Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Are Google, Yahoo, Ebay and AMZN fast becoming the digital Wal-Marts of the emerging Internet 2.0 era?

Posted by Tom Foremski - April 18, 2006

By Tom Foremski for SiliconValleyWatcher

Wal-Martization.jpgAre Google, Yahoo, Ebay , Amazon (and maybe MSFT and Craig's List too) becoming the Wal-Marts of the digital age? It's an important question as they roll out more of their "local" products and fight for the next big market - local advertisers.

But as with Wal-Mart - smaller, local web sites will find it increasingly harder to compete with these giants because of their scale: their e-commerce platform, products, and services.

And as with Wal-Mart, money will be drained from local communities to the coffers of faraway companies rather than circulating in the community. This will become more of an issue as online commerce grows from its still very small share, less than 10 per cent, of overall commerce.

And as with Wal-Mart, these companies are increasing their use of overseas producers (software developers in India and China) which competes with US developers.

Is this a good thing? It is if they return significantly more in value/services than they take away--which could happen but it unlikely.

I'd rather that the local internet "air space" be owned by local organizations/communities so that the resources and capital stay local and continue to enrich the community. Why should the local pizza parlour advertise on on GOOG, YHOO, EBAY or AMZN? It would be better to advertise on a local community owned site--if one existed that was truly local.

I think that the digital Wal-Marts of the Internet 2.0 will have limited success with their "local" services because you cannot use servers and software to become a "local" online resource. You need to become a member of the community, and the digital Wal-Marts cannot become a visible and vital part of communities because you have to have your people in those communities.

And that's why true local online sites will win the battle for the local advertisers over time, imho.

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Later this week I'll post an idea on how local communities can battle the digital Wal-Marts and win.

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