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Voice has always been a compelling way to activate certain human behaviors. It can stir women to distrust men based on voice pitch, it can soothe a crying baby, and now it’s being utilized to making shopping easier.

Well, that’s the hope.

Voice commerce is the new trend in online shopping that is piquing the interest of major players such as Google and Walmart. The two giants recently announced a one-month partnership to take on Amazon’s current dominance in the voice-shopping market.

Consumers in the US will be able to purchase any Walmart product through Google’s voice-activated assistant platform.

“For example, if you order Tide Pods or Gatorade, your Google Assistant will let you know which size and type you previously ordered from Walmart, making it easy for you to buy the right product again,” says Sridhar Ramaswamy, senior vice-president of ads & commerce at Google.

Walmart’s Head of Ecommerce Marc Lore shared that the retailer plans to expand the use of voice-activated shopping across its 4,700 stores to “create customer experiences that don’t currently exist within voice shopping anywhere else”.

To understand what currently exists and whether investing in voice-commerce makes sense, one must look to ecommerce giant Amazon and its strategy surrounding AI assistant Alexa.

Leading voice commerce, Amazon, of course

This year’s Prime Day, Amazon’s largest shopping event for its Prime members, happened on July 10 and theEcho Dotwas the best-selling product across any category globally, with customers purchasing seven times more of these devices this year than in 2016.

What are owners using Alexa to do?

Alexa Amazon Commerce

Alexa is typically being used to play music and set alarms/timers. Source: LivePerson

Amazon used Prime Day as a vehicle to increase its foothold in voice and offered premiums to influence a wave of shoppers to purchase these cylinder-shaped units. They included:

  • Voice shoppers had early access to select Prime Day deals a full two hours before the general public beginning
  • More than 100 Alexa exclusive deals were already available
  • First-time voice-shopping customers who purchased with Alexa before Prime Day received a $10 promo code
  • Amazon device owners could sign up for Prime via voice command. New members who signed up for Prime by voice got their first year of membership for $79, a $20 saving

LivePerson, a cloud-based software platform, surveyed over 500 Alexa owners in the US and discovered the following:

  • A significant majority (70.6%) of respondents have made a purchase on Amazon through an Alexa voice command at least once
Alexa Amazon Commerce

Electronics are the most popular category purchased through Alexa. Source: LivePerson

  • 45.8% of Alexa owners are repeat shoppers (meaning that, of consumers who give Alexa shopping a try once, almost two thirds turn into repeat users)
  • 70.6% of Alexa owners have an Amazon Prime account

By 2020, it’s projected that Amazon will sell 41.3 million of Echo units (each one retails for about $44.99). Having a physical presence in the household of many Americans gives Amazon a new channel of power.

Professor Scott Galloway of L2 placed an order for batteries on Alexa and discovered that the assistant would only recommend Amazon label products. Without the visual cue of product discovery, Alexa can strongly influence consumer buying decisions.

The voice trend has become so irresistible that even General Electric plans to soon sell a LED lamp with Alexa built in so consumers without an Echo can ask questions for information. Some food for thought.

As you may have already realized, Amazon’s recent $13 billion acquisition of Whole Foods is more than about groceries. By adding an enormous offline groceries chain and its customers attention to its repertoire, the retail beast moves closer to becoming a real one-stop destination for all consumer needs.

Slate puts it best, “Scale, meet scale. Logistics, meet logistics. Loyal customer base, meet loyal customer base.”

Before this, Amazon was already banking on America’s $800 billion grocery business via Amazon Fresh; it’s key competitors being Instacart, FreshDirect, Google Express and Blue Apron.

An Amazon Prime member can now receive everything he or she needs within two hours or shorter depending on their location; a feat these other grocery delivery services will find it tough to beat. 

This move will further reinforce consumer behavior of searching for products directly on Amazon rather than a typical search engine – behavior already witnessed in Indonesia.

This acquisition also puts in Amazon’s hands customer data from a network of shoppers that ring up $300 million in sales across North America. 

Why else would Facebook partner with Dunnhumby, a grocery data firm in 2016 to learn more about how Facebook advertising incentivizes purchases?

The grocer, most importantly, also has veteran experience and knowledge on sourcing and storing fresh food that can help Amazon’s “wasteful” Amazon Fresh operations and improve the entire customer experience, a staple to Bezos’ business philosophy.

Bloomberg reported that workers at Amazon Fresh threw away about a third of the bananas it purchased because the service only sold the fruit in bunches of five. Employees trimmed each bunch down to size and chucked the excess.

“There’s just not a lot of demand there. The whole premise is that you’re saving people a trip to the store, but people actually like going to the store to buy groceries,” said Kurt Jetta, chief executive officer of TABS Analytics, a consumer products research firm.

The grocery game can’t be won by trucks and websites alone. Whole Foods gets two-thirds of its sales from fresh fruits, vegetables and meats, whilst other supermarkets gets only 25% of sales from those fresh categories.

“Whole Foods as a kind of guinea pig for Amazon — a pricey, organically sourced one, perhaps, but a guinea pig all the same.” – NY Times

Whole Foods’ grocery-distribution infrastructure is already expected to act as Amazon’s grocery-distribution infrastructure and will incorporate the e-tailers technological capabilities to streamline the checkout process at Whole Foods to possibly push the long-awaited “cashier-less” Amazon Go concept.

What does this mean for everyone?

Following the announcement of Amazon’s acquisition, grocery chains’ stock took a tumble on Friday. Walmart stores Inc. fell 4.7%, while US retailer Kroger Co. dropped 9.2%.

Payment companies such as Square.Inc also fell over the concern that the acquisition will lessen the importance of traditional payment methods.

The value of the industry should reflect grocery players across the globe, also counting those investing in countries such as Singapore and Thailand. The acquisition may not have a direct impact on Southeast Asian grocery players yet, but it represents how change could come in the future as Amazon is rumored to launch in Singapore and Lazada’s acquisition of RedMart.

If grocery players remain purely within their vertical, it could make them vulnerable to an acquisition or worse, once an all encompassing, data hungry giant makes it way into the market.

Amazon’s acquisition of Whole Foods can serve as validation to how important consumer data, logistics, payments and an integrated value chain is, for small players that do not have this, it will be difficult for them to exist in the future.


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Here’s what you need to know today.

1. Australian logistics startup Shippit gears up for Asian expansion 

Australian logistics software company Shippit announced today it has raised a series A round worth US$1.6 million.

The Sydney-based startup will use the funding to fuel further growth, hire more people, and expand to Asian markets within the next year.

The round is led by Australian investment firm Aura Group, which established a Singapore presence last year.

The co-founders saw an opportunity for growing its product and sales teams to continue building the company in its home market as well as abroad, so it was a good time to pursue its series A round. Shippit claims to have over 750 customers, including Sephora and the Topshop clothing chain.

Read the rest of the story here.

 

2. DHL taps Alexa to deliver package status updates

DHL Parcel has launched a new skill for Amazon’s Alexa virtual assistant app that allows customers to ask Alexa for updates on an expected parcel delivery,

This a very practical and useful application of Alexa’s talents. While Amazon promotes Alexa’s skills as a shopper convenience, a music streamer or a know-it-all, this new skill is an example of how Alexa also can be a customer service conduit — not just to Amazon — but to any company that sees fit to develop this sort of skill.

Read the rest of the story here.

 

3. Recommended Reading: Amazon’s epic 20-year run as a public company, explained in five charts

For Amazon investors, this is perhaps the only chart needed. Amazon’s stock price as of Friday was $961 a share, over 600 times greater than what it was on its IPO day — after accounting for stock splits.

 

Amazon has made sure not to let too much money drop to its bottom line — giving it the stigma of being a perennial money loser, so it can eat up market share from competitors that are more focused on profits than on growth.

Read the rest of the story here

Here’s what you need to know today.

1. PayPal shares up 7% after better-than-expected earnings

PayPal, the payments company, posted first-quarter earnings results after the bell on Wednesday. After surpassing analyst estimates with an adjusted 44 cents per share, compared to the 41 cents that many were predicting.

PayPal also announced a $5 billion share repurchase program

PayPal says they added 6 million new accounts in the quarter, bringing the total to 203 million active users.Total payments volume for the company was $99 billion, in line with analyst expectations. This is up 23% from last year or 25%.

Read the rest of the story here.

 

2. Line and Kakao among the top non-gaming apps that are making serious money

The share of revenue for non-game apps in app stores worldwide rose marginally from 15 percent in 2015 to 16 percent last year.

 Chat apps Line and Kakao – from Japan and South Korea respectively – topped the revenue list on Google Play. Tinder – the leader in dating apps from the US – came in third.
Apart from new ways of monetization, revenue growth for apps will come from the continuing rise in smartphone users from 2.6 billion currently to 3.6 billion in 2020.
More than a quarter of the next billion smartphone users will be from India, which overtook the US last year to be next only to China in number of users.
Read the rest of the story here.

 

3. Amazon’s newest product wants to judge your outfit

“Alexa, do these jeans make my butt look big?”

The release has been met with mixed responses.

No one really asked for this product, and fashion is one of the most unpredictable human behaviors on earth. Providing a fashion service is different to growing a fashion apparel business inside Amazon.

Smart home products are disrupting the home security market, and there is growing demand for products like smart locks and security cameras. The overall security solutions market is expected to grow to over $370 billion by 2022.

Read the rest of the story here.

Scott Galloway, Clinical Professor of Marketing at New York University, Stern School of Business & Founder of L2 speaks at L2’s Amazon Clinic about how Amazon is disrupting retail and how it’s planning to destroy traditional brands. For our eIQ readers, we’ve summarized the key takeaways as well as transcribed the entire video.

tl;dr:

  • Over the last 45 years, physical mall growth outpaced US population growth, setting the offline retail industry up for a big implosion; foot traffic to malls cut by more than half over the last few years.
  • 52% of US households now use Amazon Prime, effectively subsidizing Amazon’s break even retail business and driving Amazon’s onslaught of traditional retailers.
  • Amazon has set the new standard for a new era of unicorns given free reign by investors to focus on long-term growth and grand vision over short-term profits (e.g. Snap, Uber, Wework, etc.)
  • Return on Human Capital: with $1.2 million market cap per employee (vs. $90,000 for Wal-Mart), Amazon has an unfair advantage in recruiting and retaining talent.
  • With $4.5 billion in budget for original content production, Amazon’s entertainment business only trails Netflix ($6 billion).
  • Amazon’s ad business is lucrative, driving 1/5 of total Amazon profits and is 3x the size of Snap’s ad revenues.
  • Alexa, Amazon’s voice-based, intelligent assistant, is Amazon’s strategy to commoditize brands. With price subsidies for purchases through Alexa and a bias towards recommending Amazon’s high-margin, private label products, Amazon is serious about taking down traditional brands.

Note: Minor edits have been made to the transcription for clarity.

Everyone’s been talking about how retail is in for a fall because of the stagnation of middle class wages, America being overstored, Amazon, a ton of different things such as young people spending less money on stuff and more on experiences, but retail sort of soldiered on. It feels like the reckoning is finally here and we’re seeing just an incredibly challenging environment for retail.

The number of malls in the US grew twice as fast as the population between 1970 and 2015

In the 45 years between 1970 and 2015, malls grew twice as fast as the population, sort of setting themselves up for a fall. It’s no news we just have too many malls. There has already been nine bankruptcies in retail year to date. It’s only one quarter into 2017 and we already have more bankruptcies than we did in all of 2016.

At the same time, in terms of retail, people are spending as much or maybe a little more when they go to the store. But, to give you a sense of how dramatic the decline is, the footfall traffic to malls has been cut in half in just the last several years.

In terms of store closures we wanted to put up store opening stats as well because these talks are assumed to be about how great Amazon is and how screwed everyone else is.

There are winners as well. There are people breaking through in the face of competition and opening stores but as you can see there’s a lot more that are closing stores.

We purposely put up Amazon’s fulfilment centers below as we believe that Amazon’s fulfillment centers are effectively going to start serving the stores with click and collect. At some point when you can drive up to an Amazon fulfillment center, pick up your stuff or even perhaps go into the fulfillment center. Is it a warehouse or is it a store?

In terms of scale Amazon has added $64 billion in growth since 2010. That’s the size of Nordstrom, Macy’s and Sears. They have essentially added these entire businesses to their top line over the last six years.

In terms of scale Amazon has added $64 billion in growth since 2010. That’s the size of Nordstrom, Macy’s and Sears.

To give you a sense of just how powerful Amazon is in terms of a recurring revenue stream, see the stats below. More of an attempt to get an annual fee out of people in the form of Amazon Prime to subsidize what effectively has been a break even business even at this scale with their retail platform.

52% of Americans have Amazon Prime so more people now have Prime than have a landline phone. It gives you a sense of how technology has shifted in America. Amazon is the company that offers a service so you can get great retail delivered within two days. That’s a technology that America has opted over versus a landline phone. About 55% of US households make over $50,000 a year. The people with Amazon Prime are the same households that make over $50,000. One of the things that’s unusual about it is usually a retailer has discount as a core tenet of its value proposition. It attracts a lower income consumer whereas Amazon is very much urban, it’s very much a high income consumer.

One of the things that’s unusual about it is usually a retailer has discount as a core tenet of its value proposition. It attracts a lower income consumer whereas Amazon is very much urban, it’s very much a high income consumer.

Amazon Has Changed More Than Just The Face of Retail

Amazon has essentially changed the relationship between companies and shareholders. It has replaced profits with vision and growth. It has changed the entire ecosystem because companies and investors are no longer satisfied with a company that is not growing but profitable or are growing slowly and profitable. They want something that has tremendous vision and is growing fast and they’re willing to ignore a lack of profitability.

This is Walmart versus Amazon’s profits. Amazon being the gold. Amazon runs their business at break even.

My strong belief is that every time Amazon reports a quarter that’s quite profitable and there’s all this coverage saying Amazon’s now going profitable, I think Jeff Bezos calls all his top management into a room and says, “You screwed up and we need to greenlight more massively expensive things that might give us an advantage over the long term.”

They don’t need to run the company for profits and once it becomes profitable it’s like getting an addict hooked on heroin and there’s no taking it away. So they never let the company get very profitable.

They’ve figured out that they don’t need to run the company for profits and once it becomes profitable it’s like getting an addict hooked on heroin and there’s no taking it away. So they never let the company get very profitable. Why? Because they don’t need to. Investors don’t demand that from them as long as they can take all of that money and plough it back into the company. Then what’s the point of being profitable?

And as a result Amazon just plays by a different game. Amazon has this reputation for being very innovative and I would argue that if your bosses said to all of you that you no longer need to make 20% profit on every dollar you bring in, you could be break even, then you will be incredibly impressed with how innovative you can be.

Setting The New Standard: Long-Term Growth and Vision over Profits

Now we have some very profitable companies in the Four Horsemen, Amazon/Apple/Facebook & Google.

  • Google, the original, worth around $550 billion.
  • Facebook a little less profitable worth about $420 billion.
  • Amazon, the company that is probably the most impressive in terms of its own metrics of valuation relative to its peer groups. It justifies a valuation that no one else can. It is not profitable and runs literally at a break even business.

This had a big impact on the ecosystem. People always mimic the winner and as a result we have a series of private companies and the unicorns, the companies that we now admire, have adopted this gestalt of growth and vision at the cost of profits.

  • Wework is valued at $16 billion, a $530 million business that’s break even.
  • Snap did about $400 – $500 million in revenue. But its losses were actually greater than $500 million.
  • Uber at $5.5 billion in revenue and $3 billion in losses.

Now you can argue this might not end well. This might be the wrong strategy long-term. It might have some underpinnings of something scary brewing in the economy, but the reality is, retail investors love this model – vision, growth and they ignore profits or lack thereof.

Amazon now has more people than Facebook, Google and Apple combined working for them. But what’s different is, if you look at retail, Wal-Mart, the largest employer in the US and maybe in the world, generates about $90,000 in shareholder value for every employee. Macy’s has 140,000 employees and $60,000 in market cap per employee. Sears is effectively out of business. Amazon has 360,000 employees but $1.2 million in shareholder value per headcount.

Now given that that shareholder value or those options or that equity is a part of compensation, if the team with the best player wins, imagine what Amazon’s advantages are relative to other retailers, when they have $1.2 million in shareholder value per individual and they can offer some of that as compensation, whereas everybody else is really playing with a squirt gun compared to Amazon’s bazooka as a function of their compensation and their ability to recruit employees.

Entering Entertainment: Second-Largest Content Budget Trailing Netflix

They’re getting into other businesses as a function of making this $99-dollars-a-month, 51%-of-US-households-proposition even more attractive. Things that we never thought Amazon would get into such as Amazon Video and Amazon Media or part of the Prime Amazon television.

$2.5 billion is how much HBO has allocated towards content. HBO has become such a part of the modern vocabulary in terms of great content and series. They’re going to spend US$ 2.5 billion dollars on original content this year. ABC and NBC are at about $4 billion. Amazon, the retailer, is going to spend $4.5 billion on original content this year. The only one that’s bigger than this is Netflix which is at $6 billion. And this is Netflix’s core business. Just to give you a sense of how much fun it is to plan traffic when you have almost infinitely cheap capital. You can take a non-core business and almost overnight compete with the biggest players in the business.

You can take a non-core business and almost overnight compete with the biggest players in the business.

Amazon is now spending more on content than the major broadcast networks such as HBO and can monetize it differently. They’re not going to ask you for $19.95 a month which HBO asks you for. They’re going to ask you for $99 a year which you get a ton of other benefits for.

Amazon’s Ad Business: 1/5 of Amazon’s Total Profits and 3x The Size of Snap

Sort of the overlooked middle child, what we don’t talk a lot about is Amazon’s Media Group which has become a very big business under the radar. Advertisers report that Amazon is in fact their favorite DSP (Demand-Side Platform) in terms of where to allocate their revenue and in terms who they enjoy working with most.

If we translate the margins on their business, it’s the same as the margins on Facebook’s business. Amazon is producing about $400 million a year in profits from their media business. This means that despite being a pimple on the element in terms of the top line revenue, the media group now does about a fifth of the profits of the entire company. And this is an adjunct business.

They’re now about half the size of Twitter and there are obviously bigger than Snapchat. Think about all the hype with the $23 billion valuation for Snapchat, and Amazon Media Group is a business that is three times the size of Snapchat.

Alexa and Amazon’s Conspiracy To Destroy Brands

I think that effectively you have a company that has conspired with about a billion consumers and technology to destroy brands. I think their attitude is that brands have for a long time earned this unearned price premium that screws consumers. The attitude of the association and short hand to get to a good product at a very expensive price because you don’t want to do the diligence across all these other products. The brand charges a premium for that short hand or that diligence.

And Amazon has said by using technology and a billion people who will write reviews and then putting in algorithms, we can destroy that price premium that brands have commanded through consistency, all this advertising, and all these things like packaging and shelf space and in-store promotions that we can go after, it really doesn’t add any value and we can destroy it. You and me, the consumers can destroy it with our software and our scale and start sucking the margin away from brands and give it back to you, the consumer.

Using technology and a billion people who will write reviews and then putting in algorithms, we can destroy that price premium that brands have commanded through consistency, all this advertising, and all these things like packaging and shelf space and in-store promotions that we can go after, it really doesn’t add any value and we can destroy it.

I think this is effectively a war on brands. If you look at all the money that is spent by brands and CPG (Consumer Packaged Goods) companies on shelf space, on marketing, on creating demand, the partnerships, the scale they need, the massive amount of money they spend on relationships with retailers. Amazon doesn’t need to do any of that. None of that is important to the end consumer. We can take all of that margin and give it back to the consumer.

And then you go online and there’s less of that. So brands are at a bit of a disadvantage online because they don’t have as much opportunities to portray all these amazing things they’ve invested in at the point of purchase. They’re not as obvious or as valuable online and the typical brand building investments have less purchase or less justification, less value when they go online.

Now where do brands absolutely almost not matter at all? What is banishment? What is being put on an ice floe in the world of brand? I think it’s voice and if you look at the activity on voice and on Google the number of people or the number of searches or voice requests that have a brand as a modifier or prefix before request is declining.

If you look at the activity on voice and on Google the number of people or the number of searches or voice requests that have a brand as a modifier or prefix before request is declining.

When Google launched, I think the sun had passed midday on the era of brand. We all had this gestalt. I have had it for twenty five years. I’ve made a nice living espousing that brand is everything. There’s this reflex reaction in the business world that the brand is so sacrosanct. I think Google and now Amazon have decided that all the money and all the price premium that’s required to support this intangible called brand building is the money we’re going to give back to the consumer. The consumer is starting to not care or not find value in all this “brand building”.

What Are People Using Amazon Echo For?

Right now they’re just using it to get information. If you have kids it’s a ton of fun… geography and jokes. Amazon or Alexa is by far the most popular device in my household right now but it’s not being used for shopping.

Where is it going to go? It’s pretty clear where voice is going to go depending on the company.  

  • Apple will use voice for media.
  • Google will use voice for search and information so it can monetize with advertising.
  • The way Amazon monetizes things is through commerce, so it’s likely we are going to see a huge effort on the part of Amazon to turn Alexa into a frictionless and brandless means of ordering all the stuff you need in your household.

The Future of Alexa

My prediction is within two to three years, Amazon will launch something called Prime Squared where it takes artificial intelligence, your purchase history, your credit card history, these dots you have around your house and says – tell you what, we’ll be your only retailer.

You don’t need to go ever shop anywhere else. We’re going to send you two boxes twice a week using this unmatched fulfillment infrastructure. One’s going to have the stuff in it we think you want, and the second box is going to be empty for you to just put the stuff you don’t want back and send it back. We will recalibrate using dot or Alexa. Just say, “Alexa, we need more pork, more bacon, less beer, barbecue on Saturday for six people, send me three quotes for auto insurance for a 2014 Toyota Camry via email.” The easiest way to get stuff done. And 95% — maybe 98% — of our purchases are low value, low consideration, tedious purchases. Amazon is going to say to a series of households that you don’t need any other retailer. We’re it.

The company is going to announce that those households are going to quintuple or sextuple in purchase volume and the stock is going to become the first trillion dollar market cap company in the history of business.

Amazon Subsidizing User Acquisition for Alexa

How is Amazon going to get penetration and help get traction or adoption around using Alexa for consumption and for shopping? They’re already getting there through price. If you go on Amazon you’ll see that the number one recommended detergent around the Gain brand is Gain Flings Original Laundry Detergent Pacs, 81 count for $18.97. However when you ask Alexa via voice to “buy Gain laundry detergent”, it gives you the product details and a lower price.

The majority of the products that we did this test on, if you ordered through Alexa you got a lower price than what you could find on Amazon.

It’s clear that Amazon has decided to give people a discount when they order through voice as opposed to going on Amazon. As the prices are pretty low already on Amazon, and this is obviously going to cost them a lot of money, it shows they’ve made a conscious decision to make a huge investment to encourage more adoption of purchase through Alexa.

So Alexa knowing that you don’t have the visual cues of other brands has decided to tell you that Amazon private label batteries are the only batteries available despite the fact there are numerous brands available on Amazon.

I think this is where we’re headed. I think Alexa and Amazon have conspired and figured out that voice is a way to pull brand and some of the traditional mechanisms and accoutrement of brand building out of the ecosystem and then slowly but surely take control of your preferences.

Your preferences are about to become the product that Amazon makes the most margin on or Amazon private label and we’re going to see a further death in the world of traditional brand building.

Alexa knowing that you don’t have the visual cues of other brands has decided to tell you that Amazon private label batteries are the only batteries available despite the fact there are numerous brands available on Amazon.

Summary

Amazon The Destroyer

Amazon really is in my opinion conspiring with technology and a billion consumers to say we have declared full wholesale war on brands. There are going to be some brands that are successful. If you think about what typically works with the Amazon algorithm it’s one of two things – it’s either a hot independent brand that’s getting great reviews and is a very specific indication and it’s getting tremendous buzz and that gets put to the top or it’s a good brand that for whatever reason is an amazing deal that day that’s on sale and the algorithm literally goes out every nano second and tries to find the best value for the consumer.

Most big brands are neither of those things, most big brands are good brands not hot brands, not up and coming brands, not the cool independent brand that’s getting a ton of buzz. A good brand that commands a premium. It’s not great value it’s a good price but it’s not a great price. So traditional short-tail CPG, large conglomerate brands are just not what Amazon is recommending nor will they recommend. So you have one company that’s soaking up all of the retail growth. It’s essentially decided the brands of yesterday are just that – they’re yesterday.

Algorithms vs Partnerships

If you think about your traditional retail partnerships, they are partnerships with big barriers of entry. It’s hard to get into Macy’s. It’s expensive. There’s a lot of human interaction but once you’re in there and they’re making money and you’re making money, it’s a wonderful partnership that they continue to reinvest in. They are patient. It might sound like a difficult relationship where they’re asking for a lot but you haven’t seen difficult until an algorithm is willing to trade you off for any other of one hundred different brands in a nano second because for whatever reason the algorithm has decided that at that exact moment you are not the best deal for the consumer or for Amazon.

You haven’t seen difficult until an algorithm is willing to trade you off for any other of one hundred different brands in a nano second because for whatever reason the algorithm has decided that at that exact moment you are not the best deal for the consumer or for Amazon.

It’s an algorithmically driven retailer which is a nightmare for traditional brands that have the scale to develop these relationships to advertise, to get shelf space. Amazon doesn’t care about any of those things.

Storytelling As The New Competence

Storytelling is the new competence in business. We saw this firsthand at L2 when we started. I came of age in business where you were trying to get to profits. That was the goal. I was really proud of my first company Prophet Brand Strategy because within the first two years we got to profitability.

The way I’ve always tried to run companies is to grow them between 20% and 40% a year and maintain somewhere between a 30% and 40% EBITDA margin. That’s what we were doing at L2. We were growing about 30% or 40% a year and we were getting somewhere towards 30% operating margins and then the venture capitalists came in.

They were very smart guys and they said, “Scott you’re going about this all wrong.” They put a bunch of money into the company and said take it to 70% growth and lose a lot of money. But become more special and have technology at the center of your company. Establish a leadership position that no one can argue with based on this 70% versus 30% growth. That was massively uncomfortable for me to see us hemorrhaging money every month.

Thirty six months after we took that money, the valuation of our company went up about ten fold. So they were right. This is the new gestalt in our economy. It is to establish leadership, to grow at all costs even if it means losing a lot of money.

I still don’t know if this story ends well. There’s something uncomfortable about that approach to business.

Death Has a Voice

Death has a name and it’s Voice. I think when we look back on the death of brand if you will, or how a lot of the margins get starched out – when Kraft came after Unilever, they’re basically saying you need to cut costs and if you don’t we’re going to come in and do it for you. Overnight a couple hundred thousand CPG executives lost their job. They just don’t know it because now in every boardroom of every CPG company they’re saying, we’ve either got to cut costs or someone’s going to come in and take us over and do the same thing for us. At the end of the day that cost cutter, that destroyer that voice sharpening the knife is:

  1. Google
  2. Amazon’s algorithms
  3. Now it’s going to be voice

Voice based technologies are taking over the world.

“Alexa, who is Scott Galloway.”

Scott Robert Galloway is an Australian professional football player who plays as a fullback for Central Coast Mariners in the A-league.

That is literally the funniest thing my children have ever seen and three to four times a day they invite me into the room as if they’re doing something else and my six and nine year old ask that question of Alexa and wait to see my disappointment and just ride on the ground with joy. They think it’s the funniest thing ever and we did this on a winners and losers because we thought it would be funny. And then I got a note in the comments section from somebody who said, “Scott, love your videos, this is a gift to you” and he gave me a link to a wiki page and now I have a Wikipedia page which scares the shit out of me because I don’t know what’s going to end up on this thing.

“So Alexa, who is Scott Galloway?”

Scott Galloway is a clinical professor of marketing at the New York University Stern School of Business, public speaker and entrepreneur.

BOOM.

Here’s what you should know today.

1. Alexa now takes orders from Amazon’s instant Prime Now and alcohol delivery services

Great news for impulse shoppers – Amazon announced that it will now let Prime subscribers order from Prime Now, its two-hour delivery service, as well as its newer alcohol delivery service, in cities where these are offered.

Amazon says that Alexa’s Prime Now implementation will let you order multiple items at once and make recommendations whilst automatically give you the next available two-hour delivery window.

These two newest features are also a mark of how Amazon is giving Alexa a front and center place as a key interface between Amazon itself and its customers.

 Prime Now and alcohol delivery are designed in the same vein. The idea is that you can use Alexa when you are multitasking at home and too busy to get on the computer or your phone.

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2. Alibaba buys online ticketing platform Damai

China’s Alibaba Group Holding Ltd has fully acquired online ticketing platform Damai.cn

The move marks a further push into entertainment by the firm as it expands beyond its core online retail business.

Damai.cn will be a strong platform to distribute the company’s media content as well as expand its user reach and engagement.

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3. Walmart launches tech incubator

The Silicon Valley based incubator will be called ‘Store No. 8’. The incubator will help identify changes that will reshape the retail experience in the next few years, including AI reality, autonomous vehicle and drone delivery, and personalized shopping.

The US retailer has been overhauling its online team to better challenge Amazon with greater selection and lower prices, including various acquisitions of smaller fashion labels, most recently Modcloth.

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4. Adidas trials customer personalization to tackle fast fashion

Adidas has been testing a store where shoppers can design a sweater, have a body scan to determine fit and get it knitted by a state-of-the-art machine within hours, as a way to respond to fast customer demands.

It hopes the drive will help it adjust better to fickle fashion trends, allowing it to sell more products at full price

“If we can give the consumer what they want, where they want it, when they want it, we can decrease risk, at the moment we are guessing what might be popular,” says brand chief, Eric Liedtke.

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