Local businesses are being killed off. Storefronts are empty. More and more main street looks like desolation row. Malls have become decaying relics.
Each local business that closes its doors decreases local shoppers desire to shop on main street. People like EXCITEMENT. They like CHOICE. But most of all people like other PEOPLE.
See other people shopping is what makes local shopping attractive. When shoppers walk past an empty store or restaurant the overall local BRAND is diminished. How bad is it – it is being called The Retail Apocalypse 2019.
Sinéad Baker in the April 2019 Business Insider article writes that the retail apocalypse has claimed 6,000 US stores in 2019 so far, more than the number that shut down in all of 2018.
In the article Baker summarizes what is happening to local retail:
More store closings have been announced already this year than in all of 2018, according to new research.
A report from Coresight Research found the retail apocalypse to be continuing, with 5,994 store closings announced in the US this year compared with 5,864 in all of 2018.
Some retailers including Fred’s and Family Dollar are closing select stores in a bid to stay profitable, while chains like Payless have announced they are shuttering all of their stores.
One report predicted that 75,000 stores would close across North America by 2026 as reliance on e-commerce rises.
If you don’t know what is happening to local retail then you, like Rip Van Winkle, have been sleeping. The Tech Giants and Retail Chains are culprits in the Retail Apocalypse, but the actual killers are the denial and ignorance of local business owners.
There is a well-worn saying, “What you don’t know won’t hurt you.” The writer, Margaret Atwood, has her contrary version of the saying which is, “Sometimes what you don’t know can hurt you very much.”
I am of the school that thinks ignorance is NOT bliss and that “what you don’t know can and will hurt you.” There is NO BLISS to be found in ignorance. Think about what you know now and how if you knew what you know now ten, fifteen, or twenty years ago the mistakes you could have avoided.
So, what’s killing off local businesses is first, foremost, and last – the ignorance and denial of local business owners. The excuses for ignorance are that business owners are too busy to see what is happening – that is total and complete nonsense. Denial is something else entirely. Here’s a denial quote pretty much sums it up, “People don’t know very much. They only think they know to make themselves feel better.”
It is the JOB of business owners to get their heads out of the “too busy” sand. Time to stand up and see reality. Denial is your head in the sand.
This is reality – local businesses are getting killed off. There is not one local business owner who is not afraid. The massacre is not going to stop. The killing isn’t an accident.
IGNORANCE #1: Amazon earns $282.7 billion dollars a year in revenue, it controls over 50% of online sales, shoppers love shopping online, and Amazon makes it easier and easier to shop. Think – one-day delivery. Amazon is going after EVERY local business.
Every local business from the pizza joint to the local jeweler NEEDS to understand IGNORANCE #1. Deny it and you have a death wish. A person with a death wish is shown the danger and chooses to deny it.
IGNORANCE #2: Amazon’s success is built around its customer list. Amazon doesn’t advertise – Bezos thinks advertising is a waste of money. Instead, Amazon communicates. Shoppers are connected 24/7 and they LIKE, WANT, and DEMAND communication. They HATE advertising. Deny IGNORANCE #2 and you go from having a death wish to business suicide.
Too tough. Nasty, Politically incorrect. Nope. It is reality. Local business owners, if they intend to survive need to understand that it is their IGNORANCE and DENIAL that will cause them to fail.
HOW TO GET SMART, FACE REALITY, & WIN
Nobody wants to fail. To keep from letting Amazon and the Retail Giants drive you to destruction local business owners need to Get Smart, Face Reality, and turn their on their passion to win. It all starts with LEARNING.
Learning starts when you look around and see something you want to do and say to yourself, “I don’t know how to do it. I don’t know how to get there. I know if I don’t do it and get there BAD THINGS are going to happen.”
I know the older I get the more I realize how little I really know. The good part of knowing you don’t know is that it means you are open to LEARNING. For example, one of my favorite articles about marketing I found is titled, Amazon is building the world’s largest bird feeder.
The article argues that Amazon’s list is like a gigantic birdfeeder which Amazon uses to attract millions of different kinds of shoppers. I learned from the article and begin thinking about local businesses and what they don’t know.
Here’s what local businesses both don’t know and if they know are in denial about.
Local businesses may have heard about Amazon’s one-day delivery but are still in denial. Here’s the unvarnished truth – what Amazon does ALL the retail giants will do. Target just announced its one-day delivery service. Here’s the point – expect Walmart to do the same. Ditto for all the retail chains. This news should be as shocking to a local business as having your doctor say, “You have cancer, heart disease, and PTSD but other than everything is good.”
Local business owners need to make sure they are NOT in denial about one-day delivery. It means that Amazon, Target, Walmart and the Retail Chains WILL take away more of their customers. These giants are focused on what today’s shoppers WANT.
Mary Meeker, the smartest coach, in the industry shows you how to win.
One person who KNOWS what shoppers want is Mary Meeker. Meeker is the leading expert on the internet and each year she publishes her Internet Trends report. The past sixteen years Meeker has presented her findings to the industry. She has been and continues to be uncannily accurate. She predicted the rise of Google and Amazon, the growth of Chinese technology, mobile, video, and gaming. She is a business intellectual legend. Local business owners should pay attention to what Meeker is telling them.
“Amazon stunned analysts and industry watchers in 2014 when managers paid $970 million cash to buy Twitch. The three-year-old streaming site had only 55 million users at the time and catered mostly to people who watched others play video games. The fit with e-commerce escaped most observers. Gaming is the natural evolution of sport for a generation raised with PlayStation and Xbox consoles. It’s also a purely digital experience ripe for transformative business models built in the cloud. Researchers found that 69% of players made in-game purchases, spending an average of $84.67 per year and generate billions in revenues.”
Everything will migrate to the cloud. Cloud infrastructure is dominated by Amazon Web Services, Microsoft’s Azure, and Google Cloud.
Meeker concluded that Amazon, Microsoft, and Google will control the cloud and therefore the future.
“Amazon, Alphabet and Microsoft trade at 48x, 20x and 26x forward earnings, respectively. While that may seem expensive, the best part of their business expansion is still ahead as enterprises move more workloads to the cloud.”
IGNORANCE #3: Any local business owner who doesn’t take the time to understand what Mary Meeker is saying has given up. I know it sounds harsh but the TRUTH is often harsh. I want local businesses and local communities to THRIVE. I want them to see reality, swallow hard, and fight back.
Don’t advertise.Local businesses should stop traditional advertising. Meeker is clear about Google and Facebook controlling advertising. Who shows up in digital ads and Google search are the companies that PAY the most money. Local businesses cannot compete and should STOP advertising. Think of it this way. You walk into a smoky backroom gambling parlor and everything playing cards is a card shark. If you play you are going to lose.
Make video the key to reaching local shoppers. Local is about PEOPLE. Local businesses can let shoppers know about them by making fun and authentic homemade videos.
Learn how to collect and use data. Go back to IGNORANCE #2: Amazon’s success is built around its customer list. Local businesses need to build their customer lists, communicate and collect data. The more data the more targeted the communication.
Communicate with shoppers who are connected 24/7. If you have built your list then you can communicate. No list. No communication. Learn from Amazon.
Don’t trust social media. Here’s a surprise finding from Meeker. Social media is increasingly toxic. Instead of trying to get popular in cyberspace become more real in person. Your customers will love you for it.
Understand shoppers need for social responsibility. You’ve all seen the powerful Shriner’s commercials asking for monthly donations, ASPCA the same, ditto for Wounded Warriors – people genuinely care about others. Shoppers care about local. Local starts with local businesses working together. In fact, The most powerful local business strategy is working together.
It would be simple to say the Tech and Retail Giants are killing local businesses. It just wouldn’t be true. The local business owner’s ignorance and denial are the two driving factors behind the death of local businesses. If and when, local business owners realize they have the power to control their own destinies they will discover a MASSIVE opportunity.
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Advertisers spend the most money on digital advertising ($111 billion per year). Digital advertising spend is the fastest growing advertising segment. Google and Facebook control 90% of digital advertising. 60% of digital advertising is fraud. George Simpson in his article, Is Ad Fraud Inevitable? writes,. “Agencies and brands simply write off fraud as the cost of doing business online. That is, until someone comes along and says, you know, you’re wasting 60 cents of every dollar, or calculating that every ad dollar lost to fraud costs.”
So today’s research fact reveals after the fraud comes the CLICK. Overall consumers click .09%. (See the above chart)
We can now create a digital advertising algorithm to help us understand what is going on:
Pay to reach 1,000 shoppers online
60% fraud = reach 400 shoppers
REACH – .36 shoppers after spending to reach 1,000
Pay $45 per click. Not sale. Not customer. But click.
Local Media: Local media has tried to compete by switching to digital advertising. This has proven to be a catastrophic mistake. Local media trying to compete digital advertising is like the local high school basketball player trying to play against LeBron James, the NBA superstar.
Take a look at the chart of America’s monopolies and it is not difficult to understand the the issues facing local businesses – the playing field is rigged.
Emily Stewart writes, “From cellphone providers to beer to cat food, consumers have a lot fewer choices when it comes to buying — even if they don’t know it.” Emily Stewart and America’s monopolies
Stewart shows that the big companies have gotten bigger over the past fifteen years.
In the capitalist system that is what they are supposed to do. However, local businesses have failed to see, no less understand, the threat the growing monopolies pose to their survival and success.There are 28 million local businesses in America. The 2019 Department of Labor Statistics confirms what everyone instinctively already knows – local businesses are under threat. The cause is clear – shoppers have shifted their buying to online and local businesses have not responded. Amazon has 50% of e-commerce and grows stronger daily. Jeff Bezos, the founder of Amazon, ominously warned all local businesses, “Your margin is my opportunity.”
The bigger companies become the tighter control they place on wages, working conditions, and advancement. Small local businesses NEED employees and focus on increased wages and advancement in order to grow their businesses.
Stewart writes, “In more traditional sectors, such as hardware stores, tobacco, and railroads, concentration is on the rise. And in technology-related fields, including smartphones, social media, and cellphones, in just in the past five or so years, it’s even higher.”
Think of monopolies as movie studios that buy up scripts to keep them off the market. The bigger a company becomes the more it needs to grow. Growth comes from gobbling up competitors.
The #1 fact about monopolies is that as they take dominance in market share they use that power to drive up prices.The New York Times and how monopolies drive up prices. Competitors drive down prices because their battle ground is efficiency and innovation. Monopolies drive up prices because there is no battleground. Steward writes, “The fewer options there are, the fewer places consumers have to shop for goods and services, and the less pressure for competitors to keep prices down.”
The big three monopolies are Amazon, Google and Facebook.
Let’s focus on Amazon which is earning an estimated $187 billion per year. Jeff Bezos is brilliant and his team the best. These top of the food chain capitalists have rigged the game. Amazon is smart and their focus is growing market share at the expense of every other business in the world.
Amazon’s retail strategy is to enter a business and use its technology and processes to make selling and delivery of products better, faster, and cheaper – AT FIRST. Amazon uses lower prices to drive out competitors . Once Amazon has market dominance it increases prices. This behavior is what monopolies do.
Consumers don’t care about monopolies and their impact on local businesses but they should. Monopolies take money out of local communities.They have been convinced that convenience is important than choice. A belief that will come back to haunt them as local communities become ghost towns where stacks of Amazon boxes on front porches. Keep in mind that local communities need revenue to support schools, infrastructure, parks, trash pick, and all the other things that make local communities thrive and a place to live.
FACT: Amazon and the other monopolies take the financial lifeblood away from local communities.
Amazon is destroying media companies. The destruction goes from the biggest television companies, movie companies to the local newspaper in tiny communities.
How and why are they doing it?
The Amazon Battle Plan for destroying media companies:
1. Cut off their revenue streams
2. Use its 105 million list of Prime Members to offer advertisers better response rates
3. Give advertisers access to the 55% of all online shopping searches that begin on Amazon.com
4. Sell products like Alexa, smart homes, and security system at incredibly Low Prices in order to take control over the future of shopping – i.e. voice-based search and AI driven “suggestions” for home and entertainment
Amazon can afford to invest in destroying media companies because it is the most successful company in the world, run by Jeff Bezos, the richest person in the world. We all know Amazon as the online e-commerce site that controls over 50% of everything that is bought and sold online. It may seem a bit like a “tinfoil hat” conspiracy to think about Amazon as the big bad media company.
Why would Amazon want to destroy media companies?
Amazon’s Hidden Strategy: Amazon wants to destroy media companies because it has a hidden strategy a to become the largest global media/commenications company.
Guess what? It already is. Amazon is the world’s biggest communication’s company: “Amazon has movies, TV stations, cable streaming, music, and direct communication with over 105 US households and will soon bypass ALL of cable television. Not one cable channel but ALL of them together. Staggering concept. But wait! They also own the Washington Post and they just bought MSG Cable Network.”
Amazon isn’t some big bad company that is taking over media through deception or fraud – Amazon is taking media and communications because its executive leadership is smarter than the executives running most media companies. The major exception would be Disney, whose leadership is outstanding.
What makes Amazon’s executives so smart is they are focused on reality and facts. When Bezos runs a meeting everyone is handed a 3-6 page type analysis of the problem to be discussed.
Everything STOPS. Everyone in the meeting spends the next 30 minutes reading. The meeting is then run with everyone, literally and figuratively, on the same page. Most media companies aren’t run that way.
Fox Business News reports that Amazon has become so powerful it is “Stealing Market Share From Facebook and Google and is a threat to all traditional media companies.” Fox News continues, “It wasn’t that long ago that all the talk in the digital advertising market was centered on the duopoly of Facebook (NASDAQ: FB) and Google, a division of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG). In late 2017, Digital Content Next reported the pair would account for about 63% of online advertising in the U.S. last year, with Google nabbing 42% and Facebook garnering 21%. Even more telling, Brian Wieser of Pivotal Research Group estimated that the two companies accounted for 90% of the growth in the U.S. digital ads industry in 2017.”
So here is how those focused Amazon executives are destroying media companies – they RECOGNIZE and RESPOND in REAL-TIME to TRENDS & FACTS.
Before we detail out how Amazon is destroying media and communications companies it is important to look at its PRIMARY ADVANTAGE. Amazon uses its e-commerce division to attract shoppers.
Amazon has over 105 million Prime Members105 million Prime Members, 55% of all product searches, and its growing grocery and fast food stores to offer shoppers AMAZING DEALS. Amazon doesn’t care about losing money – they want to grow their LIST of shoppers.
Data. Amazon has better data than Google, Facebook, and ALL other media and communications companies. Googgle and Facebook’s data is about views and clicks – Amazon’s data is about PURCHASE. Advertisers want to know about who’s buying what. Local and national media companies don’t have the data.
Voice-Based Search. Amazon, with its 35 million Alexa voice assistants, already controls this communications channel. Amazon is so far ahead of the voice trend in terms of advertising revenues that media companies don’t stand a chance.
Smart Home. From speakers to thermostats Amazon is communicating with consumers. Advertisers want targeted ads – Amazon is so targeted they know what music you listen to, how cool you keep your home, and when you are home.
Cloud computing. Amazon is streaming EVERYTHING – music, movies, books, and podcasts. Ditto on Better Data.
THE CONSEQUENCES OF AMAZON DESTROYING MEDIA COMPANIES:
As more media companies go out of business because of Amazon – Amazon gains greater control of what news Americans receive. With or without political bias, Amazon will homogenize the news. American democracy is based on many different points of view. If Amazon wins – there will be the Amazon point of view.
Each year Mary Meeker reports on Internet Trends and often predicts what can be expected in the coming years. This year is no exception.
1. U.S. adults spent 5.9 hours per day on digital media in 2017, up from 5.6 hours the year before. Some 3.3 of those hours were spent on mobile.
ANALYSIS: The more time people spend online the more power the tech giants gain. Recent articles (The Tech Giants Covert Actions) show the main focus of the tech giants is 24/7 surveillance, censorship, and manipulation. The tech giants engage in these three things to drive revenues. They want to know everything people in order to sell targeted advertising. They censor companies and ideas because they seek to promote products, businesses and ideas that support their global revenue agendas. They manipulate in order convince shoppers to spend more time and money on the products they promote and to view the advertisers who pay them to appear on their platforms.
2. Voice-controlled products like Amazon Echo are taking off. The Echo’s installed base in the U.S. grew from 20 million in the third quarter of 2017 to more than 30 million in the fourth quarter.
ANALYSIS: Voice-controlled products all share one common feature – they limited their response to queries to those companies that are paying the most to the tech giant offering them. Voice-controlled products are NOT benign. The tech giants goal is to make people more passive and therefore susceptible to their surveillance, censorship, and manipulation
3. Tech companies are becoming a larger part of U.S. business. In April, they accounted for 25 percent of U.S. market capitalization. They are also responsible for a growing share of corporate R&D and capital spending.
ANALYSIS: The tech giants are already monopolies. Like all monopolies they cannot help but want to grow.
4. E-commerce sales growth is continuing to accelerate. It grew 16 percent in the U.S. in 2017, up from 14 percent in 2016. Amazon is taking a bigger share of those sales at 28 percent last year. Conversely, physical retail sales are continuing to decline.
ANALYSIS: Just think of the growth of online sales as a loss of local business sales. Ditto for Amazon’s share.
5. Big tech is competing on more fronts. Google is expanding from an ads platform to a commerce platform via Google Home Ordering. Amazon is moving into advertising.
ANALYSIS: Refer to the innate philosophy of all monopolies. These five points are interwoven. The bigger tech giants become the more capital they have to expand into new services and products which leads to people spending more time online. The more they expand the greater their surveillance, censorship, and manipulation. The cherry on top is voice-controlled products whose sole function is to support the revenue goals of the tech giants selling them.