Each of the big four have new strategies to diversify into each other’s garden
‘This is the beginning of the end of Big Tech as we know it’ according to professor Scott Galloway and the Big Tech giants are well aware of this fact. Unsurprisingly, they are already at work to undermine one another and find ways to grab pieces of each other’s pies.
Where one has a stranglehold, such as Amazon does based on the sheer size and breath of its 3rd party marketplace, another, such as Google, will look for a way to gain a foothold, no matter how small, as the winds of change rise in Washington and among the public.
Amazon’s dominance is based on its virtual monopoly in eCommerce transactions, which is itself, a result of “bribing” customers with below wholesale prices on hot items, giving the customer the illusion of an unbeatable deal site.
The strategy is powerful for obvious reasons (unless you are a foreign exporter to the US, then it is illegal). Who doesn’t like to pay below wholesale prices with “free” shipping (if you pay for Prime)? A second benefit of this strategy (also potentially against antitrust laws) is that no competitor can afford to use a similar strategy unless they want to go bankrupt in short order.
Enter another untouchable giant: Google. Since it’s Google Shopping and other eCommerce search features struggle based on the unbeatable system Amazon has devised (even as Google commands 91.75% of search traffic), the only way to get a jump on the game is to fight back in kind. Bribe somebody. Fortunately for the US economy, truth and justice, this time the parties to be enticed are the 3rd party sellers.
With fees for 3rd party sales on Amazon rising as high as 30% in some cases, even as Amazon competes directly against those small businesses (“internal competitors” in Amazonian parlance), Google’s new idea of a zero commission structure just might gain some traction.
Already under fire for rigging search results to favor itself, Google is doubling down, in a sense, via drastically lowering fees for 3rd party sellers to use Google Shopping to get direct sales from Shopify or other non-Amazon sources.
Since Amazon’s fees can approach 30% for some lower cost items (such as books) this will be a powerful incentive for sellers to shift focus away from Amazon’s predatoryfee structure and to a platform that potentially could bring in sales with less cost to the seller (and therefore a better end value to the buyer).
Change is welcome, especially at zero percent
Google is offering zero commission listing and, in a big announcement, also currently charging zero, in the US, for the “buy on google” checkout system. This is in the process of expanding and rolling out, and, potentially, by the fall and holiday season, could provide an interesting shift in how small business can operate online.
Walmart started allowing 3rd party sellers onto its online store several years ago but, recently, kicked that process into overdrive with a new system that allows all Shopifyaccounts the choice to sell on Walmart.com via a direct link between the two.
Bookshop.org, with whom Lynxotic is affiliated via our sister site Cherrybooks.org, is also a company that is attempting to break the stranglehold Amazon has had on online book sales. Surprisingly successful already, its B Corp non-profit-like structure and alliances with independent bookstores has exploded. Affiliate advertising from huge media companies such as the New York Times have climbed on board and the largest book distributor in the US is a partner for fulfillment. Bookshop.Org has been able to put a tiny dent in the largest, most powerful competitor imaginable, showing, perhaps, that there are cracks emerging in the corrupt business models of these giants and they are not 100% invulnerable after all.
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