Moat Strategy: Face Control
How Amazon is Turning into a Bouncer for your Home
Since the days of Studio 54, there was a need to enforce some sort of quality control over the people that these trendy clubs were letting in. They couldn’t just let everyone into their clubs, because then exclusivity would die. The need to manage demand and create the perception that they were the hottest club in town created the concept of face control.
Face control refers to the policy of upscale nightclubs, casinos, restaurants and similar establishments to strictly restrict entry based on a bouncer’s snap judgment of the suitability of a person’s looks, money, style or attitude, especially in Russia and other former Soviet countries such as Ukraine. The term “face control” comes from the fact that establishments are attempting to use exclusivity to preserve their public “face”.
He who controls the door has the power.
Preferred Vendors
The term preferred vendors has been popularized by the wedding industry. This is the list of vendors that the wedding venue pushes, for a couple of reasons.
They are referring them because a lot of people begin with wedding venues when looking to plan a wedding. Because it is where couples begin their wedding planning journey, venues are helping out a client by providing a list of reliable vendors. They might also be pushing them because they get a referral commission.
Airbnb does something similar. As we wrote here —
For software the way to be defensible is through business development. The key is in having a valuable service which can partner with other valuable services.
As a host, you have the ability to choose if you want to have your home cleaned in between visits. Because of a great business development deal, Handy, is Airbnb’s partner that handles all home cleanings. You can even schedule everything from the Airbnb interface.
Amazon Key
Fast forward to today. Amazon has been kind enough to roll out Amazon Key. Amazon Key allows Prime members to receive packages inside their homes with smart key access and a cloud security camera. Now, you won't have to worry about your neighbors stealing your packages or having to leave a spare key for your housekeeper. In addition, the system is also includes a cloud-based video camera which can ensure that the delivery person is only dropping off the package and not hanging around your home. It also works perfectly with any sort of other vendor that you would allow your house, unintended.
Now you might be thinking that Amazon was able to understand how well cloud based cameras and keyless entry systems sell.
After all, as we noted here —
As a store that sells other companies’ goods, one of the benefits is that it can learn a lot about is
1. shopping habits of different demographics (if a loyalty card is present),
2. price sensitivity for categories of goods, and
3. margins of those goods.
And there we have our plausible deniability. It would be strange if Amazon outright asked for a key to your place. Or was the one that selected which packages are allowed to enter, or which person was allowed to enter while you’re not home. However, with the Amazon Key, they are doing just that. We are surrendering decision power of who enters and who is left locked out. And we did this willingly. Their own delivery people have a key and not the UPS or post office worker. Making your choice of who you want to deliver your packages already chosen for you. They're playing with a loaded dice. We just aren't seeing it yet.
Alexa
The Alexa smart speaker was an innocent device until it “became smart”. As https://medium.com/@profgalloway stated and continues to state, voice is the new frontier in which the big companies are going to be competing on. With voice being the new interface, it is truly the Wild West. It is becoming harder to regulate and audit the relevancy of the search results, because of its nature.
Because Amazon has a lot of their own products, including the growing AmazonBasics category, when a person searches by voice on an Amazon Alexa, the Amazon product can appear higher in the results. As you see in the graph, people are more likely to order the first thing that is recommended by the Alexa. There's plausible deniability that it is a bit clumsy to "scroll” through the other search results. However, if you were a diabolical company looking to maximize margin, you would see this as a huge advantage in which you suppress the search results of your competitors or anyone that is in providing the highest margin possible — your own products.
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