With this being the last Friday in 2017 we’re taking the week off from the usual weekly interview, but we’ll be back next Friday to kick off 2018. And speaking of 2018, my Watching Amazon partner John “ColderIce” Lawson and I wanted to see which company would give Amazon a run for their money in the year ahead.
Who Will Be Amazon Competitors in 2018?
So we dedicated an episode to looking at the relationship Amazon has to companies like Apple, Facebook and Google, how those relationships have changed over the years, and which one of these companies is positioned to most effectively compete with Bezos & Co in ecommerce, cloud computing, conversational interfaces and anything else.
Below is an edited transcription of our conversation. To hear the full conversation watch the video below or click on the embedded SoundCloud player. And see you in 2018!
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Small Business Trends: If you’re watching Amazon, you’re watching Google. You’re watching Facebook. You’re watching Walmart. You’re watching all these companies as they react to what Amazon is doing. Particularly when we look at the Facebook/Amazon/Google dynamic.
John Lawson: The Big Three.
Small Business Trends: You mentioned that before, they used to all seem to have their own turf, but now there seems to be some poaching going on.
John Lawson: The Big Three, back in the day, not very long ago, there were some very well-defined towers of expertise. Google was all about search. Amazon was all about ecommerce and Apple was all about devices and operating systems…
Small Business Trends: … And themselves.
John Lawson: Amazon, I really think, has driven a market strategy that has encroached into everybody’s stuff and now they’re all competing against each other in a very unique way and I think Amazon was the real driver behind that.
Small Business Trends: I think you’re right, but I think the last straw that has changed the game is the success of the Echo device because that was something that nobody saw coming. It was a category that pretty much really didn’t exist. You could say maybe in the last 18 months that the tide turned and people were like, “Well, this thing is pretty cool.” You started seeing more skills being developed. You started hearing more chatter and by the time it was really out there, it forced Google and Apple to both react.
John Lawson: Very late in the game.
Small Business Trends: Google was late, but they actually did a pretty good job doing some catch up. Apple still hasn’t released their own product.
John Lawson: Here’s the thing that’s crazy; that was an encroachment on Apple.
Small Business Trends: Yeah. Siri was out there …
John Lawson: Siri is the beginning of it all and they just didn’t move anywhere near where, to me, they could have moved with voice recognition and voice-activated devices.
Small Business Trends: It’s almost like they didn’t know what they had.
John Lawson: Yeah. They didn’t know. They were just was out there playing with it and they didn’t build a whole ecosystem around it.
Small Business Trends: I like “Echosystem”.
John Lawson: I think you’re right. That was like a gauntlet. Nobody saw it coming.
Small Business Trends: Now, all of a sudden, it’s turf wars going on all over the place. We even had the big blow up where Amazon had stopped selling
John Lawson: I know.
Small Business Trends: Amazon wasn’t on Apple TV with Amazon Prime Video. It’s like we have entered a new…
John Lawson: What are they fighting over now?
Small Business Trends: They’re fighting over attention.
John Lawson: Mind share, so yes. Attention.
Small Business Trends: Because if you have attention, then you can convert that.
John Lawson: Then you can use that for doing everything else.
Small Business Trends: Right.
John Lawson: I remember back when Amazon was starting to do this thing with search, where people were starting to use Amazon as the search platform for buying products. Google got crazed about it and that’s when you started seeing Google paid ads come to the top to try to stir that up, and it’s not worked, necessarily. Amazon is the platform of choice for buying. If I’m looking for something, people go straight to Amazon. No more Google search. Not no more, but very little now.
Small Business Trends: I think the big battle is going to be on voice search and as we get more comfortable using these devices, it’s going to be voice search coming through these other kinds of devices — other than the phone. Through these speaker kind of devices.
John Lawson: You know what? I’m going to change the term, because I don’t really do voice search. I make voice commands. I’m not searching for anything when I do voice. It’s rarely that I am looking for it to bring me back multiple results. It’s only going to bring me back one result, usually.
Small Business Trends: Well, that’s the key to a voice search, because you can’t do a voice search and get millions of search results back…
John Lawson: You got to be ‘the’ result.
Small Business Trends: You’ve got to be ‘the’ one. That’s the game changer.
John Lawson: This has made me just think. It’s like Amazon doesn’t need to sell the first result because the first result will be a product. Google however, has used Google Paid Ads to make you go to the top. If I’m only going to get one result, how is Google going to be able to monetize that from an advertising perspective? Just because you pay more doesn’t mean you’re going to be the best result.
Small Business Trends: Let’s take it to another step because, like you said. That’s how Google … Google doesn’t sell hard goods, for the most part.
John Lawson: No. They sell placement.
Small Business Trends: Right. Who does sell hard goods?
John Lawson: Amazon.
Small Business Trends: So Amazon makes their money off the transaction, not off the conversion, but more and more, they’re making their money off the transaction of their own branded goods.
John Lawson: They’re triple dipping.
Small Business Trends: They’re not looking to make, for the most part, their money off of …
John Lawson: The search itself.
Small Business Trends: … the search itself. They’re looking to make the money off of the actual transaction, which puts Google at a pretty steep loss because that’s how they have to make their money because they’re not making it on any transactions.
John Lawson: That’s a game changer.
Small Business Trends: Then, where does Apple fit into that? It seems like they’re struggling with that too.
John Lawson: Yeah. They are.
Small Business Trends: Because, remember the HomePod was supposed to come out …
John Lawson: Right before Christmas.
Small Business Trends: It was supposed to be ready for the holidays.
John Lawson: Right. Yeah.
Small Business Trends: They scrapped it.
John Lawson: They had to.
Small Business Trends: A lot of folks said they got freaked out at Amazon rolling out devices … Remember, there was only the Echo device.
John Lawson: Right and they announced three in one day.
Small Business Trends: Yeah, and then they rolled out some more. So, while Amazon has been rolling them out — even Google has been rolling them out — Apple’s been stuck. I think they are trying to figure it out too because a lot of stuff is going … We’re going from a phone centric environment, at least in the United States, to a multi device kind of environment. So we’re not totally dependent on the phone. I can put the phone down and just yell in different parts of my house and have a device respond. So, where does that put Apple if more and more of our interactions are not through the phone?
John Lawson: If they’re not making the device of choice, I don’t know where that puts them.
Small Business Trends: It puts them like what we’re seeing, what you just talked about earlier with Home Depot. It puts them in the kind of similar category as Walmart responding to what Amazon is doing.
John Lawson: Yeah. Right, as opposed to being the innovator, now you’re … Being at the back end of the dog and just letting the dog wag the tail, it’s not a good thing anymore.
Small Business Trends: Okay, so let me ask you this one. Out of all of the companies that we’ve talked about, who do you think has the best opportunity to be successful with their response to whatever the Amazon threat is to them?
John Lawson: I definitely think Google is the one. Google is sort of like the Falcons right now. It’s theirs to lose. I think Amazon has a good running start. They’re doing great things, but when it comes to the overall share of part of my life, Google still is the king a little bit. You know what I mean?
Small Business Trends: Google has seven platforms that have at least a billion users. They’ve got Gmail, they’ve got search, they’ve got YouTube… There’s seven of them.
John Lawson: That’s pretty crazy.
Small Business Trends: Nobody else can say that. So, they’ve got so much data that’s coming in on the things we search for. The conversations we have. Google Play. That’s the other thing.
John Lawson: Oh, okay. Yeah. Google Play.
Small Business Trends: So they have a lot of data on our behaviors, on what we like, on some of our transactions, what we search for. I think you’re right. They’re the one that has the most ammunition, I think.
John Lawson: Heck yeah. They run our phones. Most of our phones. Android. They run most of our phones. It’s just …
Small Business Trends: I’m using YouTube Live TV right now.
John Lawson: Right.
Small Business Trends: So they know what channels I’m watching, what I watch, what I save in their cloud.
John Lawson: They’ve just got to figure it all out. They got to put it all together-
Small Business Trends: The only thing, they don’t have a lot of transactional data from a standpoint of hard goods because …
John Lawson: I disagree. I disagree.
Small Business Trends: Okay.
John Lawson: The reason why I disagree is because I think with their ad platform, Google Ad Words, people put ads out on their platform and they can track that transaction all the way into cart.
Small Business Trends: Well, that’s a certain kind of transaction. It’s not all transactions.
John Lawson: No. It’s just that all the people that advertise.
Small Business Trends: When you say 50 percent of people who shopped on Cyber Monday bought from Amazon, that’s kind of hard to fight.
John Lawson: Here’s the fight, to me. The fight is even though we have two million third-party sellers on Amazon platform selling products, I think those two million understand that Amazon is not a good partner for them. If Google can position themselves as a good partner for the small and medium business that are actually competing with Amazon, even though we sell on Amazon, you’re kind of competing because you don’t want to have to pay that premium just to get the traffic that Amazon is bringing.
Small Business Trends: Who else, right now at least, can bring that traffic? You might …
John Lawson: Ebay.
Small Business Trends: Wait a minute, dude. I had a 2010 flashback there for a second.
John Lawson: That’s what I’m saying. You’re like between a rock and a hard place a lot of times with Amazon as a merchant. I think everybody else is too. Yeah, we’re just …
Small Business Trends: I think Walmart probably feels like that, I think …
John Lawson: Yeah.
Small Business Trends: … pretty much every company, so …
John Lawson: That’s something else, man.
Small Business Trends: I do think you’re right. Google seems to be the one in the best position. Apple, they’re always out there because they have a huge fanboy, fan base. The sales numbers I’ve seen for iPhone 10 have been off the charts. The margins are increasing. Got to stop messing around with slowing old phones down.
John Lawson: I was about to say that the reason why they’re off the charts because my old phone is slowing down because my battery is …
Small Business Trends: Yeah. That’s something I think is going to really cost them.
John Lawson: Yeah. We don’t know how big that’s going to be in 2018.
Small Business Trends: Yeah. The impact is going to be significant, I think.
John Lawson: Yeah.
Small Business Trends: So, they have some issues to deal with. The bottom line is we are just living in an Amazon world and everybody has to try to figure out how to deal with it.
John Lawson: If that is the case, here’s the one thing I will tell you. It is the climb to the top of the mountain is way more rewarding than being number one. Once you are the number one, then everybody’s gunning for you. I think Amazon has now tipped the scale and everybody is going to be gunning for them and there could be some public backlash to that.
This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it's an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.
More in: Amazon
Amazon is such a difficult competitor because they seem to have no desire for maximizing profitability right now. That gives them leverage if it becomes a price war.
They learned that from Wal-mart. For me, the competitor to Amazon is eBay. I use Amazon’s site for “show-rooming” – checking prices, reading reviews. And then go buy directly from a small business if I can find one or from eBay if I can’t. (Sadly, Facebook bought TheFind.com and shut it down. It was my go-to method for finding small businesses selling the product I was looking to buy.)
I’m surprised they didn’t mention Facebook. FB is trying to be a closed garden where people can search and buy without leaving Facebook. The problem they all have is that Amazon has a deal with USPS, UPS, and FedEx that others can’t match – unless they use Fulfillment by Amazon (FBA) for warehousing and shipping.
Amazon has people used to having their purchases in 1-2 days and that makes it harder for small businesses to compete. We need to encourage shoppers to plan ahead and have some patience and support small businesses or eventually we may ONLY have the equivalent of a “company store”.
Does anyone else wonder how many people use wi-fi and voice search and devices in their house that listen to everything they say to provide that service? This interview makes me think Amazon may be the reason Google is running so many YouTube ads pushing their home listening devices.
Another comment about this interview: Google would love nothing better than to force advertisers to need to only be the top result of an ad result. Years ago, Google said they would love to return only ONE result for ANY search. (I have tried to find the source of that, but haven’t ever found it again.)
Maybe these audio devices are the means to do just that.