In medieval Europe, feudal systems emerged when empires crumbled before reunifying under a new empire.
Commerce is having one of these moments.
Shopify (“arm the rebels”) would have you think Amazon is a commerce empire. It’s not. Not yet. Neither is Meta. Or Google. Or Apple.
All are feudal states.
If it wasn’t apparent before, it has been this month. Shopify said in its earnings call that it may strike a deal with Amazon to better support and push Buy With Prime. Meta announced it is requiring Facebook and Instagram Shops to use native checkout.
Those who we have been considering empire-builders are showing their hands: they believe they do not yet have the power to rule commerce.
This is, admittedly a way-out-there analogy, but it is, perhaps, a framework through which commerce might currently be explained: feudal society had rungs in which interdependencies existed, whereby peasants were protected by knights (in exchange for work) and knights were provided land by nobles (in exchange for allegiance). Without each other, no one prospered in the same way.
And herein may lie this framework’s value: It may feel like the walls are closing in on brands, but that’s not exactly accurate; they’re being built around them.
If you thought Apple’s ATT move was bad, then wait until all the walls are built. Amazon, Meta, Google, Apple… they’re all building kingdoms. No one, yet, has built an empire.
Ben Thompson, in a recent Stratechery article, wrote:
Stepping back, in the pre-ATT world, owning targetable inventory was very valuable; in the post-ATT world, though, owning conversion matters far more.
This is incomplete. The conversion matters more, because it enables advertising. And advertising is the next empire in commerce: GroupM estimates that 10% of all advertising comes from retail media networks. Amazon’s advertising business now does more revenue than Prime. Walmart’s advertising revenue grew 30% YoY in 2022 to $2.7 billion.
As the walls get built, this number will go up—and go up fast.
Zoom out far enough on this and brands are, in our estimation, knights in the feudal system—at best.
And like any good knight, their loyalty is necessary for a kingdom to amass more power. Figuring out where to place loyalty might be the most important move for the future.