It’s a given that the pandemic has been good for the tech giants. The entire GAFAM group, Google, Apple, Facebook, Amazon, and Microsoft have seen profits continue to surge. Apple, Alphabet and Microsoft made $57bn of profits in the last quarter. Alongside this group, other players like Alipay have joined them in leaning on network effects to grow bigger and faster to increase their stranglehold on the market.
There’s a certain belief that we are witnessing something new in the world, with the digital era differentiating today’s tech companies from the ones of the past. Yet, most of these businesses have mirrored monopolies of the past in growing to the same size. Market domination has come at the expense of the best outcomes for customers. In losing sight of the customers’ best interests, have they sown the seeds of their own destruction?
The reality behind adverts
When I first joined Amazon in the UK, I was one of just a few hundred employees. I loved the early rebellious attitude of Amazon. The business portrayed a customer-focused idea of creating one shop with everything, challenging the notion you had to visit multiple retailers. Over time, however, this dream blurred and became focused relentlessly on advertising models, own-brand offerings, and logistics. Being inside that bubble, it is easy to mistake being efficient with serving the best needs of the customer.
I often hear people say Amazon puts the customers first, but I think this is rather a subjective perspective than real first-hand insight. The reality is different, and there is a growing cohort of D2C brands, independent retailers and smart technology platforms that delight shoppers with unique experiences, as opposed to Amazon’s relentless focus on the bottom line.
Amazon dominates the market with its name recognition. Yet, 75% of the products above the folder are either adverts or Amazon own brands. This means Amazon is showing you what they want you to see, not the other way around. While Amazon and JD focus on delivery, Klarna and Alipay are battling for a share of the checkout. In reality, the actual needs of the shopper and the customer experience are being forgotten.
Illusion of choice
Meanwhile, shoppers visiting Google’s results page will find it difficult to differentiate a paid ad from organic content. The latter is often organic in name only. Search engines no longer show the ‘green Nike air force 1” but a collection of the bigger advertisers and the best SEO departments. It is an illusion of truth. Shoppers waste time and energy trying to navigate duplicate products, incorrect variations, and text ads to generic pages, and all of this is not working in the interests of the consumers. They are not being shown a true picture of their options.
Broken rating systems
The notion of ‘truth’ is completely lacking from the totally broken rating systems, now being investigated by the CMA. There are a plethora of services reviewing retailers, however, most shoppers still end up turning to product reviews online. At best, they struggle to find comfort – at worst, customers are completely unaware of the mix of incentivized reviews, corporate espionage, or comedians trying out new material that influences their buying choice. In parallel, providers are able to offer ‘trusted’ reviews for your product for the right price.
A vote from a friend is worth 100 anonymized reviews. When shoppers need advice or a recommendation, it should be easy to turn to friends, family, or experts to guide them. For example, social commerce could and should be layered onto a trusted source of product and offer information that is easy to share amongst peers.
The truth is – online shopping is broken, stitched together by product-broken information distributed by various retailers, brands, technical providers, and platforms. This lack of accurate consolidation leaves shoppers having to scour the internet across a myriad of retailers and opening up multiple tabs on their browsers.
Time for radical change
At the heart of the matter, the big platforms have simply been allowed to grow unwieldy. They have the power, not the best interests of the shoppers or the retailers. If you recall your last purchase on Amazon and can’t remember who sold the product, bear in mind that is a problem for every brand, retailer, and independent which filters down to the shopper.
In order to address this disparity, we need to challenge the monopolies that seem to have lost sight of their customers. Not every brand has the financial muscle to be able to step back from marketplaces as Nike did in 2019 when they withdrew from Amazon. Retailers and brands should be exploring new partnerships to move from the landlords that they have created, whilst, in parallel, regulators need to play their part.
Single source of truth
The keys to the future are in our hands. We have reached a critical juncture in technology. The huge capex to fill a skyscraper with servers has become an apex to leverage cloud computing and huge data sets. We can now begin to curate the single source of truth and a universal view of shopping for the first time, challenging the monopolies. The democratizing ability of the internet can be realized.
The covid pandemic has bought the world closer to home, and we are now at the intersection of low-cost and scalable technology; talented remote teams across the globe; demand from brands and retailers; and a booming investment landscape to turbo-charge the emerging band of startups determined to change how we shop online. There are two business models that refer to ‘users’ – Tech and Drug Dealers. It’s time to recognize that ‘shoppers’ deserve better and start a customer-focused revolution in e-commerce.