At an all-hands meeting last week, Amazon CEO Jeff Bezos, in response to a question from an employee about the lessons learned from Sears, remarked “I predict one day Amazon will fail. Amazon will go bankrupt.”
He is 100% right (as usual).
And, the company that quite possibly could bring Amazon down and also dominate retail as the world knows it today is none other than Facebook.
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For Amazon, like so many other odds-on favorites throughout history, from Goliath on down to the Rebel Alliance against the Evil Empire, has a chink in its armor, a chink tailor-made for Facebook to exploit with its own proton torpedoes.
The below visual shows exactly where the small thermal exhaust port right above the main port is within Amazon’s Death Star of Dominance:
The above slide is the single best visual I have seen at any conference this year. The slide comes by way of Carter Jensen of Latitude. What it shows is brilliant in its simplicity.
All it takes is imagining a horizontal line. On the one end of the horizontal is commerce (i.e. Amazon). On the other end is a social network (i.e. Facebook and its 2.0 billion plus users). Whoever bridges and connects the full length of the horizontal line wins.
Because of data.
I have written at length about how Amazon and Google dominate search. Over 85% of all first product searches start on either Amazon or Google, meaning when consumers know what they want to buy or have a strong inkling about what they want to buy, they go to Amazon or Google in droves.
All this activity is well and good, but it says nothing about discovery, about how consumers first “discover” what it is that they crave.
All the information consumers tell Amazon is explicit — when consumers know what they want, they type it into Amazon’s web browser to find it. Facebook’s data capabilities along the horizontal are different.
When I wake up in the morning, the first thing I do is check out Facebook’s “On This Day” feature. With a few quick clicks, I can see the entire past decade of my life played out right in front of my very eyes and also have a really good cry. Facebook, through my history, my chronicling of events via posts, my likes or comments on things I see in my feed, and even through how long I pause to look at people I used to know in high school, knows my deepest and darkest implicit desires. Amazon, as MC Hammer, and a frequent mainstay in my Facebook feed, used to say, “Can’t touch this.”
In many ways, Facebook, through all its record keeping, knows consumers implicitly better than they even know themselves.
This is the power of the horizontal line — knowing both the explicit and implicit desires of consumers. Amazon only knows the former, which is likely why Amazon has gone after partnerships with Snap, tried to launch its own social network, Amazon Spark, and also seems hell bent on getting into consumers’ living rooms via Alexa (because it’s the equivalent of a social networking end-around).
But what if Facebook can connect the horizontal? A 2 billion user social network is far more difficult to recreate than an e-commerce marketplace. I can name a handful of marketplaces across the globe, but I can only name one Facebook.
The above may sound crazy, but it is not. Take one look at Facebook’s recent announcement and celebration of what is only a two-year anniversary of its marketplace, and one can easily see Facebook is upping the ante.
Facebook likely knows that, if it can connect its implicit understanding of consumers with an easy-to-use marketplace of sellers, then discovery can become Facebook’s ultimate purview, even if Facebook only acts as an interstitial, taking a cut of the transactions from retailers and brands, many of whom will likely even fulfill product via Amazon anyway. This Black Friday could be an important signal of what is to come.
When the horizontal is connected end-to-end, when a platform of discovery is created that fuses implicit commercial desires with explicit commercial activity, then Pandora’s box will effectively be left open, and Amazon and others won’t know what hit them. Explicit search, once Amazon’s lifeblood, will migrate to a new commercial platform.
In essence, first product searches will begin to happen somewhere else.
At that point, Amazon will no longer lead. It will have nothing left to do but follow or to find another planet via Blue Origin to conquer. It will be Facebook’s world, and we will all just be living in it.
Date: November 22, 2018