Amazon Dies: A Possible, Maybe Likely Future(markatwood.substack.com)
markatwood.substack.com
Amazon Dies: A Possible, Maybe Likely Future
https://markatwood.substack.com/p/how-amazon-dies-a-possible-maybe
3 comments
Several good insights, compelling if true.
The problem:
"An American consumer wants a German duvet cover, 130x200 cm. They go to Amazon. They get four pages of Chinese-manufactured polyester comforters keyword-stuffed with every bed size ever conceived by humanity. The sponsored listings at the top are for products that share no meaningful attributes with what was searched. The organic results, if you scroll far enough to find them, are identical in kind if not in degree.
This is not a search failure. Amazon’s search works exactly as intended. The intent is not to return what you asked for. The intent is to return what someone paid to show you.
Every subsequent problem in Amazon’s retail business is downstream of that choice, and the choice was rational at every level of the org chart."
The threat: "The threat to Amazon’s retail search isn’t a startup. It’s Grainger. W.W. Grainger sells industrial and MRO (maintenance, repair, and operations) supplies to corporate and institutional buyers. Roughly 1.7 million products. Catalog search that returns what you searched for, because the customer is a procurement manager with a part number who will immediately go elsewhere if the results are wrong. Grainger doesn’t sell sponsored placements above the right answer. Grainger’s business model depends on the right answer appearing first. They have existing distribution relationships, existing shipping infrastructure, existing corporate account relationships, and a search product that works because their incentive structure requires it to work."
After a long and detailed analysis, the bottom line on what Amazon businesses survive:
"Prime Video survives. Content lock-in is real. The subscriber base that stays for The Boys and doesn’t care about retail benefits is real, and it’s underrepresented in how people analyze Amazon’s decline narrative.
What doesn’t survive at current scale: the everything-store growth story, the AWS infrastructure dominance thesis, the 33% cloud market share trajectory, the Bedrock-as-AI-moat narrative, the $2 trillion valuation multiple."
The problem:
"An American consumer wants a German duvet cover, 130x200 cm. They go to Amazon. They get four pages of Chinese-manufactured polyester comforters keyword-stuffed with every bed size ever conceived by humanity. The sponsored listings at the top are for products that share no meaningful attributes with what was searched. The organic results, if you scroll far enough to find them, are identical in kind if not in degree.
This is not a search failure. Amazon’s search works exactly as intended. The intent is not to return what you asked for. The intent is to return what someone paid to show you.
Every subsequent problem in Amazon’s retail business is downstream of that choice, and the choice was rational at every level of the org chart."
The threat: "The threat to Amazon’s retail search isn’t a startup. It’s Grainger. W.W. Grainger sells industrial and MRO (maintenance, repair, and operations) supplies to corporate and institutional buyers. Roughly 1.7 million products. Catalog search that returns what you searched for, because the customer is a procurement manager with a part number who will immediately go elsewhere if the results are wrong. Grainger doesn’t sell sponsored placements above the right answer. Grainger’s business model depends on the right answer appearing first. They have existing distribution relationships, existing shipping infrastructure, existing corporate account relationships, and a search product that works because their incentive structure requires it to work."
After a long and detailed analysis, the bottom line on what Amazon businesses survive:
"Prime Video survives. Content lock-in is real. The subscriber base that stays for The Boys and doesn’t care about retail benefits is real, and it’s underrepresented in how people analyze Amazon’s decline narrative.
What doesn’t survive at current scale: the everything-store growth story, the AWS infrastructure dominance thesis, the 33% cloud market share trajectory, the Bedrock-as-AI-moat narrative, the $2 trillion valuation multiple."
1) Inventory is highly accurate.
If Amazon says the product is available, it most likely is. Not true with WalMart.
2) The quantity of available goods is extensive.
You can buy just about anything from Amazon --- even a house or a car. Not true with Grainger.
3) Delivery is not as accurate but still beats the competition.
They can put the goods on your doorstep faster and for lower shipping cost than most others. Less than the real cost of driving to Walmart only to discover that the product their web site said was available there is not there.
Bringing all of this together is not easy. Yes, Amazon has issues but the competition has bigger ones.