Despite Trump’s tweets, there’s little stopping the onward march of Jeff Bezos’s technology giant. Compared to the retail giants of the world, Amazon is bigger than the 13 combined global retailers including the likes of Walmart, Costco, Target, Tesco and JCPenny.
Amazon has a market value of around $720 billion, which makes it the world’s second-largest company after Apple. On any day of the year, Amazon will ship over 400 items per second. So how did Amazon get so big? Apart from excellent overall company management, including storage facilities and delivery, there is the smart and aggressive utilization of a treasure trove of accumulated knowledge of online customers. Amazon has data on behaviors and tastes that is constantly up-to-date, in real-time, regarding millions of consumers worldwide.
Since launching in July 1995 in the U.S., the company opened its UK and Germany branches in 1998, its France and Japan branches in 2000, Canada in 2002, acquired Joyo.com to operate in China and also opened Amazon Italy in 2010. Then, there was the Spain branch in 2011 and Brazil in 2012. India, Mexico and Australia followed in 2013, the Netherlands in 2014, and the launch of Amazon Singapore and the acquisition of Souq.com for the MENA region both took place in 2017.
It is this weapon of global data analytics on what people want, when they want it and how much they will pay for it that enables Amazon to succeed in any retail sector; striking fear into the hearts of physical store rivals and even killing off several of them in the process.
But that’s not all. Even smaller retailers and manufacturers are worried about having to work as sellers on Amazon. In several cases, these sellers have claimed that Amazon watches products with high sales in categories it can manufacture itself, then picks the most successful and copies them. What makes it worse is that these sellers can’t afford not to be on Amazon. What other platform is as good to reach and serve consumers?
Another example regarding the dangers of Amazon’s power combined with anti-competitive behaviour, are the complaints from publishers who claim that Amazon can decide which books succeed and which don’t depending on the margins agreed on with the publishers.
In any case, such aggressive strategies by Amazon are just part of the company’s’ obvious and wider goals to also dominate several non-retail industries.
For most people, the Amazon name is associated with online retail, but the reality is that the company’s business successes include cloud services (Amazon Web Services), media streaming and production services (the Prime service and production of movies, TV shows and video games), consumer electronics (the Echo speakers, Fire tablets and Amazon ‘Basics’ branded accessories) and now robotics and groceries (with the acquisition of Whole Foods).
Some analysts say Amazon’s recent entry into physical retail stores is actually a good thing and is proof that shops will continue to exist. Apparently, Amazon will have to expand into the offline world to continue to grow its business, so perhaps the surviving physical store chains can also hit back at Amazon in its own digital domain if they join forces in bigger non-Amazon marketplaces, instead of each operating their own smaller e-commerce websites and mobile apps.
All of this has made Amazon a big target for politicians, including the President of the United States. Donald Trump blasted off a series of tweets saying that Amazon pays too little in taxes, forces retailers to close down stores thereby increasing unemployment, and that the company takes advantage of the US postal service causing it to lose money among other things. These tweets and statements have lowered Amazon’s share price and resulted in a drop in the net worth of Jeff Bezos, the company’s founder and CEO. But he probably won’t be too worried about that seeing as he is currently the richest man in the world and the share price will probably rebound.
Following its announcement earlier this year that its 2017 fourth quarter profit had exceeded $1 billion for the first time, Amazon has followed up this performance with excellent results for the first quarter of 2018. It recently announced a net income of $1.6 billion thanks to a 43 percent growth in sales compared to the same quarter last year.
Amidst this continued accelerated growth, Amazon says it’s just getting started. For anyone currently grappling with the company’s might, that’s a frightening prospect indeed.