Retail is Broken.

Retail today is Amazon. The efficiency, ease of use and selection for Shoppers has afforded Amazon an unparalleled dominance in modern Retail. Additional marketplaces such as Flipkart and Walmart rely on centralized processes to create and deliver internal value returns. This value creation requires the maintenance of running marketplaces at a substantial cost of capital. With these costs comes an expectation of increased value to Shoppers over time, but where does this value come from? The current centralized ecosystem creates an inescapable obligation to continue to extract margins from Brands, the products they bring to the marketplace, and those most vulnerable upstream.

I believe a Retail marketplace can only be healthy and sustainable if it provides valuable economic engagements for both the Brands and Shoppers. The current landscape of Retail does not reflect this.

With an obligation to external shareholders driven by economically incentivized humans, these centralized marketplaces have developed a business paradigm that drives value extraction by leveraging the exchange that occurs between Brands and Shoppers in order to increasingly consume Brands’ margin and a Shopper’s time and money.

The combination of these strategies driving the centralized system and Brands’ unfortunate tolerance for margin extraction will eventually cripple the ability for a Brand to participate in the marketplace altogether. With this impending reality, existing retail marketplaces have enacted a strategy of margin extraction combined with the leveraging of all data concerning product and related shopper interaction. Holding a superior position in understanding what products will serve the demand Shoppers have, they bypass the Brands they claim to serve by manufacturing private line goods based on that data.

Once Brands have been removed across key segments, selection decreases, price manipulation strategies begin, and the trust that the marketplace once brokered is eroded.

In short, all seems lost for the Brands creating the experiences we desire and for the Shoppers looking for the style, quality, and selection a free market should offer.

WHY RETAIL NEEDS TO DECENTRALIZE.

As someone who’s contributed to this problem personally over the years through my work in eCommerce, I’ve since developed a personal drive to help reverse this trend. To that end, my team has begun building a new open-source blockchain-based protocol (The SHOP Protocol) that will help restore balance to the system by providing a collaborative digital commerce data exchange that supports the transfer of value across Retail, Grocery, and Services supply chains in the following ways:

1. Control Over Their Data: Introducing yet another centralizing marketplace would be extremely fatiguing Brands. Another entity collecting their data within a far too recognizable system of looming fees or alternative monetization tactics would leave them listless and disempowered. We can’t re-centralize their data for our independent intentions and benefit. The opportunity to standardize and organize their data within a co-op environment, one that is built on principles providing them the ability to monetize said data at every step, would only work within a decentralized ledger of data they own and control. Here, Brands maintain their existing independent systems while we maintain interoperability with those systems, allowing for them to move towards unleashing their data within our decentralized framework.

2. Control over the Marketplace: Committing to the scale of building a consumer retail marketplace would be irrational for us to pursue. There is a substantial difference in the level of effort it would take for a centralized entity to create all of the rules, business logic, product determinations and moves necessary to deliver on par with Amazon. However, if Brands have an incentive structure matched with permissioned control over their data, they can dictate said logic, determinations and rules via ‘smart contracts,’ and a reward-bearing complementary governance, thereby removing the need for a centralized organization to fund the humans and processes needed.

3. Product Lifecycle Management: Brands need to better understand a Shopper’s interest in their product to effectively optimize downstream change in subsequent product or product line development. Once they enjoy the benefit of owning their data and understanding how that data moves through physical and digital commerce experiences to reach Shoppers, these Brands will be well positioned to respond with more agility and accuracy as they grow. Practically, this enables brands to intuit to what products to produce next for greater success.

4. True Market Diversification: If we’re left with commoditized Brand value and generic product designs made by the broken retail marketplaces of Amazon, Costco and Walmart, we will continue to see people wearing Kirkland jeans. With the SHOP Protocol we’re not moving Brand and Shopper data down into a new database environment so that they can access it better. By storing their data in a distributed ledger where those who need access to it will be forced to operate off of permissioned datasets rather than ripping off and centralizing the value in the data. We’re shifting the leverage in the equation back to the key participants: the makers (Brands) of the products and people (Shoppers) who want them.

[But how exactly are we going to bring decentralization to the market? We find out in the forthcoming Part II of why retail is broken.]

Amazon’s Advertising Hurts Brands


Yeah, I know buying on Amazon is amazing.

With Prime, you can get a couple of propane patio heaters for a little over $100 each delivered to your door for free in only two days, just in time for a party. That is nothing short of amazing. However, there are ways that Amazon is positioning itself in the market that aren’t so awesome for some of its key stakeholders: the brands. Ways that marginalize the brands even more than the margin pillaging fees are by trying to survive in an Amazon-dominated world, and that are ultimately bad for consumers.

In an earnings call late last month the biggest and most iconic of the Big Four ad agency conglomerates, WPP, slashed its forecast for the year. Now predicting 0–1% revenue growth, down from a 2% growth forecast, the news sent WPP’s stock tumbling to a 17-year low. The resulting shockwaves obliterated the advertising world. During that call, WPP chief Sir Martin Sorrell specified why: Amazon’s 2016 digital advertising earnings totalled a staggering $2.5 billion.

To explain, back up to 2013, when Amazon built its very own demand-side platform (DSP) for ad retargeting across web properties. Amazon now has developed a way to turn the massive amount of data it collects on its loyal online shoppers into advertising for itself.

It’s now becoming clear what that means.

The elephant in the room

You might be saying so what? Facebook and Google have been collecting our data for years so they can sell stuff to us, and we’ve pretty much bought into it, haven’t we? Isn’t this the price we pay for the addictive experiences we enjoy? Isn’t this simply the cost of convenience? Like and share if you agree.

For Amazon, the victims of ads aren’t just the consumers who see them, but the brands, whose exploited margins have funded Amazon’s ad network. Brands are tired of theoretical advertising metrics but will continue to give ad budget to Amazon for the sheer appearance of full funnel visibility. But for Amazon, the endgame is the same: maximize consumption activities on their properties to leverage consumer and funnel data.

While every engagement action a consumer performs on social media builds the targeted data profile, and you see the ads and sponsored content on those networks as evidence of exactly what they’re doing, the actual shopping data that Amazon collects is much closer to the funnel of dollars. That’s what everyone is after. And they are pushing further and further to control every aspect of that funnel in ways that, if it weren’t for the free shipping and great prices, would scare the pants off most of us. But it’s happening, albeit quietly and very sneakily.

Why wouldn’t Amazon do something like this? It makes perfect sense! And it does. From an economist’s standpoint, it looks like a good thing. Amazon is leveraging its assets for maximum earning potential.

But from every perspective other than Amazon’s, this is a cluster through and through.

From a Wall Street Journal article from a year ago:

To date, Amazon’s ad business has mostly focused on driving online sales with targeted ads on sites across the web, leveraging its rich supply of shopping data culled from years of operating a massive e-commerce business. It can, for example, help an advertiser target people who have recently searched for men’s apparel products.

Lately the company has been catering to a wider range of brands — the kind that advertise on TV and focus on “top of the purchase funnel” metrics, such as getting people to feel favorably about their brand. Amazon believes its data is just as useful for those marketers.

Why am I seeing Amazon’s incredible technical milestones and strategic direction as so blatantly bad? Because they are committed to using their massive pool of data, not just of “likes” and “pins” but actual purchase data, to increase the gap between brands and the consumers in favor of profit. While knowing that reduced product selection, removal of independent brands and leverage over product pricing across categories will negatively affect all consumers, they’ve got their money on their mind and nothing else matters.

All the things

Consumers always want more choice at a better price. You could argue that “owning” the consumer end of the supply chain is the most powerful place to be. This is the prime real estate that Amazon is going after with this play for ad business, at the expense of the product producer and, ultimately, the choice that consumers crave.

Looking today at a typical search on Amazon, you can see the encroachment on choices for the consumer. Take a search for something like a “microphone cable,” for example. In the results on my laptop, I see none of the old consumer-driven merchandising benefit that was the promise of the enormous data-collection machine started by Amazon, and remains a key driver of much of the rest of internet-based business, appear above the fold. No top-rated, most popular pick that my peers have determined to guide my choice. The page is instead dominated by sponsored links — even a scroll downward leads to “Amazon’s Choice” rather than the consumers’ preference.

But it’s what is at the very top of the page that is the most concerning of all. The entire top strip of the page highlights a selection of microphone cables by AmazonBasics, featuring a variety of options at more desirable price points compared to competitive cables offered on the same page. But what are AmazonBasics? Amazon has quietly started manufacturing and offering for sale on its properties a vast collection of hard goods that are of wide need and appeal to consumers. Everything from computer accessories, kitchenware, and even pet supplies are all available to you for an enormously discounted price from the rest of the competition.

One can imagine the volume of these categories of items that are sold through Amazon, and how that drove their inclusion in the collection of AmazonBasics. What Amazon is doing here is using the vast amount of data that is available to them and turning around to produce the very items that are most searched for, right down to the specs of the most sold items in each category.

Data that producers and brands don’t have access to.

One can also imagine the quality of such goods. And the future of what will be most available and accessible to consumers should this scenario play out to its foreseeable trajectory. Does everyone want to put AmazonBasics sheets on their beds, and send their kids to school with AmazonBasics backpacks? It’s such a great price. We have some indication today, with the availability of goods at Costco, or really any big store’s own brands. But we’re not all wearing Kirkland jeans or cashmere. It’s a great price, and surely it fills a need in some cases. But the choice that we all crave sends each of us in somewhat different directions, to different styles, cuts, and washes in our jeans.

To go back to the microphone cables, what is it that makes a good cable? As a musician you want a richness of the resulting sound that travels through them, as well as durability and reliability over time, among other specifications based on your own experience and need. Is Amazon the best company to deliver what you want in these cables? No. Do they care? Certainly not.

Meet the producers

You can see the potential effect on consumers of this control of the funnel, but what about producers?

When most producers start out, they begin with an affinity for an item or category, coupled with a unique vision for something different or better than what is available at the time. Sometimes it is a more straightforward view into a need in the market itself for a particular item or a different take on an existing item. And so the research and eventual production begins. As a small producer, perhaps selling directly to customers through your website or storefront, or even a marketplace like Etsy, or as a small merchant, on Amazon, you have access to information about who your customers are. Where they are, what they want, when they are happy with what you’ve produced, or not. But, as demand grows and the product begins to appear in other outlets, like bigger stores or outlets like Amazon, you lose that direct connection. At every point in the supply chain there is data that you no longer have access to. As you start to ship product to a warehouse, you don’t entirely know where it is going from there. What parts of the country are getting how much, and when? As it ships out, how long does it take to get there? Is it arriving in time for the right demand? And finally, in the store or outlet itself, who is buying, how much, and when? What are they searching for to find your product? What is their first experience with your product?

Over time Amazon, and others, really, if you look at Walmart’s actions and acquisitions (Jet) recently, have taken ownership of each of the points along this chain. And now they are working on closing that loop to the disadvantage of the producer, and ultimately the customer.

Within their properties, Amazon is slowly but surely moving to dominate the wide base of consumer goods, to the point of undercutting producers. Now, with the move into the ad space, they are moving beyond their properties and into most any other media you consume.

You’re already familiar with the kind of creepy phenomenon of having looked at a product online, only to see an ad for it as you browse elsewhere on the internet. With what Amazon is positioning, your shopping behaviour itself will feed the advertisements you see.

Here’s the thing though, it is creepy. That feeling is legitimate. Amazon has a whole story’s worth of data on you. And they are going to leverage the shit out of it at the expense of the brands you love.

Future of Commerce is Patented.

What we recognized early during the creation of Comr.se Corp, (circa 2013) was that the centralizing and serving up of product and shopper data into apps, marketplaces, and social channels would be a significant undertaking, but one hell of a market opportunity. Enabling that level of data mobility would be unique and extremely important should shoppers opt to engage with a brands products across environments.

Let me explain what we wanted to protect: shopping anywhere. Having the world of commerce dominated by Amazon, Flipkart and Alibaba reflects the recurring and compounding strategies of incumbent retailers, entities that persistently centralize the shopping experience.

Again — Let me explain. We tried on multiple occasions with Amazon to engage them to partner with us as a payments partner in order to support the efforts of putting digital commerce into ads, social channels or developer’s apps. While certain humans on the Amazon payments team found the ‘Buy Now’ use cases from Pinterest and Twitter cute, there were ZERO FUCKS given into the consideration process where Amazon would be interested in enabling their value to be leveraged outside of the desirable path to purchase.

Again, more — I have my intuitions derived from previous engagements with the Amazon payments and Amazon ads team that this thesis will hold true. Amazon only wants behavior that will push a shopper into their highly performant funnel so as to drive conversion on Amazon.com or within the Amazon app. This strategy will lead to an ever-growing, self-serving efficiency, bringing more and more shoppers into the belly of the orange beast. Centralize time, centralize consumer attention, centralize value. Mitigate brands’ value, extract margins, commoditize brands’ value, rinse and repeat — these are the systems that uphold Amazon.

Now to the patent… I’ve never been able to look at shopping and the broader retail landscape from any perspective other than through the eyes of the Brands producing the products we love.

When we raised the capital to launch Comr.se Corp in 2014. The idea was brand data liberation. Capture the brand’s attention by unlocking their siloed data, constrained to the enterprise ERP or eCommerce platform, and let it lose. Let their product data move more efficiently into marketing environments experiences or social channels. This was the idea. Sync, unhinge, unlock and ultimately decentralize a brand’s product data to enable the opportunities to connect directly to shoppers regardless of the environment.

You see, the last statement is the lynchpin in our thinking. It was the genius and ultimately our greatest challenge. We wanted to allow brands to connect directly with the shoppers. The fucking product discovery and product conversion ecosystem weren’t having that. Owning the brand’s product journey, from the moment of a shopper’s initial discovery through purchase, has propped up the household tech brands we all know. Consuming data about the performance of a product, interest in search or social environments, and cataloging the upsells and return rates from marketplaces are only a sliver of the centralization tactics that technology incumbents leverage against brands and shoppers.

Again — Back to the patent. We knew centralization wouldn’t last. We knew that there would be a model shopping experience, or marketplace that would want to exist and transcend beyond the confines of its own digitally walled garden. We had no clue that it would take rearchitecting the entire shopping ecosystem to do it.

With EVERY’s consuming of previous ‘Comr.se Corp’ assets, we are excited for the decentralization and distribution of commerce to be resting within EVERY’s Intellectual Property.

US 20150278931 A1 : “Native eCommerce Transactables for Familiar User Environments”

Native e-commerce transactable for social and other familiar and/or suitable user environments are enabled. A user of a network site may interact with a transactable to conduct a transaction with a 3rd party without leaving a user environment of the network site. The transactable may be configured to adopt the “look and feel” of the network site into which it is incorporated. While conducting the transaction with the transactable, the user may perceive that they remain at the network site, even though transaction information may be exchanged with a 3rd party network site. The transaction mediation service may obtain social activity data from a plurality of social network sites, as well as merchant activity data (e.g., transaction activity) from a plurality of merchant network sites. The data of each suitable network site may be translated, transformed and/or normalized into a unified and uniform format maintained by the transaction mediation service.