Another super interesting post by @GavinSBaker https://twitter.com/GavinSBaker/status/1259584027947909120?s=20

The only point I would nitpick is the "modest long-term negative" for FB GOOG.

While you do see consolidation and winner take most in digital services like OTAs, how many verticals either online/offline can become like BKNG?

The reason I would downplay the modest -ve is that almost any product/service (not just digital) can take advantage of advertising via FB GOOG user base, but few have differentiating qualities that make for high degrees of loyalty.

Arguably you will see more in digital world for the reasons Gavin cites but in the much larger addressable market of consumer products you’re mostly seeing the opposite effect towards increased fragmentation driven by DTC and Warby Parker brands.

One reason is that the starting point for consumer products today is already relatively consolidated in several sub-verticals where winner take most was already previously driven by shelf space scarcity and large CPG co’s leveraging a broad portfolio of brands.

The exception here is private label where there may be consolidation but it is being driven by distribution via vertical integration and lower cost (Aldi) and/or bulk offerings (COST), and increasingly in the future AMZN - which may be more of a channel vs product loyalty.

But that only reinforces the point that A LOT of products and services in the world are in fact commodities disguised as brands and loyalty is in fact low but has been camouflaged by relatively long lasting distribution models.

In this sense FB and GOOG are a bit like SHOP where underlying churn might be high but it doesn't really matter because there's an endless amount of people willing to try their luck at selling you a better mousepad.

Aside from low degree of differentiation the other force pushing against loyalty is the ever fragmented nature of local services. I expect if GOOG ever really starts monetizing maps we will see this more (but in truth we've been waiting on that for a while now).

Very relevant article ht WCM

"Less than half of all the respondents said they were sticking with the brands they usually bought, indicating that as the way consumers shopped has shifted over the last month so too have the products they buy." https://www.modernretail.co/retailers/second-mode-retail-shopping-patterns-are-shifting-again/

Distribution brands > Product brands https://twitter.com/ivan_brussels/status/1260564469593387009?s=20