Showing all posts tagged amazon:

Sowing Bitter Seeds

The Internet is outraged by… well, a whole lot of things, as usual, but in particular by Apple. For once, however, the issue is not phones that are both unexciting and unavailable, lacking innovation and wilfully discarding convention, and also both over- and under-priced. No, this time the issue is apps, and in particular VPN apps.

Authoritarian regimes around the world (Russia, "Saudi" Arabia, China, North Korea, etc) have long sought to control their populations' access to information in general, and to the Internet in particular. Of course anyone with a modicum of technical savvy - or a friend, relative, or passing acquaintance willing to do the simple setup - can keep unfettered access to the Internet by going through a Virtual Private Network, or VPN.

A VPN does what it says on the tin: it creates a virtual network that connects directly with an endpoint somewhere else; importantly, somewhere outside the authoritarian regime's control. As such, VPNs have always existed in something of a grey area, but now China (the People's Republic, not that other China) has gone ahead and formally banned their use.

In turn, Apple have responded by removing unregistered VPN apps (which in practical terms means all of them) from their App Store in China. In the face of the Internet's predictable outrage, Apple provided this bald statement (via TechChrunch):

Earlier this year China’s MIIT announced that all developers offering VPNs must obtain a license from the government. We have been required to remove some VPN apps in China that do not meet the new regulations. These apps remain available in all other markets where they do business.

Now Apple do have a point; the law is indeed the law, and because they operate in China, they need to enforce it, just as they would with laws in any other country.

Here's the rub, though. By the regionalised way they have set up their App Store service, they have made themselves unnecessarily vulnerable to this sort of arm-twisting by unfriendly governments. Last time I wrote about geo-fencing and its consequences, the cause of the day was Russia demanding removal of the LinkedIn app, and China (them again!) demanding removal of the New York Times app. As I wrote at the time, companies like Apple originally set up the infrastructure for these geographic restrictions to enable IP protection, but the same tools are being repurposed for censorship:

This sort of restriction used to be “just" hostile to consumers. Now, it is turning into a weapon that authoritarian regimes can wield against Apple, Google, and whoever else. Nobody would allow Russia to ban LinkedIn around the world, or China to remove the New York Times app everywhere - but because dedicated App Stores exist for .ru and .cn, they are able to demand these bans as local exceptions, and even defend them as respecting local laws and sensibilities. If there were one worldwide App Store, this gambit would not work.

The argument against the infrastructure of laws and regulations that was put in place to enable (ineffective) IP restrictions was always that it could be, and would be, repurposed to enable repression by authoritarian regimes. People scoffed at these privacy concerns, saying "if you have nothing to hide, you have nothing to fear". But what if your government is the next to decide that reading the NYT or having a LinkedIn profile is against the law? How scared should you be then?

If you are designing a social network or other system with the expectation of widespread adoption, these days this has to be part of your threat model. Otherwise, one day the government may come knocking, demanding your user database for any reason or no reason at all - and what seemed like a good idea at the time will end up messing up a lot of people's lives.

Product designers by and large do not think of such things, as we saw when Amazon decided that it would be perfectly reasonable to give everyone in your address book access to your Alexa device - and make it so users could not turn off this feature without a telephone call to Amazon support.

How well do you think that would go down if you were a dissident, or just in the social circle of one?

Our instinctive attitude to data is to hoard them, but this instinct is obsolete, forged in a time when data were hard to gather, store, and access. It took something on the scale of the Stasi to build and maintain profiles on even six million citizens (out of a population of sixteen million), and the effort and expense was part of what broke the East German regime in the end. These days, it's trivial to build and access such a profile for pretty much anyone, so we need to change our thinking about data - how we gather them, and how we treat them once we have them.

Personal data are more akin to toxic waste, generated as a byproduct of valuable activity and needing to be stored with extreme care because of the dire consequences of any leaks. Luckily, data are different from toxic waste in one key respect: they can be deleted, or better, never gathered in the first place. The same goes for many other choices, such as restricting users to one particular geographical App Store, or making it easy to share your entire contact list (including by mistake), but very difficult to take that decision back.

What other design decisions are being made today based on obsolete assumptions that will come back to bite users in the future?


UPDATE: And there we go, now Russia is following China’s example and banning VPNs as well. The idea of a technical fix to social and legal problems is always a short-term illusion.


Image by Sean DuBois via Unsplash

The Middle Cannot Hold

In light of Amazon's latest moves - first the acquisition of Whole Foods, and now a cooperation with Sears - the stock market is trying to work out what will be the next area of retail to be hit.

Here's a sample of the latest Finimize newsletter:

Investors should be asking, who’s next in Amazon’s line of fire?
One of the biggest threats is likely to come from Amazon making more of its own-label products. For example, why would people pay a premium for
Colgate
toothpaste or
Dove
soap if Amazon basics are cheaper and arrive at our front door on the same day?
Procter & Gamble
,
Unilever
and other consumer goods giants could experience serious upheaval to their business models. Similarly, apparel companies are threatened: Amazon’s own-label clothing sales grew 25% last year, far outstripping the industry’s 3% growth. Do you care if your downward dog is performed in Amazon yoga pants rather than
Lululemon
? Perhaps not.

This analysis is not wrong, but is incomplete. Amazon will indeed take over a large chunk of the bottom end of the market, which is almost undifferentiated. The top end will be largely unaffected, as it is driven by completely different mechanisms.

The vulnerable actors are the ones in the middle of the market, who offered neither exceptionally high quality, nor particularly low prices. Historically, these brands succeeded by controlling distribution, especially outside major population centres.

Once an alternative becomes available that offers lower prices for equivalent quality (or the perception thereof), those middle-of-the-road brands and distribution outlets get squeezed hard.

I have noticed this over the last few years on the ski slopes, where a number of relatively undifferentiated brands have disappeared under a rising tide of previously unkown logos. All of these - Wed'ze, Quechua, and the like - are the house brands of Decathlon, the French sports superstore.

This is the Amazon Basics formula: good quality, and very reasonable prices. What Decathlon adds to the mix is that the designs are usually attractive, if somewhat non-descript, and that the clothes are available to try on in their vast network of retail outlets.

That last factor is key: to conserve differentiation and therefore ability to compete against a determined behemoth like Amazon, offer something they don't. Even buying something as simple as a T-shirt online is a fraught experience, with the differences between European and US sizing. I can't imagine shopping online for anything more complicated, like a shirt or a suit. On the other hand, I buy stuff from Decathlon every season because I can check it out in store, try it on, feel the material.

The same goes for Zara, part of the giant Inditex group, which benefits from a joined-up online/offline strategy. Customers can try on clothes in store, but if the precise colour and size combination is not available, they can order it online through Zara's own retail site. Another factor that might cause shoppers to hesitate before making an online purchase is returns. The cost of shipping can outweigh the cost of the item, and in any case requires shoppers to deal with packaging and labelling, before taking the item to an out-of-town shipper. Zara on the other hand allows online shoppers to manage exchanges or returns in-store, thereby further monetising their investment in real estate even for online-first shoppers.

Of course not every operator has to take this route - which is good, because by definition there is not much room at this end of the market, where margins are razor-thin.

For anything I care deeply about, I shop from named brands that I have built up trust with - the likes of Level or Hestra for gloves, Under Armor for mid-layers, Burton or Arcteryx for outerwear, and so on. These are fairly big-ticket items, certainly in proportion to the base layers I pick up by the three-pack at Decathlon, so I shop around and get all picky about them.

Part of what I buy into is of course the experience. Going into a North Face store, you feel like you are participating in strenuous and exciting activities, even if all you are doing is bumbling about in-bounds trying to get your kids to graduate from their preferred "Snowplow Everywhere!!!" technique. Neither Amazon nor Decathlon can offer this, but then again, they have staked out the price-sensitive end of the market.

There is not much room in the middle any more, especially when you consider that consumers are quite happy to cross back and forth, wearing base layers from no-name brands under much more expensive outer layers. On the other hand, it's not a foregone conclusion that Amazon will own everything below the top of the market. Price-focused outlets still have a role to play, if they capitalise on their strengths.

As with most aspects of the digital revolution, it's the middlemen that are in trouble. The trick is to have a unique value proposition and stick to it. Operators whose only proposition was ubiquity and convenience cannot match the actual ubiquity and convenience of web-scale operators.

Coming full circle, groceries will experience a similar transition over time. Amazon is good at undifferentiated goods - which is why they started out with books: a book is the same regardless of when and where it is bought. I fully expect them to take over a big chunk of the market for packaged goods. On the other hand, there will always be a need to pick out fruit and groceries in person, to feel whether this avocado is ripe to make guacamole tonight or whether that bunch of bananas is green enough to last out the week. By combining online scale with Whole Foods' local presence, Amazon is going for the Zara play: check out a few products locally, buy many products online, and have both parts of the experience supported by the same seamless massive back-end.

Anyone wanting to compete with Amazon should choose their terrain very carefull indeed. After all, your margin is their opportunity.

Wishing for a Wish List

Why does Apple hate wish lists so much?

The wish list is the main thing I miss since I fell out with Amazon and moved all of my media buying over to iTunes. Amazon not only has great management of its wish list, allowing you to sort it any way you like and highlighting deals, or sharing it with friends and family as suggestions; it also uses the contents of your wish list as inputs to its recommendation engine.

Over the decade or so that I used Amazon regularly, its recommendations grew to be uncannily accurate, alerting me to new books or albums that I might be interested in. The algorithm involved was clever enough to recommend not only new works by artists I had already bought from in the past, but also works by other artists I had not previously encountered. This was driven by their ability to identify that "other people who bought X also bought Y", based on their insight into all of our purchasing histories.

Of course this is a critical feature for Amazon, which explains why they spend so much time and effort on refining it. In fact, it was only when they messed with my wish list that I left in a huff.

I had continued to buy from Amazon’s UK site after leaving the UK, because with free shipping within the EU, it made no difference, while it allowed me to keep that all-important wish list history. A few years later, however, Amazon in their wisdom decided that many items would no longer be made available to ship outside the UK. Instead of simply tagging the items with a notice, they simply removed the items from users’ stored wish lists. In my case, this meant I lost nearly half of my wish list items.

I use wish lists as a way to spread out purchases or remind me of items that are due to come out in the future but that I am not committed enough to pre-order right away (or which may not yet be available to pre-order). Deleting half of my wish list in this high-handed way was enough for me to quit a triple-figure-per-month Amazon habit cold-turkey.

This coincided with the move to a new house, where even our existing media collections were overflowing the shelves once we had finished unpacking. The time was therefore ripe for a move to electronic content only, and given that I was cross with Amazon, Apple was the only real alternative.

It’s been a couple of years now, and I have not regretted it in any way. I adapted very quickly to reading on the iPad, and music and the occasional film are of course super-easy. There is only one glaring problem, and that is the utterly inconsistent handling of wish lists on the part of the Apple store apps.

iBooks app on iPhone - note lack of wish list button

The fact that it’s plural “apps" is a bit of a problem in its own right, actually. I have a Music app to listen to music, that I buy in the iTunes Store app. That is where I also buy videos, that I then watch in the Videos app. But if I want to buy books, I have to do that in a special tab of the iBooks app.

Historically this makes sense - iBooks came along much later than the rest of iTunes. But why the weird inconsistencies in when I can add something to my iTunes/iBooks wish lists? iBooks on iOS won’t allow this, but iBooks on the Mac will. On the other hand, iTunes on the Mac won’t let me add an album to my wish list, but the iTunes Store app on iOS will.

Same screen in iTunes Store app on iPhone - note "Add to Wish List" button

This is why I have a file in Notes with iTunes Store links to items that I wanted to add to my wish list, but couldn’t because I didn’t have access to the specific device that would let me do that at the time.

Workaround

This is admittedly a pretty minor niggle in the grand scheme of things, but I think it’s philosophically important for Apple to fix this inconsistency. It lies right at the heart of the iTunes ecosystem, and creates an unexpected and annoying discrepancy between MacOS and iOS platforms, and even between different devices on iOS.