Ben Thompson is one of the best commentators on Big Tech and is particularly keen on differentiating between platform companies like Microsoft, which facilitate relationships between suppliers and users, and aggregator companies like Google and Facebook, which intermediate and control those relationships. In the article he applies this filter to Amazon, and we learn that it’s clearly an aggregator because it captures most of the value of its third-party retailers through both branding (everything is delivered in Amazon packaging) and logistics (Amazon fulfilment centres). Its true competitor is not a company like Walmart, therefore, but rather a platform company like Shopify, which enables retailers to become online business while remaining in the background.
Why does this matter? Investors need to recognise the threat to aggregator companies are platform companies. More so, that the differentiation that platform companies enable comes from the bottom up, via their use of many retailers, rather than from the top down as is the case with Walmart.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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