Scott Galloway: The E-Commerce Tipping Point is 20%

 

20% e-commerce penetration in an industry is the magic number, at which point the winners and losers begin to emerge. Go checkout and follow their YouTube channel at: https://www.youtube.com/user/l2thinktank/featured

 

What is the e-commerce tipping point? According to our research, once the sector hits 20% e-commerce penetration, the winners and losers begin to emerge. Case in point, when the book industry had 20% e-commerce penetration in 2006, bookseller border sales plunged as Amazon took off. Toys and consumer electronics passed that threshold as evidenced by Radio Shack’s bankruptcy and Toys R Us laying up 10% of corporate employees in February.

Which industries are next? Sporting goods and apparel. And the closure of retailers, including Sports Authority and Aeropostale, are the bellwethers here. As if apparel needed another reason to get knocked down. Let’s be honest, you’re totally distracted. There is a glitch in the matrix. I am wearing outdoor wear. I am wearing a Canada Goose light shell and by the way, I look fabulous. However, I’m wearing under my shell, athleisure, which I believe makes this Canada Douche.

A loser: firms relying on Amazon Web Services. Amazon’s Cloud Service controls 40% of the market, more than the next three players combined. AWS revenue was three and a half billion dollars in Q4, up 47% year-on-year. But that success might be an issue for everyone else. Last week’s glitch in a Virginia datacenter disrupted service for hundreds of thousands of sites, including Slack, imgur, Business Insider, and us here at L2. Some customers of AWS were unaffected. Among those, Amazon.

A loser: online travel agents. Sites, including Kayak, dominate search, beating hotel sites at their own game. However, most OTA sites are crowded and confusing. Half of Kayak’s sponsored listings are not for hotels, but for competitors. Booking.com and TripAdvisor running ads on Kayak, making the company vulnerable to Google which gets the advertising game better than anyone. The Google Hotel Finder tool comes up for 60% of branded hotel searches on Google. Just like Google Flights, this looks to be a game changer.

A loser: connected toys. In February, Germany banned the internet-connected My Friend Kayla doll over fears it could be used for spying. And last week, a US company that sells smart teddy bears that lets kids and parents record messages, accidentally leaked two million of those messages along with the parents’ emails and passwords. My boys were able to extract a toy from me this weekend. For God’s sake, leave me the hell alone. Can’t you see I’m trying to refresh the feed on my Facebook page and see how many likes I have on the comment regarding how much I love you? Their favorite toy is powered by Abilify, Chipotle, and Cialis. We’ll see you next week.

This week we received an email request from one of our dozens and dozens of fans. Any chance you could give him a shout-out on the next Winners and Losers? Better yet, Bridget, I’m going to use the force on your husband David. David, the universe is going to produce for you a spouse for the rest of your life who is thoughtful and makes an effort to surprise and delight you. “The force will be with you…always”.

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