Amazon’s Delivery Service, Snapchat’s Video Power, Google Play in China

Amazon’s Delivery Service

The Seattle Times headline on the news of Amazon buying the rest of French package-delivery company Colis PrivĂ© stated “Amazon poised to take on UPS, FedEx in delivery business”. While it is true this will make them a competitor to UPS and FedEx in France, much of the commentary around this move leads many to believe it is inevitable Amazon will someday own their own delivery services in every market they compete.

There is no question Amazon wants to save costs on delivery. This is why their drone program is in the testing phase. One can argue, if the future of Amazon delivery is by drone, they need to own fleets of vehicles to take drones to an area where they can be deployed, make their deliveries, and return to a truck.

At CES, I spent a bit of time speaking with retail executives. From what I can gather, this holiday season was quite negative YoY in terms of physical retail sales. While it is doubtful US consumers all of sudden spent less this holiday season, the better explanation is the share of online sales grew significantly YoY. This is what makes Amazon and the role they play in retail and distribution so interesting. They are the only US company doing online sales in volume and the retailers feel their presence. In this light, Amazon going as vertical as possible makes complete sense. The report also stated Amazon is negotiating the lease of cargo jets.

There are implications for FedEx and UPS in this scenario. Amazon is arguably one of the largest shippers of packages in the US and that is only growing. Which means the loss of this business will likely have negative impact on existing delivery services. Meaning perhaps that makes them a nice acquisition target, or many delivery trucks may be up for sale.

Snapchat’s Video Power

SnapChat is creeping up on Facebook in terms of daily video impressions with 7 billion to Facebook’s 8 billion. Facebook’s statistic is a little misleading since Facebook’s video impressions are generously helped by Facebook’s autoplay feature. Meaning as you scroll, unless the feature is disabled by the user, videos in your Facebook timeline will automatically play regardless of whether you want to watch them or not. With Snapchat, the person has to physically press on a video to play. So Snapchat’s video value from an engagement and, ultimately, advertising perspective is actually more valuable than Facebook’s when it comes to video.

There is no question the next big advertising medium is video. Both Facebook and Snapchat were relatively close in impressions, around 4 billion, mid-to-late 2015. The last official number from YouTube was 4 billion and, while it is likely YouTube gets more than 4 billion today, it is likely both Snapchat and Facebook have more daily video impressions than YouTube.

Our data confirms the 16-24 age demographic is very active on Snapchat. However, they don’t seem to be growing outside that age group, nor worldwide. If Snapchat can’t grow the user base much more, the focus is on heavy monetization of the base. A situation not unique to them. That being said, It is hard to not be bullish on Snapchat’s opportunity with video ads. Especially when they essentially own the Millennial generation which also happens to be the one advertisers desire the most.

Google Play to Enter China

I’ve read a number of public and private reports talking about Google’s efforts to bring their Play Store to the China Android environment. With how important China is to the consumer tech landscape, it is certainly a market a company with Google’s business model can’t be locked out of if they hope to increase their growth. With over 500 million Android smartphone users in China and over a dozen app stores, Google’s store would enter a crowded market.

Interestingly, some research I do through our global panels where we ask consumers what apps they use on a monthly basis yielded some interesting insight on Google Play in China. Leaving Google Play on the list for consumers in China to choose from, in the last quarter (Q4 2015) nine percent of Chinese consumers said they access Google Play monthly. Accessing Google Play, among other services like Facebook, Twitter, YouTube, Netflix, and more, are accessed via VPN solutions in China. When we dug into the usage of VPN services, Chinese consumers said it was to access better quality entertainment options than what they find locally. There could also be some ex-pat and non-Chinese consumers living there wanting to access these services. However, given the size of the panel in China, the 9% can’t just be from foreigners.

App stores in China, like ones offered from Baidu, 360, Tencent, Xiaomi App store, and others, dominate the landscape. Developers submit their apps to these stores and better ones from the larger vendors include app analytics, developer tools, and more. While this market is crowded, it will be interesting to see what vendors like Huawei or Lenovo do with Google being that they are very close partners globally. Ultimately, Google could see this strategy work in their favor as their global partners work to integrate them in China. This is an interesting move to keep an eye on to see how it plays out.

Published by

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

One thought on “Amazon’s Delivery Service, Snapchat’s Video Power, Google Play in China”

Leave a Reply

Your email address will not be published. Required fields are marked *