Amazon just celebrated its 25th anniversary. In that short time, Jeff Bezos' creation changed retail forever. But more than that: the company has made an indelible mark on the global economy. Is the world getting divided between Team East and Team West?
The most uttered word turns 25
Amazon is inescapable, and that's an understatement. In our daily dealings with retailers and brand manufacturers, 'Amazon' may be the most uttered word of all. What started as the basis of modern e-commerce and the digitisation of previously unthinkable industries (Books? Impossible! Clothing? Never! Food? Really?), is fast approaching Jeff Bezos' dream of becoming the 'Everything Store'.
It's becoming increasingly obvious that amazon is so much more than just a retailer, as becomes clear from the book 'Amazon' by Natalie Berg and Miya Knights. The authors predict that by 2021, most of Amazon's products won't be coming from products but from services, more precisely cloud computing (AWS), Prime memberships, advertising and even financial services (currently in the works).
Today that AWS department is already responsible for all of the profits that the Seattle-based giant makes. Even the American government uses Amazon's cloud services. NASA, the ultimate example of national power display, is also a customer. the same goes for Netflix and a whole slew of competing retailers.
Food is next
The retail portion of Amazon's full, incomprehensably vast turnover turns out to be but a very small one. For retailers, that's not a reason for relief. In fact, it's quite painful. For the raging Amazon monstrosity, which either swallows or crushes everything in its path, retail is but one of its teeth. And that while the company represents half of all e-commerce in the US. In Germany, 94% of online shoppers has placed an order with the American giant at some point.
The company's CTO once said that when Jeff Bezos founded Amazon, he didn't do it with the intention of opening a bookstore. Those words even betray a somewhat dismissive attitude towards retail. Still, Amazon will be making another breakthrough by 2025, according to Berg and Knights: the food market. Not only would that be opening the last door that was still closed, but food is also central to all other purchases.
Unfair competitors for the unfair competitor?
A company like Amazon has never been seen before. Or has it? The authors of the book Amazon write that Amazon has access to cheaper capital than any other company in modern history. That allows Amazon to borrow money at a cheaper rate than the nation of China. But ironically, Amazon's only true competitors managed to rise just there – thanks to Chinese government funds.
In the polarised world of today, East and West are facing each other with Amazon, Alibaba and Tencent as the key players. They play the game of the giants, this time with the cloud race rather than the moon landing at the stake. Every step made on one side of the ocean will be closely monitored on the other.
Some examples: Alibaba believes in 'New Retail': the combination of online with brick-and-mortar stores; Amazon takes over supermarket chain Whole Foods. JD.com – a Tencent partner – opens unmanned stores; Amazon launches registerless Amazon Go stores. Amazon comes up with Prime Day; Alibaba achieves record turnover figures on the annual Global Shopping Festival on 11/11. The power of Tencent is in online entertainment and payments, while Amazon is pursuing video streaming and financial services. Self-propelled drones, flying robots and artificially intelligent assistants buzz around in labs and test environments on both sides of the ocean.
It's not about companies but about the global economy
In the end it's the Chinese state versus Amazon, since the Chinese government supports the growth of 'its' tech giants in every possible way – from investments over subsidies up to the discrimination of foreign companies. Facebook, for example, is outlawed, but Tencent's WeChat app is even used to pay for train tickets and traffic fines. YouTube is heavily restricted, whereas Alibaba's version of the same concept – Youku – is embraced. A large portion of the Chinese giant's profit still comes from various government institutions which make massive use of Alibaba's platforms for internal transactions... Just like the American government uses Amazon's cloud services.
But unlike Alibaba, Amazon stands alone. President Tump has suggested multiple times that he doesn't like the powerful multinational one bit. The company doesn't fit his politics of 'the little man', nationalism and economic protectionism. Has Amazon, the unfair competitor of countless companies, found its own unfair competitor at last in Alibaba? The Chinese-American trade war seems to be a merely symbolic response. And what about Europe? Well, we find ourselves caught in the middle, literally and figuratively.
In the end it's not about companies but about the global economy. Amazon is so much more than a company. It's one of the biggest agents in the current global economy and in times of political polarisation, one of the most prominent players in the global political showdown. The final goal is power and world domination. You don't achieve that with impressive profit figures or high dividends for shareholders, but with data and customer loyalty.
WACD: What Amazon Can’t Do
Whether it's Amazon, Alibaba or Tencent, their intentions are all the same: to catch the consumer in their web. That web is an ecosystem so all-consuming and complete, it can meet any possible need or demand. Every expenditure the world is eventually bound to be made with one of them. And just like in any war, hot or cold, it's about finding allies. And so the world is slowly being divided between Team America and Team China.
It's an almost unimaginable achievement for a company that has 'only' been around for 25 years. So wish The Everything Store a happy birthday and take a closer look at this economic wonder. Whether Amazon is your friend or your enemy, everything is based on knowledge. Knowledge is the weapon of the future, as data-driven Amazon knows all too well. In fact, Amazon has created that state of affairs. But don't forget to focus on what the globlal players can't do. The real opportunities are with these WACDs: the companies that do What Amazon Can't Do. And fortunately, there are still many. So choose your weapons and be aware: retail is back to attack!