Beyond Aggregation: Amazon as a Service - From Users to (Sense)Makers: On the Pivotal Role of Stigmergic Social Annotation in the Quest for Collective Sensemaking

Beyond Aggregation: Amazon as a Service - From Users to (Sense)Makers: On the Pivotal Role of Stigmergic Social Annotation in the Quest for Collective Sensemaking

In late 2015, Amazon made a rare strategic mistake by closing its Webstore business and directing its customers to Shopify. This move was seen as a blunder, as Amazon essentially endorsed its competitor as the preferred partner for its Webstore diaspora. However, the composition of Shopify's business has since transformed from a Software-as-a-Service (SaaS) model to a commission-based one.

Amazon.com Inc. has now extended some of the offerings of its popular Prime membership program to merchants off its platform. This new service embeds Amazon's payment and fulfillment options onto third-party sites, effectively making Amazon a service provider. This shift is reminiscent of how Amazon Web Services (AWS) transformed from being a retailer to being a services provider.

AWS, Amazon's cloud computing arm, operates on a massive scale with substantial fixed costs but benefits greatly from economies of scale. The justification for building AWS was that Amazon would be its first and best customer, which would increase the return on investment. Similarly, Amazon's fulfillment centers, which house goods sold by third-party merchants leveraging Fulfilled-by-Amazon, benefit from increased scale and deepen Amazon's competitive advantage.

Now, it seems Amazon is looking to repeat this model with logistics. Just as they did with AWS and e-commerce distribution, Amazon plans to offer its logistics network to third parties. By doing so, they can further increase returns to scale and strengthen their market dominance.

The key to Amazon's success lies in its control of demand and the data it collects from consumers. This gives them a significant advantage over their suppliers and allows them to leverage a self-contained ad platform that is unaffected by government regulation or Apple's restrictions. However, this approach also limits Amazon's overall addressable market in markets where there are network effects.

In the case of e-commerce, Amazon will never be the only option, especially with the rise of The Anti-Amazon Alliance. To ensure customer satisfaction, merchants need to meet the expectations set by Amazon in terms of shipping. This is where Amazon's logistics network comes into play, as it offers an Amazon-like shipping experience to merchants who choose to ship via Amazon.

Although Amazon may have initially lost business to Shopify, it doesn't matter much if that business becomes a commoditized complement to Amazon's true differentiation in logistics. Building out a logistics network creates a nearly impregnable moat for Amazon, attracting businesses competing to be consumer touchpoints and increasing Amazon's addressable market.

Unfortunately for Shopify, the more volume Amazon processes, the harder it will be for them to scale their own shipping solution. This puts Shopify's major initiative at risk. However, Shopify can still differentiate itself by offering a solution that respects merchants' privacy and data security, which Amazon's offering lacks.

In the quest for collective sensemaking, the concept of stigmergic social annotation plays a pivotal role. Stigmergic communication relies on the environment as a distributed memory, with modifications left by others providing feedback and driving the emergence of novel system-level behavior. Stigmergic markers, such as likes, annotations, and hyperlinking of text, serve as digital traces of human attention and are valuable resources for both extractive (ad-tech) and constructive (collective sense-making) purposes.

To empower maker-centric ecologies and free human attention from platform control, the concept of Open Source Attention (OSA) is proposed. OSA aims to create a decentralized ecosystem for creating, storing, and querying stigmergic markers. By starting with basic hypertext primitives like emotional valence, bi-directional links, span highlighting, semantic categorization, and textual annotation, OSA seeks to "free" stigmergic markers in the same way that open source software frees software.

OSA is congruent with the "protocols, not platforms" approach, which advocates for interoperable protocols and storage for stigmergic primitives. By sharing data across diverse Personal Knowledge Management (PKM) apps, collective sense-making efforts can be enhanced.

In conclusion, Amazon's transformation from a retailer to a services provider has been marked by its adoption of the AWS model and its expansion into logistics. By offering its services to third parties, Amazon deepens its moat and solidifies its market dominance. However, there are still opportunities for competitors like Shopify to differentiate themselves by respecting privacy and data security. Additionally, the concept of Open Source Attention presents a way to free human attention from platform control and enhance collective sense-making efforts through stigmergic social annotation.