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Scott Galloway: How Amazon is Dismantling Retail

Scott Galloway speaks at L2’s Amazon Clinic about how Amazon is disrupting retail. By Scott Galloway

Not only has Amazon changed consumer shopping habits, it has changed the relationship between shareholders and investors.

Investors are no longer satisfied with steadily growing profits; instead they seek fast growth and strong vision – even at the expense of profitability.

Watch the video above for insights on the future of brand, Alexa’s effect on households.

Read: 3 Ways Amazon’s Alexa Could Create $10 Billion in Revenue By 2020

The online retail giant has decided to open up what amounts to Alexa’s ears, her 7-Mic Voice Processing Technology, to third party hardware makers who want to build the digital brain into their devices.

Here are the three prongs, according to RBC

  • Device sales: "~$5B in device sales, assuming 30% Amazon customer adoption" of the Echo and related products.
  • More shopping: "$5B in incremental shopping revenue, assuming 10% incremental sales per customer." Bezos has said that Alexa is "good for reordering consumables, where you don't have to make a lot of choices, but most online shopping is going to be facilitated by having a display." Still, RBC thinks Amazon could see a 10% bump.
  • Taking advantage of the platform: "In terms of Platform revenues, nice things happen when you reach a 100M+ installed base, which we estimate for Alexa within 3-5 years. We see several areas of incremental monetization – Alexa Skills Search placement and Premium Content Skills revenue share." Skills are the Alexa equivalent of apps on your phone and RBC sees an opportunity to pay Amazon for premium placement, and a cut of the revenue like Apple does with the App Store.

Related: 3 Ways Amazon’s Alexa Could Create $10 Billion in Revenue By 2020

Download the Paper: Death of Pureplay Retail

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