Amazon's Imitation Game: Copy Your Way To Business Success

In the context of you again, how can you build your brand? How can you control that? You can only really rely on yourself at the end of the day. So today we're going to talk about how Amazon is currently copying other brands, rigging the results in their favor. Amazon has copied products and rigged search results to promote its own brands, documents show. I want to talk about what's happening here and how to think about this from a business mindset and what you would do as a human being. Right. And so there's a couple of lessons here. Again, this is more of a thought exercise. Let's look at a couple of highlights over here on my screen. So thousands of pages of internal Amazon documents examined by Reuters. Show the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India. So India, I believe their population's about 1.3 billion people or so. I do believe you have China becoming kind of the number one world power right now. Close behind, I think what's gonna happen long term is India might become the world power, uh, long term, right? Who knows what's gonna happen. You know, if you're Amazon, you're one of the largest companies in the world. You have Alphabet, you have Apple, you have Amazon, you have Microsoft. You kind of have these big companies out there. When you're one of the largest companies out there and you have all this data, you're the world's largest e-commerce store. What are you going to do exactly? Right? So if you're looking to grow, if you have shareholders, well, what ends up happening is they need to continue to grow to please their shareholders. Charlie Munger, Warren Buffett's partner, has always said, show me the incentive and I'll show you the outcome. If their executives' incentive is to continue to grow and maybe their compensation is tied to the stock performance, what are they going to do? They're going to look for any type of way to grow. That's human behavior. If you're given an incentive, you're going to keep pushing towards it and you're going to go above and beyond for that. And that's what's going on right now. I mean, you look at what Amazon has done as a company over the years, they've done a lot for the world. Amazon Prime, AWS, you have Kindle, you have the FBA program as well. So Fulfilled by Amazon, they generate a lot of sales through affiliate, which is meaning they take a commission off of each sale if you're selling on Amazon. So They have, uh, they bought Audible. There's the video aspect as well in terms of, you know, different shows that they might have. So they've done a lot of good for the world because they've built such a machine. They have a lot of proprietary data. If their incentive is to continue to grow, if their executives are incentivized that way, they're going to continue to find any way that allows them to do so. And so if you have this proprietary data, what are you going to do? Well, you're naturally incentivized to be like, oh, there's actually an opportunity here where We know exactly how well each product converts. We know what the return rate looks like. From that, we can cherry-pick the best products out there because we have this proprietary data. So this is naturally one of the problems with large centralized companies. A lot of people right now in the crypto world, they talk about Web 1 and Web 2, which is kind of the advent of social networks that we see today, right? Like the Facebooks of the world and, you know, the Alphabets of the world and YouTube, right? You see how these companies are able to dominate. So Web 2 is basically these centralized kind of behemoths, right? Web 1 was kind of a little more decentralized. You didn't really have any big players quite yet until people really figured out how to play the game. And then Web3, now you talk about DeFi, right? You think about the world of DeFi, you think about decentralized social networks, you think about DAOs or decentralized autonomous organizations. I'm talking about all this because that's where the world is going. You see a lot of this power that's consolidated with Amazons, the Alphabets, or the Googles of the world, and they have a lot of consolidated power and they've done a lot of good for the world. And by the way, Amazon also owns Twitch too. You know, you have a lot of people Politicians clamoring for big tech breakup. I do believe that it's becoming more and more of a problem with all this consolidated power, and they're behaving according to their incentives, which is totally fine. But at the same time, you know, the world cannot continue going this way, right? Because they're going to continue to do what's right for them, and rightfully so. They've earned their way up to doing so. And now, you know, the more power you gain, the more people are going to complain about it, right? I don't see it that way. I think they've played the game and they won, and now they might have to adjust based on kind of where the world is going. We can see the next highlight. The internal documents also showed that Amazon employees study proprietary data about other brands on Amazon.in, so that's India, including detailed information about customer returns. The aim is to identify and target goods described as reference or benchmark products and replicate them. You know, some of the best investors in the world, Mohnish Pabrai, I think that's how you pronounce it, he just copies what Warren Buffett does with his investing strategy. Oftentimes you can just take something and maybe iterate on it, maybe 10 to 20%, just make it into your own, that ends up working out. You know, that's really, that's kind of just drawing inspiration. It's building on the shoulders of titans, right? Amazon's really just taking products and really slapping their own brands on it, kind of reaching the parity with these products, right? And so a couple lessons here from a branding and marketing standpoint. What really matters at the end of the day is you have to have great products. You have to have distribution and Amazon has all the distribution in the world and they have all the proprietary data. So they're going to win the game and they know a thing or two when it comes to supply chain, to manufacturing, to all these things. So, you know, you can almost argue that a lot of the products that they're copying have become commodities because they know how to play the game there. They know they have the ultimate distribution machine in Amazon, right? So if you're able to control the brand, if you're able to control the data, then you're going to be in a good spot, especially in a world where privacy is becoming more of a thing. When you see what Apple's doing with their iOS 14 update, you can see government clamoring down and saying large companies shouldn't have all the power in the world. So who knows what's going to happen with that? The lesson here also is you can only really rely on yourself at the end of the day. Can you collect email addresses? Can you collect text messages, right? So can you have like an SMS chat group or community like community.com? You can have push notifications on your site, you can collect emails. To an extent, you can also use SEO too. Those are really the channels that you can, the first 3 you can more or less control, but Google can obviously ban you from an SEO standpoint too. So how can you control your brand? Because what's becoming more and more of a moat long-term is your brand. Nobody else can take that away from you. And you might say, hey, I don't have that brand. I don't know what to do exactly there. Well, if you have some resources, can you go out there and can you buy some media properties that have good email lists, that have good organic traffic, that have some form of distribution that you can take advantage of? The more you rely on the beck and whim of like a Facebook or a Google or even Amazon ads, TikTok ads or whatever, at any given time, these platforms can decide, hey, we're gonna change how this works. We're gonna change how the algorithm works. And then you're screwed. Amazon's taking matters into their own hands, and people are unhappy with their success. You know that's fine. They're playing the game how they want to play the game. I mean, they have their goals, and they're just going to do that. It's not right or wrong. It's just that's what's right in their minds. In the context of you again, how can you build your brand? How can you control that? Because what I will say, what I realized with you building a podcast, one podcast has over 50 million downloads. The other one has you know a couple million or so. Building our SEO traffic over the years, or even building our other channels over the years, it takes a lot of time. With business success, it typically takes about three years to get there. Same thing. With building an audience, right? If you want to build an audience from scratch. So Amazon has been accused by employees who work on private brand products of exploiting proprietary data from individual sellers to launch competing products and maintaining search results to increase sales of company's own goods. Again, show me an incentive and I'll show you the outcome. And highlighted in red over here, Amazon said, as Reuters hasn't shared the documents or their provenance with us, we are unable to confirm the veracity or otherwise of the information and claims as stated. We believe these claims are factually incorrect and unsubstantiated. A lot of big words in here, but provenance is the one that I really want to highlight. Provenance basically allows you to really verify the origin of a document or a product or of a piece of art. And that's what you can do with NFTs. You can verify the origin or the history of art and determine that this is actually the original source or this is legitimate. And so with NFTs, with the blockchain, you're actually able to verify provenance. I believe in the long term, in the future, this is way out there, but all documents are going to be verified by the blockchain, right? You're able to kind of verify provenance. I just want to call out here, I mean, they're using a big word here, but I think it does apply kind of to the future as well. I mean, come on, this is obvious, right? They're— of course Amazon's gonna respond by saying like, we can't verify these, right? So in the future, you're not gonna be able to say this as easily. You know, hopefully a lot of these are stored on blockchains, whether they're private blockchains— I would hope for this type of stuff— or public blockchains. And so I believe that's where the world is going. And the final highlight I'm gonna call out here is Amazon predicted private brand sales would reach nearly $600 million by 2020 in India. According to a 2017 internal business strategy document, we will be amongst the top 3 brands in each subcategory that we play in, the document stated. It makes sense that they're doing this. I don't know if people should be upset here. They're just doing what's right by them. And you need to be thinking about what's right by you and how you can control your own destiny because at the end of the day, only you can do that. The government's not gonna come save you. In fact, you know, you could have the people that are out there kind of creating their own outcomes or you can have the government out there that's going to, you know, create the outcomes for you, right? So you wanna do everything you can to control your own destiny. And that's what it is at the end of the day. So don't forget to hit the like button for this video to help grow the reach. And don't forget to hit the subscribe and the bell button, um, if you enjoyed this video, and we'll catch you in the next one.