From my Perch

Garyamazon, AOL, Bill Gates, competition demise, Cosco, Costco, google, jeff bezos, Time Warner, Yahoo

From my perch

By Gary T. Petler

The record of failure of large companies is replete with examples of how the giant corporations faltered and some totally collapsed. For example, IBM, Xerox, NCR, Macy’s, Rexall, Woolworth, Sears and the other giants of the last 75 years, the steel companies and hundreds of others. Why? Serious competition, labor cost and the failure to meet problems and make quick decisions.

Which brings us to the present, the Internet as an example. When the www came to fruition in the 1990’s, many players got into the action, some too late and some with a unique’ niche’.  Born in this period was the likes of Netscape (Mosaic), Microsoft’s Internet Explorer, America Online (AOL), and later Yahoo, Google knocking the others out of the market, excepting that of the greatly reduced presence of Internet Explorer. The reason for this blunder by Microsoft was simple, they were too large to quickly initiate change, as well as the task was not within their business model.

In time, other than Yahoo and Google, the early spear headers have shrunk or been bought up by their competitors, such as Microsoft, Yahoo, Google and of course, Time Warner’s really bad decision to tie in with AOL, which is likely the worst financial event in the history of the very successful Time/Warner Brothers Company, they overpaid a bundle for this browser and it was not worth a whole lot in actual value-standing by itself.

Case (no pun intended Steve Case) in point, in the midst of these coming-to-life companies, came an out of the garage and Volvo trunk delivery book seller, naming his startup “Amazon”, which “sold books online” This company has grown exponentially and continues to expand its product line and services, most unfortunate for some big retailers like Costco (who sells just about everything, which is now also sold through Amazon) and Target, Those who sell office supplies, Office Depot and Staples are in the gun-sights of Amazon, In short; labor, facilities for products, resource transportation and the fickle buying public. At Amazon they are already experiencing disgruntled employees’ problems, in spite of their continued effort to keep up, and then there is the problem of consumer complaints. Amazon also has to be looking over its shoulder at a company named wikibuy; a perfect example of the kid in the garage, likely not really a serious problem, yet!

 Bill Gates (Microsoft Co-founder) was once ask? What is your biggest competitive fear? his response, “A kid in his garage”. In the above case, for some, it was one person named Jeff Bezos, hence Amazon, who took down the majority of retail book sellers and neighborhood book stores in the United States, and now is focused on the entire retail market sector in its entirety, making it all via on-line thru the Amazon machine. Another case in point is that of Ebay. It too has experienced the threat of Amazon, the difference as to its survival is that Ebay is not in the inventory business, but that of a middle man in exchange for a fee, where the majority of Amazon is bound to products stored on the shelves for shipment in most cases, hence tremendous overhead in storage and handling.

Then there is the other kid on the block with a difference with regard to the purchasing public, Alababa has a potential purchasing audience of billions, most of whom will be loyal to it, as long as they keep up their customer service quality, and they really work hard at it (so does Amazon). This giant will be around for a long time, since its market is potentially a huge amount of Asia’s billions of people, thus it will continue to grow. It like Ebay has little product storage to house for advertised customer products and subsequent shipment, as Amazon-does, which again, requires staffing and inventory/storage and shipping facilities nationwide.

Which now brings us back to the Internet Browsers. The giant currently is Google (Alphabet) “Chrome, followed by the struggling one time giant “Yahoo”. Obviously, most utilize Google and Internet Explorer and Apples Safari, but the odd’s say that in the next five years, Yahoo will begin regaining it market share at the expense of Google and another unnamed startup. Not to mention the possibility of another ‘kid in the garage’, who has a better and more appealing browser product. It is worth mentioning here that should Microsoft or Apple somehow end up buying Yahoo, this could well be a real challenge for Google.  Google simply cannot keep expanding, again it is; facilities, employees, and most of all the fickle user public and subsequently the advertisers, without whom, they are toast, not to mention that of the now potential oversight by the government, due to user information. Then there are the likes of the social networking website Facebook and its continued long-term use. It too will have the very same consequences the others face: the kid in the garage who is already nibbling at Facebook”.

Walmart is one the largest giant-of-giants (approaching $500 billion in sales last year), it also needs to re-think its continued expansion. They have pretty much saturated the US market, and can only grow as the population grows. They have obliterated the competition when it comes to apparel, housewares and grocery chains and in most cases, the demise of the ‘Mom & Pop’ stores nationwide. The exception being the small neighborhood convenience stores, they have a smaller need for employees, less cost for facilities (cost per square foot), yet have a very large consumer base, due to location and “Convenience” as well as the ability to also sell gasoline, which is their anchor product of which initially brings in many of their customers. People still flock to these convenience stores, and in most cases, pay more for items, because of sheer convenience (Ace Hardware also charges more, but again, it is quality & convenience). Walmart entered in this market and pulled the plug within a year or so, why? they are too big to adjust in a local market mindset and their superstores cannot function in cities with populations of less than 8500-due to square foot economics. Interestingly, as Walmart business model could not work in this small market, there is now thousands of “Dollar Type” stores throughout the United States, and they are prospering where Walmart could not, this is what happens when companies such as Walmart, simply cannot move quickly due to their business model and, they are just too big and their overhead is massive.

Having outlined just some of the ups and downs of the competition, the present big kid on the block Walmart and that of Amazon have to deal with the potentially largest on-line provider in the world of just about everything and it is called Alababa. Their potential market is within five years of serving all of Asia, and the U.S.A. is certainly in their sights. The threat of very serious competition never ends, as the graveyard of failure is full with those who failed.

As Amazon continues its monumental growth pretty much unchecked- to date, it too has on the horizon an obstacle that could well bring on the government’s intervention; due to the possibility of having being charged with Anti-trust violations, this is an almost sure thing, as Amazons is smothering almost every competitor they go after. Of course, in no way would this diminish the personal wealth of Jeff & McKenzie Bezos. If anything, they began with very little, and through sheer brilliance and Amazons incredible developmental teams, deserves their wealth.

In the end, Amazon will gain, the Government will lose. The Dog and Pony show will eventually happen, Politician’s love this opportunity to grandstand, albeit, actually when they speak, it shows their true ignorance in understanding the world of business, for most no very little.