Jeff Bezos picked an ideal name for his company: Amazon, biggest river in the world, biggest rainforest, the name of fierce Greek women warriors. Since launching in 1995, Amazon has helped make Bezos the richest man in the world and the go-to for online shopping, especially during the holidays.
Amazon accounts for nearly half of online sales in the U.S. at 49 percent (its closest pursuer is eBay with 6.6 percent) and 5 percent of U.S. retail sales overall. Amazon also owns 90 percent or more market share in sales of home improvement tools, skin care, batteries, golf-related products, and kitchen and dining accessories.
Corporations and competitors fear Amazon, and rightly so. Amazon can deliver more products faster and cheaper. It’s Dec. 23, and you still need a gift before Christmas Day? No problem! Amazon can probably get it to you.
It’s hard to believe now, but Amazon once was simply an online bookseller. Since those early days in the dot-com boom, Bezos’ juggernaut has expanded into markets with a speed and efficiency that has shocked the business world and disrupted companies that once seemed untouchable.
It seems no industry is safe from Amazon’s reach. Grocery stores, pharmacies, travel, delivery — Amazon has penetrated these and many more areas of business.
Here is just a sampling of the next companies likely to fall in the Amazon revolution:
Barnes & Noble
The last remaining bookstore chain once dwarfed Amazon in sales — $2 billion compared with $16 million — but that was 22 years ago. Now Amazon owns more than 83 percent of e-book sales compared with 4 percent for B&N as of early 2017, as book consumers increasingly are trading paper for cyber. B&N is also bleeding cash, reporting a net loss for seven straight quarters. Several offers reportedly have been made for the company, which could be facing a last-gasp attempt this holiday season to survive.
(Got to give the company credit, though. It outlasted many others — including Borders, Book World, Crown Books …)
Amazon bought online pharmacy PillPack in June as part of its push into the health care industry. That was another blow to Rite Aid, whose stock has plummeted this year thanks to its shaky deal with Walgreens and failed merger with Albertsons. An informal Business Insider survey found that consumers would switch from Rite Aid, CVS and Walgreens to Amazon for their pharmacy purchases.
With Amazon poised to become the leader in the U.S. apparel market, Macy’s has had to get creative with its business model, lest it goes the way of Toys R Us and Borders under the Amazon tsunami. After a 45 percent drop in its share price since 2015, Macy’s has upgraded stores, enhanced its website and app, and added off-price business Backstage (think Nordstrom Rack). Will it all work? This holiday season will be telling.
The office supply giant’s stock is down nearly 70 percent since early 2015, the company is saddled with more than $1 billion in debt, and it’s suffered years of declining sales. Customers for Amazon Business, its B2B business-supply operation, tripled to over 1 million in 2017, and Costco and Walmart also are luring away customers with their own office-supply enterprises.
AutoZone and O’Reilly
Amazon sells $6 billion in auto parts annually to DIY car-repair customers, and Walmart has also gotten into the industry, with the mega-retailers now controlling nearly a quarter of the market. But with the growing complexity of vehicles, it’s harder for the DIY-er to fix their own cars. O’Reilly and AutoZone still dominate the market for professional mechanics, which could help them stave off the Amazon threat, but for how long?
FedEx and UPS
Federal Express once branded itself as the delivery service to use “When it absolutely, positively has to be there overnight.” United Parcel Service was the brown truck with the brown-clad drivers who could deliver anything anywhere. And Amazon’s rise has been great for both companies, with Amazon relying on FedEx, UPS and the U.S. Postal Service to deliver millions of packages.
But Amazon Air will cut out the middleman and deliver increasingly more packages over the years, putting pressure on UPS, FedEx and other companies, according to Barron’s. It’s still early in the game, but Amazon Air will take a bigger and bigger bite out of FedEx and UPS revenues, a stock analyst told the publication.
The grocery chain is caught in the crossfire of a battle for consumers between Amazon, which now owns Whole Foods, and Walmart, which is trying to lure higher-end customers. The Cerberus Capital Management-owned Albertsons was unable to merge with Rite Aid earlier this year and has a $12 billion debt burden, and it has been unable to outperform same-sector rival Kroger.
Thus, as Amazon dips its humongous feet into more industries, the disruptions will continue. Survival and success will require companies to develop their own strategies and models to compete. As Amazon says in its slogan, “Our vision is to be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
That’s a promise, and a threat.
How do you feel about online shopping? Any regret that these businesses may be on the way out? Share with us in comments below or on our Facebook page.
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