insights! episode #8: verticalisation of companies

It's about vertical integration, about verticalising your business model. That's the sixth of eight points about what the GAFAs really do differently from other companies. Verticalisation is something many companies already do. It's not inherently special either. I want to go through two or three examples with you of what the GAFAs do, and I'll start with Apple.

Apple made computers and still does. At some point Apple made an MP3 player, then came out with the iTunes Store. Smartphones came out. Vertical integration, in effect, means I sell the devices through the stores, through the online shop. I also manufacture all these devices myself, I design them myself, or rather have them produced on my behalf. But across this entire digital chain I also have the iTunes Store. Anyone who does anything involving monetisation there pays a tax to Apple. And that's how Apple managed to vertically integrate across the entire level and offer it accordingly, integrated.

Amazon does that much, much more intensively. They don't just sell products, no, by now they also have a payment offering. In more and more countries Amazon also handles logistics, and not just to the end customer, which is the particularly tough part, but also company-wide between the warehouses. They've bought aircraft that transport the relevant products from larger hubs. But Amazon doesn't stop there. Amazon has the marketplace we all know, which is populated by retailers, often small retailers. Amazon identifies which products work there, then takes a closer look at those retailers, put positively, and discusses with them how that could be expanded further. Amazon perhaps also builds white-label solutions together with the retailers or manufacturers, which then create Amazon Basics. And Amazon then makes these Basics fairly big, batteries or cables, MP3 players. Many of these Amazon Basics were originally introduced by entirely different manufacturers and retailers. Once that's happened, the retailers can also be swapped out again. That's perhaps the downside of the whole thing, and something we always warn about.

But from Amazon's perspective, that's something they've vertically integrated further too. And they're integrating it forward as well, towards the customer.

Who knew, for instance, that Twitch is part of the Amazon network?

Who knows that Amazon is also researching quantum computers and has bought many AI companies, certainly to build new things into their vertical value chain there? That's exactly what makes this company so powerful, but from my point of view also concerning from a socio-political perspective, since it ultimately controls an entire chain.

But that's not the topic today.

The topic is, how can you look out for yourself, how do I get ahead?

We don't even need to go that deep into the GAFA world.

We've also seen this verticalisation with Esprit, Gerry Weber and other companies that also manufacture and sell directly. How can you do that? How can you give the customer even more of your own offering? From our perspective today as an agency, we also run systems, and very well too. We implement them and try to verticalise in the same way. And taking these ideas out and looking at where the topics are for you, that's a step you should definitely take with someone who can support you along the way. Because verticalisation is something you can use to leverage existing customer relationships to generate new value for your customers and for yourself with new products, perhaps ones you design completely afresh, perhaps even with the Benjamin Button principle attached.

This makes you as a company also a bit bigger, more stable and more valuable at same time. And maybe you get the bundle effect too.

How you then sell the whole thing so it's gladly accepted, more on that in the next two sessions.

On the one hand, how do you become likeable? And on the other, what's your story?

I'm looking forward to going through the next two sessions with you!

Thanks for listening, have a great day or evening.

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