Big four: chronicle of a success5 reading minutes

Le Regard Libre N° 45 - Nicolas Jutzet

They're everywhere, they're in the news: they're the GAFAs. Short for Google, Amazon, Facebook and Apple. Yet, apart from generalities, they are generally little-known. Google, for example, is much more than a search engine: it runs Youtube and the Android mobile operating system. Their influence is often sprawling. We invite you to take a closer look at the players who are shaping our society, and will continue to do so in the years to come.

Amazon: the big one

In his bestseller The four, Scott Galloway, a professor at New York University's Stern School of Business, reminds us of a figure that should concern us all: «44% of U.S. households own a gun and 52% subscribe to Amazon Prime», Amazon's premium offer that enables users to benefit from advantageous deals. It is widely used and profitable, with premium members purchasing 140% more than customers. lambdas on the site. So Amazon's citizen lobby is stronger than its gun lobby. But what if this is just the beginning?

The first particularity of these different players is that their core business is diametrically opposed to established players. The GAFAs are revolutionizing entire sectors, like a bulldozer intent on wiping the slate clean. The problem facing their competitors is that the boundaries of this competition are changing radically. In the physical market, going out to find new customers, producing one more unit, is inevitably linked to a marginal cost that increases over time, the reservoir of either being by definition limited.

In this new, digital world, acquiring a new customer or selling a new Amazon Prime subscription is in no way limited by these rising marginal costs. On the contrary, they are decreasing, and the marginal contribution of a new member is even equivalent to increasing the value of the community. In the end, we're heading towards a general trend towards monopoly, as the winner pockets the whole market and is encouraged to silence all competition. And this is thanks in no small part to the pact pocketed by this dominant position, enabling him to buy up any new start-up that might even partially challenge his hegemony. This is what Jeremy Rifkin theorizes in his book The new zero marginal cost society:

«We are witnessing doomsday in retail. Just as we've witnessed the proportion of farmers in the population decline from 50% to 4% in a century, over the next 30 years we'll see a similar decline in retail.»

Visit storytelling

A company's success depends on many factors, not least the undeniable charisma of its founder. Jeff Bezos' charisma is undeniable. Year after year, he manages to convince people that the next venture will be even better than the last. This way of selling himself is convincing, to say the least. This easy contribution of cash gives your company unparalleled freedom of action.

And yet, as Scott Galloway reminds us, this is by no means a natural reality. «Amazon has conditioned Wall Street to treat it to a particular standard, i.e. to accept that its growth is stronger, but its profits are lower. In other words, a total disregard for investors» short-term needs to satisfy long-term objectives." Above all, it's the promise of a brighter tomorrow that motivates investors. Why so much confidence? Because the outlook is bright, and the current model continues to grow. 

Whole Foods Market, the cloud, Echo, the way forward

While the general public still sees Amazon as an online retailer, the company has slowly but surely become a leading player in many other fields. The most interesting is its cloud service Amazon Web Services, Amazon Echo, which enables businesses and individuals to store their data online at low cost. Another promising service is Amazon Echo, its intelligent personal assistant, offering interaction with a voice that answers to the name Alexa. This service can be used to activate smart objects, start playback of an audio file, and so on. playlist or to place an order on Amazon. With these two projects, Amazon has moved into your living room, and now possesses massive amounts of data that will enable it in the future to respond precisely to your needs, and even predict them.

What's more, far from limiting itself to its online presence, Amazon is extending its physical influence. The future is ’unichannel«: online sales and physical sales will become one, happily complementing each other. In this particular case, this trend is materialized by the arrival of Amazon booksellers in the United States and the takeover of organic supermarkets Whole Foods Market, which should enable Amazon to test its capabilities, including data analysis, in the real world. All these announcements are causing the other behemoths to tremble, such as Walmart, the largest private employer in the United States.

«In retrospect, Amazon's retail platform may simply have been the Trojan horse that established the relationships and brand, later monetized by other activities.»

Scott Galloway

And in Switzerland?

In early 2018, La Poste and Amazon announced a forthcoming partnership. This news confirmed the giant's definitive arrival in our country. Previously, Swiss consumers had to go through the French, German or Italian platform. Without, however, being able to take advantage of the entire catalog. This development raises a number of questions, particularly for local retailers. Payot and its unusable website are constantly denouncing this agreement, via its truculent boss Pascal Vandenberghe. The maneuver is crude. For the consumer, it's certainly good news. However, since the announcement in question and in the face of numerous political reactions from all sides, the amazon.ch site has still not gone online.

It should also be noted that in our country, the arrival of discounters such as Aldi or Lidl have by no means revolutionized the market. It's a safe bet that the loyalty of Coop and Migros will also stand up to any expansion in this area. Initially, however, Amazon will be competing in its traditional role as an online retailer. The market is already very tense: created by Swisscom and Coop, the Siroop.ch platform, which saw itself becoming the equivalent of Amazon in Switzerland, will close at the end of the year.

Write to the author: nicolas.jutzet@leregardlibre.com