E-commerce Tipping Point Is 20%, Digital Winners & Losers (video)

Scott Galloway: The Tipping Point is 20%

Video above re-published Mar 10, 2017 (see note* below), by L2inc.com: NYU Stern Marketing Professor Scott Galloway on this week's digital winners and losers:

*Reposted this week's episode as the previous version included data that was cited correctly, but learned was not accurate and has been retracted by the source.)

Once a sector hits 20% e-commerce penetration, the winners and losers start to emerge. We've seen it with books and toys, and apparel may be next.

Loser: Firms relying on Amazon Web Services (aws.amazon.com). The recent outage disrupted service for hundreds of thousands of sites.

Loser: Online travel agents, whose crowded layout paves the way for Google's Hotel Finder to change the game.

Loser: Connected toys. Amid growing evidence that "smart" playthings can be hacked, Scott demos his kids' newest toy.

Sources:
0:16: Foner Books Analysis of SEC Filings.
0:24: “Total Retail 2016: They Say They Want a Revolution,” United States Fashion Industry Association, August 2016. http://bit.ly/2mLUggH
1:10: “AWS Still Owns the Cloud,” TechCrunch, February 2017. http://tcrn.ch/2kmsrYP
1:16: Q4 2016 Amazon Filings. http://bit.ly/2njB2Me
1:28: “Amazon Just Broke the Internet,” Gizmodo, March 2017. http://bit.ly/2n4saOj
1:36: “The Massive AWS Outage Hurt 54 of the Top 100 Internet Retailers — But Not Amazon,” Business Insider, March 2017. http://read.bi/2mG10di
1:42: “Amazon Just Broke the Internet,” Gizmodo, March 2017. http://bit.ly/2n4saOj
1:50: L2 inc.
1:57: L2 inc.
2:11: L2 inc.
2:21: “Germany Bans ‘My Friend Cayla’ Doll Over Spying Concerns,” NPR, February 2017. http://n.pr/2l2RlvZ
2:39: “If You Have One Of These Toys In Your House, You May Want To Stop Using It,” The Huffington Post, February 2017. http://huff.to/2lS7aXR

Auto-generated transcript via YouTube.com:
0:00what is the e-commerce tipping point
0:04according to our research once the
0:05sector has twenty percent e-commerce
0:07penetration the winners and losers begin
0:10to emerge case in point when the book
0:12industry had twenty percent e-commerce
0:14penetration in 2006 bookseller border
0:18sales lunch as Amazon took off toys and
0:22consumer electronics pass out threshold
0:24as evidenced by radio shacks bankruptcy
0:26and toys r us laying off ten percent of
0:30corporate employees in February which
0:32industries are next
0:33sporting goods and apparel and the
0:35closure of retailers including sports
0:37authority and aeropostale are the
0:39bellwethers here as its apparel needed
0:42another reason to get knocked down
0:45let's be honest you're totally
0:47distracted there is a glitch in the
0:49matrix i am wearing outdoor where i am
0:52wearing a Canada goose light shell and
0:55by the way I look fabulous however i'm
0:58wearing under my shell at leisure which
1:01I believe makes this canada do shit a
1:04loser firms relying on amazon web
1:06services Amazon's Cloud Service controls
1:09forty percent of the market more than
1:11the next three players combined AWS
1:14revenue with three and a half billion
1:15dollars and q4 up forty seven percent
1:18year-on-year but that success might be
1:21an issue for everyone else
1:23last week's glitch in a Virginia data
1:25center disrupted service for hundreds of
1:27thousands of sites including slack
1:30imager business insider and us here at
1:33l2 retailers including the disney store
1:35target and nike solo x increased by
1:38triple digits some customers of AWS were
1:41unaffected among those amazon a loser
1:45online travel agent sites including
1:48kayak dominate search eating hotel sites
1:51at their own game
1:52however most OTA sites are crowded and
1:54confusing half of kayak sponsored
1:56 listings are not for hotels but for
1:59 competitors booking.com and TripAdvisor
2:01 running ads on kayak making the company
2:04 of vulnerable to google which gets the
2:06 advertising game better than anyone
2:08 the Google hotel finder tool comes up
2:10 for sixty percent of branded Hotel
2:12 searches on
2:13 google just like Google flights this
2:15 looks to be a game-changer a loser
2:18 connected choice in February Germany
2:20 bandy internet-connected my friend Kayla
2:23 doll over fears it could be used for
2:25 spying and last week a US company itself
2:27 smart teddy bears that lets kids and
2:29 parents record messages accidentally
2:32 leaked two million of those messages
2:34 along with the parents emails and
2:36 passwords my boys were able to extract a
2:39 toy for me this weekend for God's sake
2:41 leave me the hell alone can't you see
2:45 I'm trying to refresh the feed on my
2:47 facebook page and see how many likes i
2:49 have on the comment regarding how much I
2:52 love you
2:54 their favorite toy is powered by a
2:57 vilified chipotle and cialis will see in
3:00 actually this week we received an email
3:04 request from one of our dozens and
3:06 dozens of fans any chance you could give
3:09 him a shout out on the next winners and
3:11 losers better yet Bridget I'm going to
3:14 use the force on your husband David
3:17 David the universe is going to produce
3:20 for you a spouse for the rest of your
3:22 life with thoughtful and makes an effort
3:24 to surprise and delight you will be with you

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Did ICANN Just Break the Internet? No, But It Could Have, and May Yet

ICANN.org: "ICANN's mission is to help ensure a stable, secure and unified global Internet. To reach another person on the Internet, you have to type an address into your computer - a name or a number. That address has to be unique so computers know where to find each other. ICANN helps coordinate and support these unique identifiers across the world. ICANN was formed in 1998 as a not-for-profit public-benefit corporation and a community with participants from all over the world. ICANN and its community help keep the Internet secure, stable and interoperable. It also promotes competition and develops policy for the top-level of the Internet's naming system and facilitates the use of other unique Internet identifiers."

If you live in the U.S., you may have noticed or been affected by the internet outage on Friday caused by a distributed denial-of-service (DDoS) attack:

• Fusion.net: WTF is happening to the internet today? Internet down after DDOS attack. 
• Bloomberg.com: Possible Vendetta Behind the East Coast Web Slowdown: "Millions of internet users temporarily lost access to some of the world’s most popular websites Friday, as hackers hammered servers along the U.S. East Coast with phony traffic until they crashed, then moved westward. In what is believed to be a coordinated attack on one particular Domain Name Server provider, the hack took down sites including Twitter, Spotify, Reddit, CNN, Etsy and The New York Times for long stretches of time, from New York to Los Angeles ..."

Coincidentally (or maybe not), this attack came only a day after ICANN, global coordinator of the DNS including the internet Root Zone file (via subsidiary PTI), announced that pursuant to the Obama administration's IANA Stewardship Transition, "Verisign [NASDAQ: VRSN] will now perform the root zone maintainer services for ICANN under the Root Zone Maintainer Service Agreement (RZMA). ICANN and Verisign are in the process of switching to the root zone management systems that do not include NTIA’s [U.S. government] authorization role." 

Unfortunately for internet users around the world, incompetent ICANN has for several years been so obsessed with its new gTLDs program, seeing itself as a 'marketing agency' for new generic top-level domains from .PORN to .SUCKS, to now "over 1000 new gTLDs," that it has been lax in its primary duty of ensuring the security and stability of the domain name system (DNS). See, for example, on DomainMondo.com:

• Verisign, ICANN, Internet Root Zone, Risk Factors to the Root Domain 26 October 2015
• Internet DNS Root Stability, New gTLD Domains, ICANN Study RFP 08 June 2015

In the most recent Verisign 10-Q filing with the SEC (Q2 2016), Verisign warns (as it has for several years) under "Risk Factors":

"Under its New gTLD Program, ICANN has recommended delegations into the root zone of a large number of new gTLDs. In view of our role as the Root Zone Maintainer, and as a root server operator, we face increased risks should ICANN’s delegation of these new gTLDs, which represent unprecedented changes to the root zone in volume and frequency, cause security and stability problems within the DNS and/or for parties who rely on the DNS. Such risks include potential instability of the DNS including potential fragmentation of the DNS should ICANN’s delegations create sufficient instability, and potential claims based on our role in the root zone provisioning and delegation process. These risks, alone or in the aggregate, have the potential to cause serious harm to our Registry Services business. Further, our business could also be harmed through security, stability and resiliency degradation if the delegation of new gTLDs into the root zone causes problems to certain components of the DNS ecosystem or other aspects of the global DNS, or other relying parties are negatively impacted as a result of domain name collisions or other new gTLD security issues, such as exposure or other leakage of private or sensitive information."

For a reference to many of the risk factors about which ICANN has been warned, repeatedly, read the attachment included with this letter (pdf), from ICANN Board Chairman Steve Crocker to Patrik Fältström, Chair, ICANN Security and Stability Advisory Committee (SSAC), embedded below (highlighting added):

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