Amazon is conquering new economic sectors
Introduction:
Amazon is conquering new economic sectors: In the ever-evolving landscape of the global economy, few companies have managed to achieve the level of dominance and influence that Amazon has.
From its humble beginnings as an online bookstore, Amazon has grown into a tech giant that has disrupted numerous industries.
With its relentless pursuit of innovation and customer-centric approach, Amazon is now conquering new economic sectors, reshaping the way we live, work, and shop.
When an economic depression occurred in the United States of America in 2000, after a decade of high hopes placed on electronic commerce known as the Roaring Nineties, similar to the Roaring Twenties that relied on real-world commerce and ended with the Great Depression in 1929, Amazon was one of the few companies in this sector.
It survived despite its damage, because its stock fell from $106.69 to $8.37, or 92 percent, between December 6, 1999 and April 2, 2001.
It was able to weather the storm thanks to its nature. The price of the item that it sells immediately, and keeps its inventory of items for sale at the minimum necessary to fulfill orders immediately.
Diversification Beyond E-commerce:
While e-commerce remains at the core of Amazon’s business, the company has successfully diversified its operations into various sectors. One of the most notable expansions is Amazon Web Services (AWS), the company’s cloud computing division.
AWS has become a leading provider of cloud infrastructure services, powering countless businesses and organizations worldwide. This move into cloud computing has not only boosted Amazon’s revenue but has also solidified its position as a technology leader.
Entertainment and Media:
Recognizing the growing demand for digital content, Amazon made a strategic move into the entertainment and media industry. With the launch of Amazon Prime Video, the company has become a major player in the streaming market, competing with established giants like Netflix and Hulu.
By producing original content and securing exclusive streaming rights to popular shows and movies, Amazon has successfully attracted a large subscriber base and expanded its influence in the entertainment sector.
Healthcare and Pharmacy:
In 2018, Amazon made headlines with its acquisition of PillPack, an online pharmacy. This move signaled the company’s entry into the healthcare industry, a sector ripe for disruption.
With its vast logistical capabilities and customer-centric approach, Amazon aims to streamline the prescription drug delivery process and improve access to medication for millions of people.
Additionally, the company’s voice-activated assistant, Alexa, has been integrated into healthcare settings, providing patients with personalized health information and assistance. Amazon is conquering new economic sectors
Logistics and Delivery:
Amazon’s relentless focus on improving the customer experience has led to significant investments in logistics and delivery infrastructure. The company has built an extensive network of fulfillment centers, enabling faster and more efficient delivery of products.
Furthermore, Amazon’s experimentation with drone delivery and autonomous vehicles showcases its commitment to revolutionizing the last-mile delivery process. By taking control of its logistics operations, Amazon has reduced its reliance on third-party carriers and gained a competitive edge in the retail industry.
Grocery and Physical Retail:
In 2017, Amazon made a bold move into the grocery industry with its acquisition of Whole Foods Market. This acquisition not only provided Amazon with a physical retail presence but also allowed the company to leverage Whole Foods’ reputation for quality and sustainability.
Amazon has since introduced innovations like cashier-less stores (Amazon Go) and expanded its grocery delivery services (Amazon Fresh), further disrupting the traditional grocery sector.
During the first decade
During the first decade of the twenty-first century, it expanded its retail activity to include books, music, toys and sports equipment, and established competitors, especially Barnes & Noble, Toys R Us and Sports Authority, failed to sell books, toys and sports equipment, respectively. , in repelling its attack with the weapons of fast delivery and low prices.
With the advent of the third decade of the century, Amazon began to look to sectors beyond retail. It has built significant experience in supply chain logistics and has a significant advantage in data collection.
Revenues of about 469 billion
In 2021, the company achieved revenues of about 469 billion and 822 million dollars, while net profits amounted to 33 billion and 364 million dollars. In the latest figures for 2022, the company recorded a net income of $2.9 billion in the third quarter of the year.
It includes between one million and one million and 544 thousand employees around the world, about a million of them in the United States alone, but what the company announced in early January 2023 of laying off 18 thousand employees exceeds what was previously leaked at the end of last year about its intention.
10,000 employees were dismissed around the world under the pretext of ambiguity in international economic trends, especially in light of the worsening inflation rates, not the least of which was Russia’s war on Ukraine.
These circumstances, in addition to the strictness of the anti-monopoly regulatory authorities, caused the company, and other giant companies, losses in their market values, and according to estimates, these losses at Amazon, in approximately a year and a half, amounted to a trillion dollars, reaching 869 billion dollars in December.
December 2022, compared to $1.88 trillion in July 2021, which is the largest loss of its kind for an American company and a historical precedent in the world of financial markets.
Amazon is expanding as much as it can into the sectors of pharmaceuticals, medical care, insurance, smart homes and gardens, media and entertainment, grocery, insurance and handicrafts.
Amazon’s expansion
In a return to Amazon’s expansion ambitions, the company purchased a physical grocery store and is using its available technology to simplify the delivery of vegetables and fruits, as assembly lines use visual artificial intelligence to sort ripe products from immature ones, and it purchased a virtual pharmaceutical services network and is obtaining pharmaceutical licenses in Various parts of the United States to launch its “Amazon Pharmacy” service.
Amazon Market began providing loans to merchants dealing with Amazon at interest rates lower than those offered by banks, based on the forward-looking data it collects.
Closures during the Covid-19 pandemic
It goes without saying that the closures during the Covid-19 pandemic boosted e-commerce, and Amazon was at the forefront of benefiting from this.
The company’s profits jumped in the third quarter of 2020 to $6.3 billion, an increase of 200 percent over the corresponding quarter of the previous year.
Although its profits in the third quarter of 2021 fell to $3.2 billion as the closures began to be lifted, the company still has the investment capacity to venture into new sectors.
CB Insights, an American company specializing in market and company information, believes that Amazon, as it appears today, has already broken into five new sectors – pharmaceutical products, small business lending, logistics, grocery, and payments – and is close to entering seven.
Other sectors – Insurance, luxury goods and services, brick-and-mortar retail, smart homes, home and garden care, media and entertainment, and handcrafted goods.
New sectors
As for the five semi-decided sectors, Amazon began its foray into the pharmaceutical products market in 1999 when it bought 40 percent of Drugstore.com, which specializes in selling these products and which was still in its infancy, then put its foray into this sector into the refrigerator until the year 2016 when it began obtaining licenses from the United States to sell these products, and two years later, it purchased “Pill Pack,” the virtual pharmacy, for $750 million.
What is important in the process is that the purchased company has licenses to sell pharmaceutical preparations online in all 50 states. In August 2022, Amazon bought One Life Healthcare Inc., which owns One Medical, which specializes in selling drugs that require a prescription, both real and virtual, for $3.9 billion.
Amitabh Chandra
But Amitabh Chandra, a professor of medical business administration at Harvard Business School, told the Harvard Gazette that Amazon may hope to leverage its experience to improve supply chains that suffer from “chaos” in the pharmaceutical sector.
However, he wondered about the aspects of the giant company’s exploitation of patient data available in the purchased company for commercial purposes, while its lack of experience in managing medical business may harm the latter, according to his opinion. After purchasing One Life Healthcare Inc.,
Amazon launched the Amazon Clinic, but The Economist noted that the company has a record of gaps in this field, as it established two health care services for its employees and some non-employee clients, but they did not… Amazon is conquering new economic sectors
Healthcare companies
They have been long-lived, and pointed out that major companies have begun to acquire healthcare companies in order to compete with “Amazon” in this sector, and reported that American regulators are looking into the possibility that “Amazon” is hiding monopoly plans behind its attack on the sector.
In terms of small business lending, Amazon entered the sector in 2011 by lending to commercial entities that deal with the “Amazon Marketplace” through “Amazon Lending”.
At the time, it benefited from the continued lack of confidence in the financial sector following the 2008 crisis, but over the next ten years, the company doubled its activity in this field, as by 2021, the number of beneficiaries of “Amazon Lending” reached two million small enterprises.
It is likely that the jump in the share of these sales from third parties that facilitate Amazon’s sales from three to 56 percent over 20 years encouraged the company to venture into lending, especially in partnership with the two prominent banks, Goldman Sachs and Bank of America.
American Prospect magazine
American Prospect magazine warns against Amazon’s approach in this regard, which is based on offering its loans to willing partners in exchange for guarantees in the form of their goods, equipment, and even money that their partners owe them.
Often, these goods and equipment were sent before the loan was approved. Amazon’s warehouses put borrowers at the mercy of the company, not to mention that “Amazon Lending” is a program shrouded in a lot of secrecy, so little information is available about it, and since those wishing to borrow from the company rely on its network to sell their products, their negotiating position is weakened.
Amazon’s invasion does not provide “Amazon Lending”, “Amazon Payments”, “Amazon Money”, “Amazon Insurance”, “Amazon Style”, handicrafts, and from video games and entertainment to cinema and movies.
With regard to logistics services, especially within the United States, where Amazon constantly reduces the time needed to deliver orders, the company relies less on companies specializing in these services, such as UPS, FedEx, and the US Postal Service, and invests more.
US logistics infrastructure
Within its own network, it tripled its US logistics infrastructure between 2014 and 2018 alone, before boosting it by an estimated 50 percent in 2020 alone. The reason for the expansion is the huge costs incurred by the company to ship the orders received (reaching $53 billion in the first three quarters of 2021).
It relies on drone delivery and develops its delivery services via vehicles without drivers, in addition to the continuous purchase of warehouses in strategic areas. This policy worries companies specializing in delivery, such as those that Amazon previously relied on, and those emerging in this field.
Grocery market
Amazon is also invading the grocery market, and the matter dates back to 1998 when the company began investing in emerging companies that sell groceries over the Internet.
With the bankruptcy of many of these companies and the company incurring losses, the latter gained experience and aspired to dominate the American grocery market estimated at 800 billion dollars.
A decade later, it brought in executives from virtual grocery companies and placed them in prominent positions within them. Its fortunes in this regard rebounded during the pandemic, when online grocery shopping increased in light of the closures.
Today, its project, Amazon Fresh, delivers groceries stored in its warehouses and those of its partner, Whole Foods, within just two hours, with no delivery costs. Its attack threatens smaller grocery delivery services as well as supermarkets.
CNBC television
CNBC television news network points out that the project has not yet achieved the desired results, and quotes Jake Dollarhyde, CEO of Longbow Asset Management, which invests in Amazon, as saying: “The grocery sector is still closer to an expensive hobby.” .
The latest sector to be invaded by Amazon is the payments sector, which includes Amazon Pay, a service that allows external merchants to sell their products on their own websites using the company’s payment technology, and Amazon Cash, which allows customers to deposit… The company also issues its own debit and credit cards.
Goal
The goal is to reduce the transaction fees that it incurs whenever a customer buys from them using his bank card, which are fees that burden small companies, not large companies such as Amazon, but the latter is known for seeking to save in every available aspect. These services worry companies specializing in payments, such as PayPal, Visa, and MasterCard.
Target sectors
Meanwhile, Amazon is investing in insurance companies in the hope of breaking into their sectors, and it reached the point of investing in 2017 in the Indian “Ako” for car and bicycle insurance, which soon encouraged it to adopt health insurance during the pandemic, and a year ago it launched “Amazon Protection.
” (Amazon Protect) is an insurance service operating in the United Kingdom in the field of accidents and theft and is limited to products purchased from the company.
The company is looking into the luxury goods and services market, and in 2020 it launched “Luxury Stores” with the aim of attracting brands in this field to display their products through the company, and it succeeded in doing so with brands such as “Oscar de la Renta”, “Elie Saab” and “ Roland Mouret.
She founded Amazon Style, a real-life store that opened in Los Angeles, with the aim of breaking into the real-life commerce sector.
Smart Home Sector
The company is also trying to expand into the smart home sector by introducing smart home products, the first of which in 2014 was the Amazon Echo, which is a speaker.
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Alexa voice service.
Although competing companies have launched similar products, the company still holds 69 percent of the speaker market. Smart. Four years later, it partnered with Lennar, one of the largest construction companies in the United States, to build smart homes powered by Amazon’s Alexa voice service.
It has also been looking into the home and garden care market since it founded the “Plant Store” in 2014. Although the desire to care for gardens was witnessing a significant decline among Americans at that time, the company bet on its experience in logistics and distribution services and hopes that it will be able to benefit from it. This market.
The media and entertainment market did not escape Amazon’s ambitions, especially the video game market, estimated at $211 billion.
The company partners with specialized companies, and also provides subscriptions to many video game services. In 2015, it launched “Handmade,” a virtual store selling handcrafted products, hoping to penetrate the market estimated at $680 billion.
Since then, the number of participating artisans has increased 7.5 times and they are distributed in 80 countries. Amazon plans to invest more than one billion dollars in producing 12 to 15 films annually for cinemas.
Amazon “Revenue River”
Amazon is an American multinational technology company that focuses on e-commerce, cloud computing, online advertising, digital broadcasting, and artificial intelligence.
It is one of the five major American companies operating in the field of information technology, along with Alphabet, the parent company of Google. Microsoft, Apple, and Meta, the owner of Facebook.
Jeff Bezos
It was founded by Jeff Bezos in his garage in Washington in 1994 as an online book selling company, before its interests gradually and steadily expanded to become, as he described it, “the everything store.”
It has earned a reputation as a disruptor of established industries through technological innovation and reinvesting profits heavily into capital projects.
Bezos chose this name for her because it begins with the first letter of the alphabet and because it is the name of the river located in South America, and it is one of the largest rivers in the world.
$111 billion Amazon is conquering new economic sectors
The company’s strong revenues contributed to making Bezos one of the richest people in the world, with a fortune amounting to $111 billion. When Bezos was the company’s CEO, he only rarely visited political circles in Washington for the purposes of lobbying, and he only appeared before Congress when the latter wanted to scrutinize his company’s affairs. When he threatened him with a subpoena.
As for his successor, Andy Jassy, who took office in 2022 after Bezos decided, as executive chairman, to devote himself to innovation in the company and move away from daily management, he takes a different approach. He has visited Congress and/or the White House at least three times to boost his company’s image.
Amazon Web Services
However, the man who joined the company in 1997 and built Amazon Web Services, its cloud computing business, is one of Bezos’s closest associates, so many observers doubt that Jassy’s culture and methods differ from those of Bezos. Amazon is conquering new economic sectors
Like giant technology companies, Amazon faces legal troubles and regulatory oversight, the most important of which is a recent lawsuit filed by some British civil society organizations on charges of favoring their products on their websites and demanding that they pay a fine of up to a billion dollars.
The European Commission approved a settlement proposed by the company to avoid a monopoly lawsuit by making its obligations regarding the use of non-public data of sellers in the market legally binding.
I’m Hassan Saeed, a Clinical Psychology graduate deeply engaged in the realms of WordPress, blogging, and technology. I enjoy merging my psychological background with the digital landscape. Let’s connect and explore these exciting intersections!
