When Amazon was founded in 1994 by Jeffrey Bezos, the company was nothing more than an online retailer of books organized from Bezos’ garage. Today, Amazon is the world’s largest online retailer selling much more than only books, with a remarkable reputation for being a “mass disruptor of industries”. So how does the company disrupt industry after industry? And which companies become Amazon’s next victims?
Within the last nine months alone, Amazon had announced dozens of new services and business expansions that have attacked major players in half a dozen industries.
Last June, Amazon acquired Whole Foods for $13.7 billion dollars. Despite the fact that the overall market share of Whole Foods in the grocery business is a small two percent, the effect on not only food retailers but also retailers of other goods can be large when Amazon decides to turn the roughly 400 stores into distribution hubs. Besides the Whole Food stores, Amazon has been opening physical bookstores, turning the retail industry on its head. These expansions show that Amazon does not necessarily eschew the idea of having physical stores.
But Amazon’s plans do not stop here. Bezos’s strategy of continuous evolution suggest that the company is ready to disrupt also other industries. Wall Street analysts speculate that with the acquisition of Whole Foods, the grocery chain might soon house pharmacy locations and threat all parts of the pharmaceutical supply chain, including drug makers.
Also the payments industry is not safe. Over the years, Amazon has been expanding its presence in digital payments. With the introduction of a one-click checkout, Amazon enhances the ease of payments on its website by saving the customers’ preferred payment details. Another feature is Amazon Pay Places, where users can order ahead and pay for goods in-store via the Amazon App. Besides that, Amazon introduced a service that enables customers to add cash to their Amazon accounts at select brick-and-mortar stores, which is comparable to depositing cash at a bank. Finally, Amazon offers traditional banking services, such as loans, which are becoming increasingly popular.
Amazon’s latest developments and its innovative approaches to transform how the marketplace delivers product sends a warning to companies: it is a matter of when Amazon gets into your business, not if.
Sources:
http://www.marketwatch.com/story/is-amazon-getting-into-the-pharmacy-business-this-is-what-you-need-to-know-2017-10-09
http://time.com/money/4868145/amazon-disrupts-industries/
https://www.forbes.com/sites/bisnow/2017/07/21/a-dozen-disruptions-amazons-pursuit-of-massive-market-share-in-12-major-industries/#3de95aff1ebe
https://seekingalpha.com/article/4083034-just-amazon-mass-disruption-retail
http://www.businessinsider.com/amazon-has-big-plans-to-disrupt-the-payments-industry-2017-7?international=true&r=US&IR=T
Interesting analysis Leonie! And I think you are right, it is only a matter of time before Amazon is a special generalist in every thinkable industry. However, in a free market economy, businesses are allowed to grow until a certain point makes them too monopolistic, and consequently they are broken up. That is why recently, some speculations have been published concerning the future of Amazon as one business: should it be broken up because it is too strong? Amazon currently represents around 30% of all United States e-commerce sales, and 70% of e-book sales (Dwyer, 2017). According to Dwyer (2017) economists have analyzed these numbers and concluded that Amazon, as well as Google and Facebook, are (supposedly) behind the decline of worker’s share in national income, the increase of inequality, the reduction in business startups and the decrease in spending on research and development. First of all, do you think that Amazon will and should be broken up sometime in the future, and do you think breaking up Amazon could solve the above-mentioned problems, or do you see other solutions?
Dwyer, M. (2017). Should America’s Tech Giants Be Broken Up?. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2017-07-20/should-america-s-tech-giants-be-broken-up [Accessed 17 Oct. 2017].