We recently posted a blog about Google so we thought it was only right to also dedicate a blog to the undisputed e-commerce titan Amazon.
You’d be forgiven for thinking that Amazon is just an online shopping platform, a quick and easy service that acts as a middleman between you and the products you need.
Amazon is actually a much bigger beast and is growing at a staggering rate. The e-commerce giant owns 9% of the global retail market, is a book publisher and seller, a hardware and software producer, owns a surprising number of the sites including Twitch, IMDb and GoodReads and has most recently purchased the huge American grocery chain WholeFoods. And let’s not forget its plan to become the king of voice recognition, with Alexa and Echo.
Amazon has grown 560% in value from 2012 to 2018. It’s combined net worth is $177.9 billion which would make it the 55th richest country in the world, sliding ahead of oil-rich Algeria and Qatar. Jeff Bezos, Amazon’s founder, is the richest man in history and would be the 61st richest country in the world. He is currently richer than the wealth of Morocco and Sudan.
The kiss of death
We all know that money means power, so if a company or a person becomes richer than a country, what does that mean in the grand scheme of things? And why is Amazon’s rapid growth worrying so many experts and politicians around the world? Isn’t it normal for global businesses to grow and acquire new assets?
Sure it is, but the way Amazon goes about expanding and growing could be akin to a Pinky and the Brain episode, but where Brain actually succeeds. And I’m not exaggerating. The Bespoke Investment Group has been tracking 54 retail index stocks that have had brushes with Amazon in the competitive market, the negative effects for those companies were so huge that the BI Group have named it the ‘Death by Amazon Index’ and will soon release an ‘Amazon Survivors Index’ for those that have managed to crawl out of the black hole.
A great example of Amazon’s pull on stock markets is their recent Wholefood acquisition, which saw grocery chain stocks plummet as soon as the news hit that Amazon was moving into the grocery sector. And it seems Amazon’s power is so great that it need only mention a potential partnership to affect the stock market. The e-commerce heavyweights recently mentioned a potential healthcare project with JP Morgan and Berkshire Hathaway which saw healthcare stocks start to move into a downward slide.
Why is the stock market so worried every time Amazon decides to move into a new sector?
When Amazon moves into a new sector, its intention is always to rule the waves of the sector it takes on. Amazon does this with two well-oiled strategies – the first is to be loved by their customers and the second is to use aggressive competitive takeovers to continue to rule their present markets and become kings of their future markets.
Track my progress
Amazon is also arguably one of the best customer behaviour trackers out there. Their analysts and algorithms do such a good job of tracking they can predict what we’ll want next. A bit like how the chain Target managed to predict when someone was pregnant just by what they bought. This obviously freaks people out and actually makes us realise the all-seeing power Amazon and the like have, so Amazon instead uses its omnipresence to subtly point us to a tailored e-commerce dreamland for all of our personal shopping wants and needs. Amazon knows that for customers to trust the brand it needs to show a friendly, cuddly face while sifting through our personal information.
They also use their hoovered-up data to see gaps in markets. So, if they see a large number of people searching for something but then not clicking through, they can see customers are trying to find something which Amazon currently doesn’t provide. Amazon then goes out and finds a partner to provide that service (which negatively affects other competitors) or creates a knock-off version themselves at a cheaper price, and effectively puts two fingers up at everyone else.
It also doesn’t have any problem competing with its own investments. Amazon infamously gave 5.6 million to start-up Nucleus for its Alexa powered conferencing tablet, only to release a very similar and cheaper Amazon device, the Echo Show.
Amazon, like most Tech Giants, is fighting it out to become the supreme leader of IoT, and specifically of voice recognition. To win, Amazon is assembling a tech army whose sole purpose is to see Amazon’s voice recognition software as the go-to brand in the entire world.
Don’t believe me? Here is a direct quote from Priya Abani, Amazon’s Director of AVS enablement.
“We basically envisage a world where Alexa is everywhere.”
A sentence that should strike fear into anyone that has seen enough doomsday films and doesn’t want Alexa to hear their every conversation (even if it forgets it). Or doesn’t want to see a company have pan-global access to a whole lot of personal data.
And when Priya Abani says everywhere she means everywhere. Amazon’s plan is to build Alexa software and hardware that can be built into anything and everything – from light bulbs and jewellery to cars and fridges. And this isn’t a lofty business strategy, Amazon is already working with partner brands to make that happen in the very near future.
Amazon basically wants to be the all-hearing ear in the ‘woke’ IoT world.
Have I scared you enough? No? Good, let’s move on to books.
Another business venture is their online publishing platform and their bookselling arm. Although great for self-publishing, smashing the old publishing barriers and gaining access to cheap literature, it actually serves as a commercially funnelled service for Amazon.
Amazon can pick and choose which books you see and which are recommended for you. Which means it can engineer which books become more successful. And not only can it do this on its publishing and e-commerce platform it also owns goodreads.com, which rates the books. A three-wheeled attack strategy that the Trojans would be proud of.
The end is near
But as Scott Galloway rightfully says in his insightfully hilarious video about tech companies and their mounting grip on the world – it is our role to put pressure on governments to hold tech companies to account so that they follow the same rules and laws that we and countries are governed by.
The internet and technology is truly a wonderful thing and has brought innovation after innovation to create a modern world full of possibilities. But like its inventors, us humans, it can have a darker side that we need to watch out for and not shut our eyes to.
There is a huge global shift ongoing at the moment to bring a bit of light and governance to some of the murkier realms of technology. What we need to do, as a global community, is strike the right balance between governance and the fantastic freedom and reach the internet and technology gives us. If one takes over the other one, that is when we must step in.