How Amazon Is Creating a New Competitive Landscape

This post was originally published on this site

In light of the recent Amazon-Whole Foods acquisition, much has been made about Amazon flexing its muscles again in a new industry. It’s certainly not the first time we have heard cries about the impending threat of Amazon. This has been going on since its early days, when brick-and-mortar bookstores feared the online giant.

As it turns out, bookstores’ fears were warranted. Amazon rapidly made book buying easier and simultaneously consolidated supply into one simple yet massive digital library. You know the story.

Here we are again with Amazon’s latest foray into groceries. I’m certain the initial reaction is to highlight their big, bad, industry-consuming behavior. Fair enough. I’m sure any apparent altruistic behavior is merely an externality of some profit-driving activity. But every time Amazon digitizes vertical X, Y or Z, it sends up the newest reminder that X, Y and Z are open for business. What do I mean?

Amazon may kill late online adopters but it also democratizes the market and distribution engine for all kinds of products. It’s the Amazon Catch-22: It may kill small bookstores, but it simultaneously creates a market for anyone to become an author and monetize their craft.

With Amazon, the publisher acts more as the desired stamp of approval — a signal, not the only driver for consumer viewership. There are good book listings and bad book listings on Amazon, but there are few barriers to entry for both. Now, more than ever, anyone can create a product and sell it to practically an unlimited audience through Amazon.

Incredibly, more than 50 percent of online product searches start on Amazon. Yet, there is paltry information on Amazon SEO and its product listing engine. I did some digging, and A9, Amazon’s algorithm for product ranking, seems to be a big mystery. In contrast, every big business employing paid acquisition has dedicated significant resources to SEM and traditional SEO. What does that mean for the small entrepreneur?

By digitizing vertical after vertical, Amazon is creating the greatest opportunity for small sellers to reach massive audiences. The individuals who figure out Amazon SEO and listings can create cash-cow businesses with all kinds of products. Thousands of authors and small business owners can now compete on a much more level playing field.

Going forward, it will be fascinating to see how big online retailers react to a growing group of savvy individuals eating into their categories with solid Amazon fundamentals. It’s a new competitive landscape, where execution and digital know-how can trump war chests and long-standing relationships.

All of this is creating our latest Amazon conundrum: Empowering small entrepreneurs and potentially hurting big online business. It seems we can’t escape the Amazon Catch-22.

A version of this post originally appeared here.