vs Amazon

I had an interesting conversation with a start-up founder recently, one whose business had received multiple rounds of funding and is scaling well. Our chat soon moved into listing on Amazon/other horizontals, and I was reminded of my post from earlier this year – The Shrinking Shelf Life of Ecosystems. I had written how the advantages of dominating the triumvirate – distribution, product and brand – now have a shrinking shelf life.

I had taken DTC brands as an example of this. But while that is relatively true and there are enough unicorns around, in absolute terms, the distribution might of Amazon and other horizontals continues to be formidable. In this insightful post – Bonsai Brands – Simon Andrews explains that while it might be “easy” to get about $50m, the journey to $100m and beyond gets tougher because efficiencies start maxing out. They could remain viable businesses at a certain scale.

But VC money has different expectations, and that’s where listing on Amazon etc starts becoming a conversation. Especially when Amazon sees DTC brands as a part of its relentless march towards being the “everything store”.  IMO, that’s the beginning of a systematic slide towards losing all advantages accrued thus far, and becoming a commodity. But that’s a different post!

My thoughts were on what a competitor to Amazon’s increasing dominance would be like. I think it’s going to be near-impossible to out-Amazon Amazon! But both Facebook and Google have their own paths moving inevitably towards a collision. The former, with commerce on its own platform, Instagram and Whatsapp, and the new play -Libra, and the latter sneaking in on domains like flights, and steadily building Maps as a “super app”!

I had a few other thoughts too – a v2 of a Unilever or P&G that would create a house of brands, a holding company if you will, with a distribution-product-brand strategy that factors in the new rules of the game, and also leverages existing economies of scale. But that, I think, is wishful thinking. I even thought of a VC model which could build a structure of verticals and horizontals – the former being front end businesses and brands which handle core areas like product, brand and marketing, and the latter consisting of infrastructure – distribution, tech, logistics and so on.

However, as always, Ben Thompson introduced a great perspective on this  – Shopify, which is a platform as opposed to Amazon, which is an aggregator. Do read the post for the really interesting detailing of this premise.

But if I had to really bet on a good fight, it would feature WeChat, the big daddy of super apps – messaging, commerce and payments for everything from banking to food delivery, mini-programs, O2O, games and utilities – the depth and breadth is astounding (a quick primer). Of course, privacy concerns are equally concerning, especially since the playground is China, but the concept is already being replicated by Grab, Go-Jek, Line etc.

It has all the makings of an East vs West classic!