The Rigged Retail Playing Field

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.” Retail Business Failures

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.

The financial advantage goes to the bigger company.  The problem is then reflected in weak personal income growth because entrepreneurs are being pushed out of the game. The New Times review of the impact of monopolies

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.Money Stays in LocalThey 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.

How Amazon is destroying media companies

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.
  • Shoppers have changed.  Instead of looking at ads, 90% of shoppers begin the buying process by using their smart phones to search.  Guess what, 55% of all product searches begin on Amazon.
  • 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.

Facebook quickly becoming as dangerous to local business as Amazon

Facebook is entering the home services market Facebook goes after local business. Starting today, U.S. Facebook users browsing the Facebook Marketplace will be able to search thousands of home service professionals through a new feature that helps users locate top-rated and vetted professionals like house cleaners, plumbers, contractors, and others, as well as receive quotes.

THE NET-NET. FACEBOOK GAINS DIRECT CONTROL OVER LOCAL SERVICE PROFESSIONALS. JUST LIKE AMAZON, WHO FACEBOOK USERS FIND WILL BE DIRECTLY LINKED TO HOW MUCH $$$$ EACH LOCAL SERVICE PROFESSIONAL SPENDS WITH FACEBOOK. Facebook after local businesses

When users click on one of the prompts, they’re walked through a form to fill out other relevant data in order to find matching home pros. The service pro who follows up will respond on Messenger.

THE NET-NET. FACEBOOK DIRECTLY CONTROLS THE CUSTOMER/SERVICE PROFESSIONAL INTERACTION. FOLLOW THE MONEY.

Amazon expanded into this category several years ago with Walmart quickly following.

THE NET-NET. LOCAL COMMUNITIES DON’T PROSPER. MAIN STREET BECOMES A GHOST TOWN. ALL THAT WILL REMAIN ARE THE TECH GIANTS AND THE GIANT RETAIL CHAINS.

Amazon wants to totally control local retail

Business Insider reports, Amazon accounts for 43% of US online retail sales.  An analysis by Slice Intelligence released found that 43% of all online retail sales in the US went through Amazon in 2016, as the e-commerce giant’s market share continues to grow.  According to the study, which analyzed more than 4 million online purchases, Amazon accounted for the majority (53%) of the growth in US e-commerce sales for the year.

Amazon is a great company and a great business and yet as great as it is, it is always dangerous and destructive.  The six million local retailers cannot compete with Amazon UNLESS they learn to compete in ways that Amazon cannot.

Amazon is convenient and impersonal.  Local businesses are convenient and personal.  The key is for local business to learn to use real-time coupons and direct-to-shopper communications.  This means enrolling in-store shoppers with direct communication tools of real-time email and text.