I was speaking to a friend recently about Amazon and they basically had a fangirl moment about the brand. That’s what you get when you work in technology I guess.
However, what really struck me is that they are not considering any potential impact about mass disruption by a single brand. Disrupting a single industry is fine, as monopolies within single industries happen all the time and regulators find it easier to manage or restrict that. Amazon has the potential to disrupt about a thousand separate industries, which frightens me a wee bit.
With this in mind, when I saw this great article about the industries that Amazon can’t take over, I wondered if we should be worried at all.
We should be worried.
I might be a pessimist at heart or at least someone who looks at things through a slightly skeptical lens.
What happens when there is little or no competition in the market? The consumer suffers.
We saw this in the taxi market across the region, with incumbents being lazy and then utterly surprised that no one liked having a bad taxi experience with little or no effort to improve. With that in mind, Blue Bird in Jakarta needs to be applauded for improving their service and really stepping up their game after Grab, Uber, and Go-Jek tried to rain on their parade.
Service standards drop, pricing becomes a problem and you can pretty much forget about customer service and experience.
Amazon has a reputation for great service, quick response, and innovation, but looking ahead 20 years in the future and are we confident it would continue to do the same?
I am not foretelling a dystopian world where eCommerce is pretty much Amazon, but it is a bit troubling that we’re seeing a global hostile takeover of thousands of companies at the same time.
We shouldn’t be scared
Well, make up your mind damn it.
We hopefully live in a free market or at least as close to a free market as possible. That means we’ll never have a situation where a monopoly can exist for a long enough period of time to negatively impact me, the consumer.
At least I hope so.
So then why are we even talking about this?
Well, because Amazon will want to take over the market in all aspects. Just because it is unlikely doesn’t mean they won’t try. And the harder they try, the more difficult it is for new entrants and smaller incumbents to stay in the fight.
To be honest, Amazon is more of an analogy or example, rather than the villain. I like Amazon, but love choice and better options. I can’t imagine a world with a single telco, single phone brand, and a single online store.
Maybe that’s why I am falsely confident that the market will adapt and prevent this from happening.
Is there anyone who should be worried?
If you’re an eCommerce marketplace in Southeast Asia, then yes, you should be afraid.
Amazon has shown they are more than happy to spend an inordinate amount of money to get market share and damn it, as a consumer I love that.
Prime Now is basically setting the groundwork for an online offensive and everyone knows it. I’ve had conversations with folks in the industry and there is some form of resignation that their businesses will suffer, while the real naysayers are polishing up their resumes and sending them over to Amazon right now.
However, I’ve seen a few players enter the market and try to differentiate, which I think adds value. Lazada and co. launched LiveUp, their version of Prime membership for Amazon. I am a happy customer, but I know I am not that brand loyal anyway.
It will be tough for a while, though I honestly believe Amazon will not enter niche markets and specialty verticals for a long time. That leaves a lot of opportunities for brands to enter the market and then chip away at Amazon’s dominance.
Conclusion
I recommend cautious optimism for now, but let’s all keep a close eye on Amazon.
The landscape in the region is currently crowded, so we’re going to see change and consolidation in the eCommerce market anyway. The weaker players will fall and the dominant brands will rise to gather the spoils.
So as we see brands rise and fall, we’ll see the behemoth Amazon make plays. No one knows what they are yet, but that’s what makes this industry interesting.
There is no certainty in eCommerce.
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Last edited 29 September 2020