Scott Galloway, NYU Stern School of Business professor and future co-host of our new Pivot podcast, kicked off Recode’s Code Commerce conference this week in New York with a wide-ranging and humorous presentation.
Watch: Scott Galloway’s provocative predictions on Amazon, Walmart and the future of retail
Why Walmart will beat Amazon at groceries.
Rani Molla was a senior correspondent at Vox and has been focusing her reporting on the future of work. She has covered business and technology for more than a decade — often in charts — including at Bloomberg and the Wall Street Journal.
There he discussed everything from artificial scarcity in fast fashion to why VR will fail — “no one’s gonna put something on their face that acts as a prophylactic that ensures they will never conceive a child.” He also presented a number of predictions, many of which had to do with Amazon.
Here are some of the most interesting:
Amazon’s new headquarters will be in Washington, D.C.
Galloway called Amazon’s competition for where to locate its second headquarters a “ruse” and a game that was “over before it started.” He predicts the location all along was Washington, D.C.
- Amazon CEO Jeff Bezos has a home there.
- It’s not Indianapolis, where he said Bezos would be unlikely to want to spend his time.
- Proximity to the national’s capital will help Amazon stave off regulation.
“The only thing in between Amazon and $1 trillion and $2 trillion in market cap is regulation,” Galloway said. “No one is going to regulate the gentleman throwing out the first pitch of the 2019 Washington Nationals season,” Galloway said, referring to Bezos.
That isn’t to say, however, that Galloway thinks Amazon setting up shop in D.C. is a good idea for the country.
“Amazon will take the most ridiculously insane term sheet, give it to someone in the D.C. metro area and say, ‘Match it,’” he said. “Ten to 20 years later, a lot of academics like myself are going to do the math and say, ‘This was stupid.’”
Amazon will surpass Apple in market cap in the next 60 to 90 days and will never look back
Although Apple was the first company to reach a $1 trillion market cap, hitting that target a month before Amazon, Galloway thinks the online retailer will soon beat out Apple for good. That’s because Amazon has a number of things going for it:
- Huge market share in the growing e-commerce market — nearly 50 percent — much bigger than market share for companies in other industries.
- Additional revenue from its advertising and media businesses supplement retail.
- Amazon’s success with Alexa on its Echo device has helped Amazon extend its reach to the growing audience of American smart speaker owners. Galloway said the Echo smart speaker has surpassed the smartphone as the “most innovative hardware product of the last 10 years that will also reshuffle trillions of dollars in market capitalization.”
Walmart will beat Amazon at groceries
“Online grocery is about to be the most innovative part of U.S. retail,” according to Galloway.
Thanks to a series of e-commerce acquisitions as well as its roots as a physical store, Walmart is poised to be the grocery winner of 2018, riding high on the trend toward click and collect.
He considers click and collect — the act of ordering groceries online and picking them up at the store — to be more convenient for many Americans than having food delivered. And he expects 3 percent to 5 percent of grocery sales to be completed in this manner.
“About 40-60 percent of the U.S. population can go two to three minutes out of the way to and from work to pick up groceries,” Galloway said. “It’s not that convenient for the majority of America to get home and find a yellow sticky saying, ‘We were here and couldn’t deliver.’”
Meanwhile, he says Amazon’s fresh grocery offerings are underwhelming and more expensive than Walmart’s.
Education and healthcare are the next best candidates for disruption
“It’s easy to pick a sector ripe for disruption,” Galloway told the audience. “Just look at its pricing relative to inflation.” The two most obvious sectors by this criteria, he said, are education and healthcare.
On education: “$100,000 in tuition, mostly taken on in debt, for me and a projector for two hours and 40 minutes. My agent takes 97 percent but it’s still unsustainable.”
On healthcare: “You’re going to see retail and healthcare meet in the middle. You’re going to start taking your kids to urgent care, not to the emergency room. Those little retail pop-ups with medical logos on them will become the fastest-growing part of retail.”
Galloway notes that — guess who? — Amazon is also pushing into healthcare.
This article originally appeared on Recode.net.
