Benedict Evans has spent 20 years analysing mobile, media, and technology.

These are liveblogged notes from Ben’s talk to NEXT Limited Edition in Hamburg on 24th September 2021.

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We used to think of e-commerce as a separate thing from physical retail. But it’s not. As it turns out, people will buy anything online, but not at the same rate and in the same way they buy things in shops.

The question is: how do you get what you’ve bought? A lot can be delivered through the mailbox, but some things can’t: like restaurant deliveries and food.

Amazon delivers almost all its own parcels, but food delivery is a much more mixed picture. But meal delivery is about more than just delivery. You don’t end up changing the logistics, you change the restaurants themselves. The growth in delivery has created the “dark kitchen”, which is only made for delivery. 

One result of the shift to digital commerce is many more people working in logistics, or supporting logistics-driven businesses. 

Amazon and Shopify

People worry about Amazon, but it’s still quite a small proportion of commerce in total. For example, it’s not really in the restaurant space, and it’s only just moving into food delivery. But it’s also worth remembering that many other businesses sell through Amazon. That’s allowed the company to scale to new industries and countries, rather than having to build those lines itself.

Shopify is another example of unbundling, one that has grown through the pandemic, and is now doing about 40% of the value of Amazon Marketplace. Shopify made doing e-commerce an order of magnitude easier. The pandemic has made people spread their buying behaviour beyond Google and Amazon, and Shopify has enabled that for many businesses. 

People have moved beyond using the internet for price comparison, where they knew what they wanted, and went online to find out where to get it cheapest. They now go online to work out what to buy.

The internet has moved up the funnel. 

The Presumption Shift

Presumptions change over time. We switched from “colour TV” being a thing, to “black & white TV” being a thing, as colour became the default. That’s happened with retail: we now talk about “retail” and “physical retail”. 

Every brand and every retailer faces these challenges: how to generate demand and how to fulfil that demand. Physical retail can meet both of those challenges, but there are now many more options on both, thanks to the internet. 

Advertising has gone down as a share of GDP by ⅓. That’s partially because advertising has got more efficient, but also partially because some advertising doesn’t get classified as advertising any more — like real estate listings sites that charge commissions. It’s advertising a property, but it’s counted as paying a commission. There’s the rise of merchant media.

Unbundling the Ad Business

There are many challenges for the ad business. There’s the cookie apocalypse, which is going to hit targeted advertising. Unless we find an alternative, all the money is going to Google, Facebook, Axel Springer and the NYT, who have data that doesn’t require cookies to collect.

Tesla doesn’t have an advertising budget, but Elon Musk still seems to get the word out there… 

And then there are shifts, like streaming replacing broadcast TV. Software companies are now peers and competitors to the big traditional media companies. The US media market spends more on content than most of the European broadcasters put together. They used to sell their output to other markets — now they’re streaming to those markets directly and competing with the local broadcasters, but with much bigger budgets.

What sort of company are you?

Most consumer brands are actually B2B brands. Coke doesn’t sell drinks, it sells trucks full of drinks to people who sell drinks to consumers. Now, they’re trying to figure out how to go direct, and that’s a different business. Pizza delivery has always been a light manufacturing and logistics industry — and so were newspapers. 

So, what sort of company are you? If you have an idea for a new bag, which you sell via the internet and market via Instagram, before then selling it on Marketplace, and then maybe partnering with a big site like Net à Porter as you become successful? 

The old definitions don’t apply in an unbundled age.