The Value Chain Constraint(stratechery.com)
stratechery.com
The Value Chain Constraint
https://stratechery.com/2019/the-value-chain-constraint/
9 comments
yes that’s basically it, it’s outside their core competency, not with tech/r&d/product but with the value chain.
amazon knows how to source, warehouse and deliver non-perishibles, but groceries (perishables) require a different, more urgent value chain that doesn’t build on their existing expertise. they effectively need to build a parallel business (which they jump-started by buying whole foods).
with google, it boils down to “google sucks at sales and service” (value delivered outside technological expertise).
this is a high-level initial analysis (as you’d do in an mba strategy class), which is probably why it feels generic. you’d typically delve deeper into the leverage points, like logistics for amazon and sales and marketing for google.
amazon knows how to source, warehouse and deliver non-perishibles, but groceries (perishables) require a different, more urgent value chain that doesn’t build on their existing expertise. they effectively need to build a parallel business (which they jump-started by buying whole foods).
with google, it boils down to “google sucks at sales and service” (value delivered outside technological expertise).
this is a high-level initial analysis (as you’d do in an mba strategy class), which is probably why it feels generic. you’d typically delve deeper into the leverage points, like logistics for amazon and sales and marketing for google.
His more abstract posts usually come together more for me after listening to his podcast (Exponent).
I'm not sure what parts of a value chain a business controls and core competencies are the same thing.
> What does work are (1) forward and backwards integrations into the value chain and (2) acquisitions.
He's saying that no matter what your core competencies are, no business can adapt to an entirely new value chain. At best they can hope to acquire a company with the right business model, or integrate further into an existing value chain (Netflix, moving into content creation and distribution).
I'm not sure what parts of a value chain a business controls and core competencies are the same thing.
> What does work are (1) forward and backwards integrations into the value chain and (2) acquisitions.
He's saying that no matter what your core competencies are, no business can adapt to an entirely new value chain. At best they can hope to acquire a company with the right business model, or integrate further into an existing value chain (Netflix, moving into content creation and distribution).
How does Ben Thompson know that Microsoft Azure holds the second position in the cloud market? Even though they are growing substantially according to their earnings call, Microsoft doesn't disclose what the numbers are for Azure. They only release it their numbers for Cloud, which includes a lot of products
Amazon shared Gartner's ratios at their last Re:Invent: https://youtu.be/ZOIkOnW640A
AWS: 51.8% Azure: 13.3% GCP: 3.3%
AWS: 51.8% Azure: 13.3% GCP: 3.3%
From what I understand, azure includes a lot of office 365 customers.
fwiw -- i'm a very happy customer of amazon fresh. just an hour ago i received a $100 delivery (+tip). I think the $15/month subscription fee (on top of the amazon prime annual fee) is pretty steep though. But it's still worth it for me.
I live in the city and don't have a car, and grocery delivery is a huge benefit for me. I remember several years ago, I'd take a $30 uber ride to my preferred grocery store, buy ~$100 worth of groceries, and charter another $30 uber back. the extra transportation cost + the physical hassle of lugging all those groceries around, is something I never hope to repeat again.
I live in the city and don't have a car, and grocery delivery is a huge benefit for me. I remember several years ago, I'd take a $30 uber ride to my preferred grocery store, buy ~$100 worth of groceries, and charter another $30 uber back. the extra transportation cost + the physical hassle of lugging all those groceries around, is something I never hope to repeat again.
How does that compare to something like Instacart, or other delivery options? Curious if you've tried them.
Never tried Instacart.
Giant (a grocery chain) has a delivery service called PeaPod. I used it a couple times. Selection wasn't as good, delivery times weren't as flexible.
Giant (a grocery chain) has a delivery service called PeaPod. I used it a couple times. Selection wasn't as good, delivery times weren't as flexible.
I know there's something else he's trying to say, but all I read is "it's outside of their core competency".