Yesterday we got the news that Amazon has acquired GoodReads.
As usual, some people responded with predictable panic. “Greedy corporations, blah, blah, blah, they are going to own everything, blah, blah, blah, monopoly, blah, blah, blah, the End is Nigh!” (I’m paraphrasing here.)
Well, I’m not scared, and I’ll tell you why. 7-11.
Remember 7-11? You may still have one or two in your area, but if you’re my age, you remember when they were everywhere. This is the company that essentially invented the idea of the convenience store. They were open all night, they had a small staff, they stocked only the items with the highest turnover. They took the idea of a retail market and stripped away everything that wasn’t a high profit item, cut the overhead to the bone, and proceeded to price everybody else out of business.
So why don’t they still own the market share? Because you can’t patent a business model. Suddenly other companies looked at what 7-11 was doing and decided to do it, too. Overnight you had Circle K and Huck’s and Get’N’Go and what have you. 7-11 suddenly had to compete with other people who were doing the same thing that they were, and their advantage faded away.
And then Quick Trip came along and ate everybody’s lunch. Because Quick Trip took a good hard look at how people decide between convenience stores and designed a store to appeal to people who use convenience stores a lot. Every road technician I know, in any business, gives directions in terms of QTs. Other stores, PetroMart, for example, are now copying the QT model and gaining back market share. The game has changed again.
Sears And Roebuck was the name in catalog shopping for decades. When the catalog was king, they did it better than anyone, and they had the lion’s share of the business. Then things changed and they didn’t change with it, and now the chain is struggling to hang on.
AOL was going to buy up the world, too, once upon a time, now they are playing catch-up to Google and Yahoo. Blockbuster Video–anyone here remember them?
Here’s the deal–in a free market economy no one stays on top forever. Companies only have a monopoly as long as they deserve one. There has been a lot of talk about Amazon putting everyone else out of business and then jacking up their prices.
Well, they might. But if they do, then someone else who is lean and hungry is going to swim out of the shallows and gobble up customers by the mouthful. Because Amazon can’t stop other companies from learning from them and using what they learn to compete with them.
So far, Amazon is riding high. The top management has been very good at listening to their customers and using sophisticated technology to deliver what customers want in a way that is consistently easier and cheaper than the competition. That’s how you gain market share–give people what they want.
But they are only going to stay on top as long as they realize that they could lose it. Because we, as consumers and as content providers, have a choice. Right now it would be really tough for any on-line startup to go head to head with Amazon. In five years–hell, in a year, the internet being such a volatile marketplace–Amazon could make a few bad corporate decisions and be vulnerable.
I’ll admit, I have a fondness for Amazon, but that is based on how they treat me as a customer and as an author. If how they treat me changes, then my feelings for them will change.