A Dozen Disruptions: Amazon's Pursuit Of Massive Market Share In 12 Major Industries
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Since Amazon’s initial public offering 20 years ago, the online retailer’s stock has skyrocketed more than 42,000%, and the giant does not have plans of slowing.
Within the last seven months alone, Amazon has announced new services and business expansions that have stepped on the toes of major players in about half a dozen industries.
Founder and CEO Jeff Bezos has built an empire focused on constant innovation, making Amazon an industry trailblazer whose goals extend far beyond its initial online retail and cloud computing services business.
“Some of [Amazon's success] is attributable to Jeff Bezos himself. He’s now purchased the Washington Post, and it’s a power situation,” Berger Singerman Business Reorganization Team partner Ilyse Homer said. “You’re looking at someone extremely ambitious and successful who likes the idea of expanding his brand and seeing how that can influence the economy.”
Below are 12 industries Amazon has disrupted since its 1997 IPO or may disrupt in the near future.
When news broke that Amazon was buying high-end grocer Whole Foods Market for $13.7B, the industry was in a tizzy. Competing grocers’ shares plummeted and the retail industry questioned how it will keep up with the increasingly dominant retail behemoth going forward. The acquisition was a strategic move on Amazon’s part to better position itself for the logistics and supply chain challenges that come with online-to-door grocery deliveries. Grocers are already battling low profit margins due to declining food prices. As new discount grocers like Aldi enter the already tight market with lower prices, existing players such as Walmart and Kroger are forced to lower their prices to compete — and around the circle goes.
Amazon has been expanding its physical bookstore footprint. It recently announced its entry into the New York City market with its 7 West 34th St. location across from the Empire State Building. A second location is being mulled for the Hudson Yards area. Amazon opened its first bookstore in 2015 in Seattle. The company also has storefronts in San Diego and Portland, and there are plans for future stores in Chicago and Needham, Massachusetts.
The e-tailer has reportedly also been looking to expand its other retail storefronts. News broke last October that Amazon planned to open 2,000 supermarkets in the next 10 years, which Amazon later denied. The retailer is also making headway with its curbside pickup convenience stores that allow customers to buy products with no register and no checkout.
Amazon is also nosing into the meal prep industry. It filed a trademark for a service described as: "We do the prep. You be the chef," according to a filing uncovered by The Sunday Times. Less than a month after the company's initial public offering, meal kit company Blue Apron suffered its all-time intraday low on news of Amazon's impending competition. On July 17, Blue Apron's shares went as low as $6.51, a 35% drop since the IPO.
Real Estate Referrals
Geekwire revealed earlier this week that Amazon is looking to enter the residential referral business, as inferred from the new “Hire A Realtor” placeholder web page on Amazon’s website. The page reads “Coming Soon” right now, but experts predict once it goes live it will challenge online marketplace companies like Zillow, Redfin and realtor.com. The news sent Zillow’s stock falling July 12 almost 4% to $44.54/share.
Amazon has been quietly pushing to form its own service-provider business, similar to Best Buy’s “Geek Squad,” hiring smart-home experts to provide consultations and installations for customers. Its army of gadget specialists has been unveiled in seven markets and continues to grow under the radar. These experts provide services such as free Alexa consults and in-home product installation.
Movie And TV Content
In September 2006 Amazon launched its Amazon Video, an online movie and TV show streaming service available to Amazon Prime members. Today, that service has about 80 million subscribers and accounts for $1.9B in annual revenue. Though this does not compare to Netflix’s $8.8B generated last year, the e-commerce behemoth is giving the streaming giant a run for its money with both original and licensed content.
On Oct. 12, 2016, Amazon took its first stab at music streaming, charging listeners $3.99/month, unless already Prime members, to listen to its online selection of music. The company entered the fray with streaming giants Spotify, Apple Music and Pandora in an industry that has grown to roughly $2.3B — though Spotify continues to dominate.
Amazon’s mobile app, Amazon Spark, is nothing new, but it recently added an Instagram and Pinterest-like feature. Now users can scroll through photos and captions of Amazon products that friends post through the app, much like the above-mentioned photo-driven social platforms. Pictures can link to the purchases on Amazon and allow users to purchase them through the app. Amazon has been testing this feature for the past few months, and enthusiasts say this is Amazon’s effort to expand the system for reviewers.
Critics claim Amazon’s smartphone brand, Amazon Fire Phone, was a bit overambitious. It launched in 2014, and just a year later the company discontinued its only model. The phone performed so poorly that Amazon had to take a $170M write-off on the venture. Still, many enthusiasts are calling for another go-round on the former dud, claiming Amazon’s access to Alexa and other services could allow the e-tailer to conquer the smartphone market now.
The e-commerce titan has been beefing up its health-tech team as it aims to boost its cloud offerings for healthcare providers, insurers and even the pharmacy market. Amazon has been working to bolster its HIPAA-compliant offerings to appeal to new users and current customers, including Bristol-Myers Squibb, Siemens and Orion Health. The company recently hired Missy Krasner, vice president and managing director of Box's Healthcare and Life Sciences Group, to play a major role on its health-tech team.
Package Delivery Services
Amazon, like its competitor Walmart, has been building out its own delivery and logistics services, recently expanding its shipping services to China and North America. By cutting out the middleman and shipping direct to consumers, the online retailer is disrupting carriers like FedEx and UPS. In 2016 the e-commerce behemoth predicted delivering its own merchandise could save roughly $1.1B annually.
Amazon is the dominant player in the cloud computing industry, going up against forces like Microsoft and Alphabet Inc. (which owns Google). Amazon Web Services brought in $12.2B in revenue last year from customers such as Netflix and the CIA. Talk about crazy. Competition among the biggest players in the industry has heated up to such an extent that last month Walmart threatened to end relationships with its tech vendors if they do not get off of Amazon’s cloud.