Why Web3 For Amazon?
Breaking down why Amazon is interested in making moves in Web3...
In today’s edition of the Ground Floor we will be breaking down why Amazon is interested in making moves into Web3.
Why Web3 For Amazon?
$957 billion dollars 💸
Amazon's current market cap far exceeds the value of every single NFT collection combined.
Nonetheless, this billion dollar business seemingly has their eyes set on entering the Web3 world by offering NFTs to their customers this April.
Let's break down why this move into the Web3 World makes sense for Amazon.
It's no secret that the leadership team at Amazon are fans of NFTs.
Amazon CEO, Andy Jassy
“I expect that NFTs will continue to grow very significantly."
"I do believe over time that you'll see crypto become bigger and – it's possible that Amazon ingrates crypto payments."
Nonetheless, these comments were never followed by actions from Amazon as they remained on the sidelines as the demand for NFTs went through the roof in May 2022, before experiencing a sharp decline in the months that followed.
⌛ Why Now?
The answer, consumers still care about NFTs.
Yes, this might not seem like sufficient cause for celebration, however, following Ethereum and Solana losing 50% of their value, and more rug pulls than I can keep count of ~ it was certainly possible that the demand for NFTs would simply fade away.
This hasn't happened, and while the total transaction volume for NFTs is a difficult data point to interpret thanks to the ever increasing number of people buying and selling NFTs to receive rewards from Blur, it's clear consumers are still interested in NFTs.
Combined with a a growing list of billion dollar brands such as Starbucks, Nike & Louis Vuitton who have all created projects to participate in Web3 ~ it's easy to see why Amazon is interested in exploring how they can help their customers explore Web3.
✅ The Best Case For Amazon
Candidly, the biggest problem with NFTs in 2023 is the low percentage of projects that can clearly communicate the value customers can expect to receive from owning their NFT.
This pain point presents a massive opportunity for companies such as Amazon.
Amazon's mission is to be "Earth's most customer-centric company".
Should Amazon adhere to this mission, it will be imperative to work with the Web3 companies that can clearly communicate the value proposition of their products such that Amazon customers can develop realistic expectations when purchasing NFTs.
Setting such a high standard is by no means an easy task for any company, however, Amazon is a company with almost infinite resources, and a strong understanding of the policies that are needed to ensure customers are happy when purchasing products online.
If, and it's a big if, Amazon were to set such a standard whereby projects are required to provide consumers with clarity on what they are purchasing ~ I can certainly see a world in which Amazon can become the most trusted place to purchase NFTs.
❌ Worst Case For Amazon?
While many people associate Amazon with delivering physical goods to consumers, it's worth remembering Amazon has built a beast of a business with Amazon Web Services ~ an enterprise software business that generates $5.2 billion in profits each quarter.
For context, that's more than $57 million each day.
Worst comes to worst, Amazon will spend < $100 million on their Web3 effort, obtaining invaluable learnings when it comes to consumers desire to purchase digital goods.
In any attempt such a loss is absolutely minuscule in comparison to the profits other divisions of the business generates each year, and in the meantime, vastly more people will have considered purchasing an NFT thanks to Amazon educating its customers.
📡 Looking Forward
Today, Amazon is one of the most technologically advanced companies in the world, with a willingness to lose billions of dollars in the short term, to win big in the long term.
With Amazon's leadership team needing no convincing that NFTs are here to stay, I'm very excited to see Amazon's approach to create an easy onboarding process to successfully onboard their customers to NFTs, and more importantly, what NFTs Amazon will present to their customers to give them a reason to remain excited about this initiative.
With 200 million loyal Amazon prime members alone, should Amazon successfully tick both of these boxes, there's certainty a world in which Amazon can play a pivotal role in onboarding the next 100 million users to Web3 ~ becoming the most trusted platform to purchase NFTs for the majority of Web3 consumers in the process.
💡 Web3 Roundup
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See you next time! — OB1👋
This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.