News & Analysis

A picture of the Queen goes into battle with a cardboard box from Silicon Valley

Andrew Saks, Tuesday, 8 June 2021

Amazon is a tough beast to reckon with.

Those who work in the financial sector would likely associate the global giant with its data monopoly, and herald it as being equal to the government in terms of the power it wields.

Amazon Web Services (AWS), which is the company's corporate internet services and hosting division, has a stranglehold over the transmission and reporting aspect of almost all regulatory reporting of retail financial markets transactions across the entirety of Europe, meaning that whenever a regulatory technology company sends its data to a reporting entity, it is giving its entire intellectual property to Amazon.

It is common knowledge within the financial services and electronic trading industry across Europe that AWS is so intrenched in the infrastructure that most regulatory consultancies which work with brokerages have no choice other than to use AWS for cloud-based reporting.

Ergo, AWS owns and has full access to all trade, client, reporting and commercial data of every derivatives firm that reports to various other regulatory bodies around the world.

That, whichever way you look at it, is a monopoly. Amazon, like all the large internet companies, is a data company. It is like Google, Alibaba, Facebook and eBay in its collaboration with big government and influence over the world’s markets and political leaders due to its harvesting of mass data and very detailed knowledge on how to assemble it.

Given that most companies in every business sector globally are now hardware-free, as in they do not have any large server infrastructure on site, Amazon has a massive business in hosting, too, meaning that they own a huge amount of infrastructure in most business sectors globally.

Think of AWS as a giant warehouse where every single business in every single area operates. Therefore, it is an intrinsic part of the corporate life of almost everyone in the world.

Outside of Amazon's enormous involvement in the business world's everyday operations, domestic customers see it as a delivery company which sends brown cardboard boxes to the doorstep of millions, with that familiar smiley face logo on each box.

It's a welcome and friendly knock at the door. A "what's in today's box?" combination of excitement and suspense.

People worldwide love it, and Amazon knows how to get this right. The company has been criticized over the years for its perceived treatment of logistical staff in its quest to make sure that customers get exactly what they want at the time they want it, anywhere in the world.

Amazon is now the first brand that comes to mind when anyone makes a purchase of absolutely any product from the internet.

Nobody thinks of Royal Mail, which was established over 505 years ago by King Henry VIII. Perhaps the only head he did not chop off was the one which appeared on the postage stamps that were applied to letters to prove that payment had been made for mailing letters.

Amazon is not five centuries old. It isn't even half a century old.

Yet it overshadows Royal Mail, and is considered modern and high-tech, whereas Royal Mail is considered as plodding as the Queen's cake stand.

Amazon is considered a 'big tech' company. A Silicon Valley leviathan. Royal Mail is considered as cutting edge as a retired geography teacher on a caravan holiday in Skegness.

How did this happen? What made even the most traditional members of British society eschew the red metal post-box in favor of the all-American recyclable cardboard package?

It may be purely down to clever advertising and image. Amazon is perceived as a high tech, internet giant with a well-funded television channel that is as avantgarde as can be. People who watch Amazon Prime are cool, whereas people who watch the BBC have an unkempt beard and a deer-stalker.

This is really all there is to it because Royal Mail is by no means an outsider and is now preparing to go into direct battle with Amazon on its core business which is parcel and mail delivery.

Just as Royal Mail prepares to be re-admitted to the FTSE 100 index alongside the 100 most prestigious publicly listed companies in the UK, its shareholders cheered the company's decision to out-Amazon Amazon by allowing customers to choose delivery time slots.

Royal Mail will let customers pay more to send and receive letters and parcels at specific times and on specific days, at a time during which 'premium' services and subscription products in everything ranging from rental apartments to cars and even clothing.

The company is in the process of putting together a 'good, better and best' three-tier system for its deliveries.

Choosing 'good' means customers would allow Royal Mail to decide the delivery, the more expensive 'better' tier will give customers control over dates, while 'best' will probably be dates and times. 

Investors backed the idea and Royal Mail shot to the top of the FTSE 100 index, up 1.4 per cent, or 8.4p, to 599.4p.

Royal Mail has been quietly raking it in over the past year, and profit has more than doubled to £702million as lockdowns and restrictions drove a surge in online shopping.

Therefore, it is fair to say that it also did what Amazon did in being one of the only business sectors that boomed during the draconian and anti-business lockdowns. The difference is that Royal Mail did not crow about it quite so much.

Royal Mail looks set to be re-included in the FTSE 100 index within the next few weeks and certainly before the end of this month, as the stock market reshuffle is taking place within the month of June, therefore now is the time when its current shareholders are paying attention to how it shapes its business now that it finds itself no longer a lone service with the Queen's head on its stamps and a Horlicks-before-bedtime image, but as part of a global elite which does battle with the Silicon Valley titans.

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