When Jeff Bezos announced to his Amazon staff his concept for the Amazon Marketplace in November 2000, many people — inside and outside Amazon — thought he was crazy. Amazon was inviting in other sellers — individuals and merchants — to compete against Amazon’s owned inventory on Amazon.com. As full price merchants were added in categories such as consumer electronics, apparel, and baby products in the early 2000s, the head shaking continued. To paraphrase, Jeff Bezos claimed this was about “the world of perfect information.” Customers are going to find the lowest price online if they really want to, and they should be trained to find it on Amazon. Maybe Amazon could grab a piece of the pie along the way.
Of course, what was once seen as crazy is now viewed with envy, as the marketplace now represents approximately 35% of Amazon’s revenues and 30% of total units sold in Q4 2010.* Amazon charges anywhere from a 5% to a 25% revenue share on a sale through its marketplace, roughly determined by dividing the expected margins in a category in half — to be shared with the merchant. With only limited incremental technology and category management costs, the profitability of this for Amazon is easy to see. And as a result, it has also solidified Amazon’s role as the leading product search site. This success is already breeding imitators in Buy.com, Sears, Walmart, NewEgg, and soon a whole host of large UK retailers. And let’s not ignore Apple’s iTunes, clearly a very successful marketplace, though of a somewhat different flavor.
Most of the hype in advance of today’s Apple media event is rightly about a new iPad. Sarah Rotman Epps will post on her blog about the new iPad for consumer product strategists after the announcement. I’m focused on the published reports that Apple’s Mobile Me service will be upgraded. I cited Mobile Me as an example of emerging personal cloud services in a July 2009 report, and I’m working on a follow-on report now. Mobile Me is Apple’s horse in a contest with Facebook, Google, Microsoft, and others, to shift personal computing from being device-centric to user-centric, so that you and I don’t need to think about which gadget has the apps or data that we want. The vision of personal cloud is that a combination of local apps, cached data, and cloud-based services will put the right information in the right device at the right time, whether on personal or work devices. The strengths of Mobile Me today are:
Synced contacts, calendar, Safari bookmarks, and email account settings, as well as IMAP-based Mobile Me email accounts, for Web, Mac, Windows, and iOS devices.
Synced Mac preferences, including app and system preferences.
Mobile Me Gallery for easy uploading and sharing of photos and videos.