesses begin to take off. Today, the truth is that you can't
sell a stand-alone product; you also have to sell connection,
support and service and deliver a first-class experience across all those
dimensions. As a result, in the "right now" and "always on"
economy, everything is, of necessity, transaction-based in one way or another.
The only question is, who's getting a piece of the pie and how do you make sure
that you get your share? Getting into that game is becoming harder and harder
because so much of the process is data-dependent and only a few of the biggest
players have access to the answers.
We're starting to see the emergence of large
and well-funded gatekeepers and all kinds of other middlemen in almost every
industry and everywhere you look on the web. The companies
developing GPS-based mapping software are a great example. Google and Here (formerly
part ofNavteq/Nokia) have such a huge edge that the other players
talking about creating their own global street and site maps sound seriously
deluded. Coinbase jumped miles ahead of the rest of the pack
in the cyber currency space and has already become a virtual utility and
exchange for the industry. And these tech toll takers are here to stay because
many of the markets and the disparate players they serve can't continue to grow
and expand without the concentration, centralization and organization that
these entities provide.
It's not exactly one-stop shopping yet, but,
over and over again, technology channels tend to become two- or three-horse
races or even "winner-take-all" configurations. Think about Apple and
Android, Uber and Lyft, or even FedEx and UPS. You don't have to be the
first; just eventually the best. And,
to stay in the race and maintain your position, you also need to have the
technology and, most importantly, the data that it increasingly takes to
compete at these levels of size and scale.
The new gatekeepers are becoming some of the
most valuable businesses on the planet, as we grow ever more connected and
reliant on a few key channels to meet our basic and recurring needs. The people
who own the pipes (the utilities) may be in decent financial shape, but the
ones who are controlling the content and product flows and sitting astride the
traffic in, out and through those pipes are much better positioned, further
ahead of the game, and far more likely to be highly profitable.
Controlling, delivering and charging for
access to the content or products is a lot more appealing than having to handle
all the hardware maintenance headaches. Access trumps assets today. Poor
AT&T and Comcast still have to pay attention to (and spend millions
servicing and keeping up) all those POTS lines, cable boxes and telephone poles
while digital content creators and e-commerce providers essentially ride their
rails for free. Trump's not entirely wrong about how the e-commerce companies
are taking advantage of the U.S. Postal Service, which still has to get all
those deliveries over the last mile and into our mailrooms and mailboxes.
It's a good start to know who and where the
customers are, but the ultimate giants will be the ones who can track,
influence and ultimately dictate our actions, choices and decisions. Companies
that can provide invaluable evaluations and interpretations of the vast amounts
of user data that are being constantly and exponentially generated will become
new market leaders. And you can bet that the best players won't share this data
with the world - they will use it exclusively to improve and strengthen their
own positions. This is where Amazon once again shines.
Amazon's dream state for its Prime customers
is the complete elimination of thought in the purchase process.
"One-click" is on the way to being "no clicks" at all.
Think of this as "I see, I buy." I'm not even sure that
needs or even desires will enter into this Pavlovian process of pre-conditioned
responses for much longer. And, as for commodities and recurring purchases,
life is going to be all about automated replenishment. The pantries of Prime
subscribers will never be empty again.
But it's Amazon's newest foray into providing
free samples to Prime customers on behalf of brands that highlights the
beginning of these new data-driven initiatives. No one has more detailed
information on every aspect of our past, present and intended purchase intent
and behaviors than does Amazon. And no one can do a better job for their brand
"partners" than Amazon of putting these offerings directly and
painlessly into the hands and the homes of the very best,
in-market prospects.
But every rose has its thorns and, in the case
of Amazon, it's that (a) the brands hate giving up their direct connection and
control of the end customer, which Amazon basically requires and (b) they hate
the fact that Amazon keeps adding competitive house brands that are
aggressively priced and bundled in ways that the brands can't replicate. And,
to make things even worse, as Alexa approaches 150 million households, and
voice becomes the key to commerce, it's hard to see how brand identities will
even matter any longer to the buyers.
Not a happy prospect, but if you're looking
for a way around the juggernaut, you might take a look at what Walmart's trying
to do by buying a bunch of the niche names like Bonobos, Modcloth and Moosejaw
and hoping that the selective and upscale customers will prefer and seek out
these specialty offerings rather than the typical mass market and commoditized
goods they associate with Amazon. Try to be sexy, not Sears.