The Identity Store
Amazon has 300 millions customers, 80 million of which are Prime customers. Before I write anything further, let’s let that sink in for a moment. Got it? Good. Amazon, with a $365 Billion market cap and a rapidly growing shipping and logistics business, has become the most valuable retailer on the planet, surpassing Walmart.
Becoming the largest retailer in e-commerce has Amazon given an incredible amount of customer data, insights into purchasing preferences and payments credentials. Leveraging this data, Amazon has that largest consumer identification platform in commerce. Coupled together with its Amazon Services (Fulfilled By Amazon, or FBA, and Web) platform, Amazon offers merchants a centralized customer identification and logistics platform that will be extremely tough to compete with.
Payments and Identity Aren’t Fully Linked (Yet)
Owning an identity platform isn’t as valuable as one that is tied to commerce. Up to this point, the major independent identity platforms (Google and Facebook) have been built on the backs of advertising revenue and partnerships. While an advertising-based business has been incredibly lucrative for those companies it leaves them beholden to consumers’ content consumption (Facebook) and search (Google) patterns.
Due to the inherent intent of Google search queries, it has a more linear path to tying commerce to identity than Facebook. Even still, 95% of Google’s revenues are derived off being a middle-man for products and services it doesn’t sell. At the end of the day, a consumer’s commerce relationship isn’t with Google, it’s with the lawyer they just found on a Google search.
Amazon owns the customer relationship from end to end. 44% of consumers start product searches on Amazon, with 75% saying the Amazon that does the best job of personalizing their experience. Amazon’s selection allows it to be the final destination for search, discovery, purchasing and fulfillment, all in one-click. Google has recently released new ad formats in attempt to stave off Amazon’s surging ecommerce efforts, but it may be too little to late.
Facebook has tried its hand at leveraging its social identity platform in commerce, but its results have been mixed so far. Buy buttons and bots have proven too unfamiliar to consumers to prompt significant commerce on the platform yet. It seems that sustainable commerce is still an intent-driven experience, not a social one.
Commerce is a Great Bridge to Identity
Amazon’s vast selection and personalization have helped it amass 300 million customers with their payment credentials on file. Brand value and affinity is something that cannot be bought and can only be built up over time. After 20+ years of leading the ecommerce market, Amazon has the services in place to be manage the customer experience for merchants through its Marketplace or manage their back-end logistics and server needs through Amazon Services (FBA and Web).
If this wasn’t appealing (or threatening, depending on the merchant) enough, merchants can use Amazon on their ecommerce websites as identity authentication. As Patrick Gauthier, Amazon’s VP of External Payments, put it, “Check-in is the new Checkout.” The ability for merchants to rely on Amazon for check-in, checkout and fulfillment on the website “removes friction from the customer and provides merchants with valuable information that they never before had.”
Essentially, Amazon has created “Amazon as a Service” or (AaaS) with customer identity and insights as the centerpieces and recurring revenues bolstering its top line. Amazon has the ability to scale up or scale down to meet the needs of any merchant, giving it a defensible moat and a merchant lock-in at the same time.
Amazon’s Identity Platform Could Be More Value Than Facebook’s
Amazon could eventually be a more valuable identity platform than Facebook’s platform. Amazon’s platform gives merchants the ability to understand their customers, both in-store and online using historical and real-time purchasing data. As Facebook builds out a real world attribution system for its advertising products, Amazon already has the functionality to monitor and understand customers’ actions and preferences in both physical and digital retail.
Amazon has a built an impressive platform that is far-reaching and has the potential to go even further.
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Founder and Co-CEO at Pangea.ai | I help companies hire top agency talent to build high-performing product & engineering teams ??Bootstrapped from 0 to $250m GMV | Investing in founders making impact ??
8 年Great analysis - it proves once again that great planning and well-defined goals pay off. Aim high, set your goals, follow them and reach them. What Amazon is doing is a perfect example of how to adapt to one's own organization.
CEO/CTO/Founder at BASIL Networks, PLLC
8 年Great analysis - There are two different business models, Amazon and Social Network like Facebook, etc. Amazon started out with selling physical products to the end user - Facebook etc. started out as social networks to develop a marketing base for groups that sell products both applied Game Theory uniquely in their own objectives. Microsoft purchase of LinkedIn appears to be a huge direct market base to push their products to the cloud. There are many avenues for marketeers to channel a physical end user product through. Small businesses now have the ability to sell selected products on places like Amazon, Buy.com, Etsy etc and all of them are gaining a fair market share for the consumer to choose. It is a different world or commerce that has emerged over the years and will be interesting to see how competition directs the challenge.
I help authors build great businesses.
8 年Great article. Amazon is also taking the lead with Microbusiness building and entrepreneurship. Kindle Digital Publishing KDP has allowed authors to connect with readers and has created 50% of the authors who have made more that $10,000 or more. Amazon's commitment to building these markets with minimal friction provides them with a front row seat to collect data while the most interested participants figure out the market. To put this into perspective 10 years ago if you had a book in you, your only hope to get that book into print was to get an agent to publish. Today you can use Amazon Platforms to digitally publish at near zero cost and collect 70% royalty, you can print on demand with no upfront costs and you can connect with audiobook producers and get content produced in a no upfront money revenue share deal all while sitting at home. I have no doubt that they will be dominant in payments, fulfillment, and logistics while they continue to disrupt markets.
Consumer and B2B Product Leader
8 年Thanks, Greg! I think your team has a really interesting solution for retailers and merchants.
Founder and Chief Creative Officer
8 年Great post, Donald. I'm biased, though, because I'm the Technical Evangelist for Amazon's identity solution (https://developer.amazon.com/login-with-amazon). :-)