Earlier this week at the 2015 DLD conference in Munich, L2 Founder Scott Galloway spoke about the four most dominant companies in digital and made predictions around who will increase and decrease in value and influence in 2015. “The Four Horsemen” Amazon/Apple/Facebook/Google, are the most dominant tech companies with a higher combined market cap than the GDP of South Korea.
Amazon: Pure-play retail is going away, whether its pure e-commerce or brick-and-mortar without an online presence. Therefore companies like Fab.com, Gilt, and Net-a-porter are on their way out. True innovators are e-commerce players Rent the Runway and Warby Parker who are opening up stores, and traditional department stores that are expanding their e-commerce and omnichannel operations. While Amazon has a reputation of being the most innovative company in the past ten years, Macy’s has surpassed Amazon in the past five years from a shareholder perspective.
Amazon’s Achilles heel likely to lead its downfall: shipping costs. The company received $3.1 billion in shipping fees and spent $6.6 billion on fulfillment last year. Galloway predicts Amazon will make a brick-and mortar acquisition in the next 12 months. Top contenders: RadioShack, U.S. Postal Service, a gas station chain.
Facebook: The company that changed the nature of friendships also pulled off the biggest bait-and-switch in marketing history. After convincing brands to invest in building Facebook communities, it started charging for access. Organic reach on Facebook is at 6%, meaning brands can get virtually no access without spending. Facebook also made two of the best acquisitions in tech in the past decade: Instagram and Whatsapp. Instagram is growing faster than any other social platform in the world, except WeChat.
Galloway calls reports that say Facebook is declining in popularity “hogwash.” It is still the platform people of all ages spend the most time on. Furthermore, Facebook has the ability to track users by their identity, something only Google is able to do through Gmail.
Google: Google is dominant in search, but other brands are chipping at Google’s share . Two-thirds of product searches – which are high-value searches – are happening on Amazon, and a billion searches a day are done on Facebook vs. 3 billion on Google. Furthermore, the mobile world is unfriendly to Google, which has resulted in a lower cost-per-click and revenues slowing down.
Google failures: Google Glass and Google+.
Apple: Apple has the pillars of a luxury brand: craftsmanship, an iconic founder, an exceptional price point, vertical control of distribution, globally recognizable, and with a self-expressive benefit. It’s on it way to becoming the world’s largest luxury brand with the help of former Burberry and YSL CEOs Angela Ahrendts and Paul Deneve. Proof is this map of New York where red represents iOS and green represents Android. The operating system has become an indicator of wealth.
Apple is completing its transition to luxury with the Apple Watch, predicted to have more sales than any other watch company in 2015.
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