When it comes to destructive technology, there is one company that dominates. Amazon ($ AMZN). Amazon and its pioneering founder and CEO Jeff Bezos are responsible for disrupting more industries than I can expect and they are still working. In this article, I’m going to explain what makes Amazon such an efficient machine, and many industries are disrupted.
When was the last time you visited Barnes & Noble ($ BKS)? Or in some other bookstore, for that matter? How about when was the last time you visited the Amazon website? I’m willing to bet that almost everyone who reads this has been on the Amazon website in the last few days, and I’m also willing to bet that almost no one has been to a physical bookstore in a long time. The bookstore industry, symbolized by the former giant Barnes & Noble, was the first victim of Amazon’s devastating trends. Amazon’s roots go back to 1994, when the company founded an online bookstore. Conceived as an online bookstore, Amazon was able to offer much more choice than any physical bookstore, and offer consumers the same choice at a lower price. Because the free market behaves normally, consumers opted for a cheaper option when offering an identical product or service. By 2007, Amazon surpassed Barnes & Noble in revenue from book sales, in the same year they released the first version of the Kindle e-book reader. By 2010, sales of digital books exceeded sales of physical books through Amazon. Amazon also runs the company and website Audible, one of the biggest players in the audiobook game. In 2011, Borders Group, which was just a few years before, the second largest chain of bookstores in the United States, declared bankruptcy and ceased to exist a few months later. At the time of writing, Barnes & Noble has a market capitalization of approximately $ 454 million. Amazon’s market capitalization is about $ 832 billion. According to market capitalization, Amazon costs almost 2,000 times more than Barnes & Noble. Amazon’s entry into the bookstore industry and its replacement by companies that were previously entrenched in place is simply the first of many industries to be torn apart by the Amazon bull.
DO NOT SEE THE END
After earning revenue from direct retail sales and fees levied from third-party vendors on the Amazon website, Amazon makes the most of its revenue from its Amazon Web Services division (AWS). The history of AWS dates back to 2006. During 2006, Amazon launched the Simple Storage Service (S3), a file storage service, as the name implies. Simple Queue Service (SQS), a service designed to automate message queues. And to end the year, they launched Elastic Cloud Computer (EC2), a service that allowed users to pay for server time for program execution and simulation. Today, under the auspices of Amazon Web Services offers about 100 different services that can meet almost any digital need. Currently, almost half of all digital cloud computing is powered by Amazon. Just like what happened to bookstores, Amazon took control. By 2020, cloud computing is projected to become an industry worth more than $ 400 billion. And Amazon is set to dominate this market in the foreseeable future.
Claim for glory
The retail and grocery industry is a great example of an industry that has forever changed Amazon and what they are best known for. However, let’s start with the fact that Walmart ($ WMT) has about three times the annual revenue of Amazon, so it’s not like Bezos and Co. have begun to dominate the retail industry, but they’ve definitely made a dent. We can say that they destroyed the industry. Although they were founded in 1994, the first four years they were just an online bookstore, but in 1998 the company expanded its catalog and started selling more than just books. Since then, the company’s online sales have grown exponentially year by year, and they have even been accused of making many traditional retailers disappear. Amazon gets about 85% of its revenue from the retail business, so it’s clear that this is the largest part of Amazon. For newcomers to online retail, Amazon has been able to establish itself as one of the largest players in retail, despite the fact that it is completely online, thanks in part to convenience and low prices. Most recently, in 2017, Whole Foods, a luxury grocery store, was acquired by Amazon to increase its market share in the retail and grocery scene. Thanks to its retail network and physical product divisions, Amazon can take a significant share of the market and keep the agency in space. Well, just to consider the scale of Amazon, more than two-thirds of all households have a subscription to Amazon Prime.
BUT WHAT ELSE
Above I talked about what Amazon’s largest divisions are and what they are best known for. But here I will talk about lesser known parts. Amazon manages its Amazon Video service and is available to all Prime customers. This service competes with traditional television and media and is popular among cord trimmings, it competes with other streaming services such as Netflix ($ NFLX) and Hulu (will soon be owned by Disney, ($ DIS)) and offers thousands of movies and TV shows. There is Amazon Drive, which offers unlimited file storage for just $ 59.99 a year. They also recently acquired the streaming website twitch, the largest live video game site that gives Amazon market share in the streaming and eSports industry. One of the first subsidiaries is A9, a very advanced search and marketing company that works with machine learning. Amazon is also stalking companies like Tesla ($ TSLA) and Waymo from Google ($ GOOG, $ GOOGL). Although Tesla is not as advanced as many believe, and not as good an investment. Returning, they also have Amazon Music, Amazon Tickets, Amazon Home Services, Amazon Inspire, Online Movie Database (IMDb), Amazon Go, Fire TV, Goodreads, Zappos and many more. Go ahead and look at Amazon subsidiaries or services offered by Amazon that I didn’t talk about, you can probably find at least a few dozen more. A few days ago, Amazon even announced that they were acquiring an online pharmacy to offer an online pharmacy and a delivery service for pharmaceuticals that disrupted traditional pharmacies.
Amazon is now the second most expensive market capitalization company in the world. The only company that outperforms them is technology giant Apple ($ APPL). Given Amazon’s huge potential for growth and the lack of equivalent competition, I believe their value will continue to grow. They are in a unique position of destroying almost every industry you can think of and succeed at the same time. Amazon is a great company that will continue to expand indefinitely and I would advise everyone to invest in a company even though some people think they are overrated.