Only a few organizations have had a significant impact on other sectors as Amazon. From entertainment to consumer products, cloud computing, ecommerce and media, Amazon has hands in nearly every facet of the economy. Only an army of experts can assess what opportunities and threats Amazon is likely to pose to other industries it is rumored or has promised to disrupt.
Here are a few sectors that Amazon is shaking up:
Amazon has contributed to the increased competitive pricing pressure in the consumer products world. There were concerns that unlimited shelf space on Amazon would make small challenger brands endanger large incumbent brands. Yet, that isn’t the case, given that online buyers still only purchase from the listings where big brands dominate. However, expanding private label offerings on online trading platforms will probably be the bigger threat. Online trading platforms, Amazon included, are easier to penetrate than brick-and-mortar stores, and that’s why their impact on consumer products has been significant.
Amazon is believed to be gearing up to enter the US health sector in the coming years. Experts see Amazon developing an online pharmacy that would compete against top healthcare service providers in the US. Recently, Amazon acquired an online pharmacy that now allows customers to order medicines online and manage their prescriptions. Amazon’s joint venture with top health insurance providers in the US could also provide insights that could be expanded to other health insurance service providers. Amazon is meanwhile pursuing other health-related initiatives that align with its operations, including the distribution of drugs to vendors and providing AWS to companies in the health industry. Amazon has as well made several hires in the health sector in recent years. Amazon has recently announced its intent to acquire an online pharmacy, PillPack, in what it seems like a massive push into the healthcare industry.
IT Hardware and Software
Amazon is about to revolutionize the traditional IT hardware industry. IT enterprises have already begun to change their perception of tech spending, as IT firms increasingly avoid running their databases in favor of outsourcing IT resources to Amazon. Most organizations are running their workload in the cloud, and that trend is expected to increase as time passes. Cloud providers, Amazon included, are capitalizing on their expertise and scale in-house support teams and white-box hardware to cut out traditional IT hardware providers. The cloud, including next generation firewall solutions have already started to influence expenditure on traditional IT hardware. That will probably lead to negative growth in the traditional IT infrastructure as more companies move their functions to the cloud.
Amazon has already expressed its desire to create a new payment platform that will compete against Alipay and Paypal. Amazon intends to add discounts to attract smaller retailers, launch stored balance capabilities and rebrand its offerings to realize this dream. Amazon is a formidable tech prowess, given that it is responsible for 3% of global payments that are made through Mastercards and Visas. With a base of 100 million Prime subscribers and 2 million merchants, Amazon could soon become a game changer in online payment platforms. Mastercard and Visa now seem more insulated, given that Amazon transactions contribute significantly to their sales. Amazon has already shown interest in partnering with Visa and Mastercard to launch its branded credit card.
Amazon began by offering products that owners of brick-and-mortar stores could not provide in their stores. As a result, it gained massive share online market and took share from inefficient offline traders. However, brick-and-mortar retailers have fought back in several ways, including offering services that can’t be offered online and in-store assistance. With most brick-and-mortar stores in rural areas, they cannot achieve more attention in highly populated areas than Amazon. That aside, Amazon has revolutionized the traditional retail sector and contributed to the collapse of the struggling brick-and-mortar retailers. Without storefronts, the overhead costs of Amazon are significantly lower than other retailers. That gives it an edge to operate on thin profit margins and allows it undercut on prices.
As a result, some economy watchers are nervous about the deflationary impact of Amazon. Low unemployment comes along with the growth of wages, which, in turn, fuels inflation as suppliers and manufacturers try to pass on the inflation burden to consumers. That’s the logic of traditional retail, but Amazon has disrupted it. Lower prices and high competition limit the ability of a retailer to pass on any burden of increase of wages to consumers.
Amazon wants to make package delivery and logistics cheaper. Amazon has already invested millions of dollars in a fleet of planes aimed at cutting the distance covered when delivering a package. The retail giant has also developed, Amazon Logistics, a last-mile delivery apparatus that will reduce the cost of package delivery. Amazon is now looking for partners to start up a package delivery business line. Amazon also works and engages various third-party contractors for tasks such as package delivery. They go door-to-door while delivering Amazon packages. With that, some credit could go to the giant retailer platform for creating jobs. Working with contractual workers could also help Amazon keep its costs in check.
Amazon seems to be everywhere. It has disrupted the way we shop and has brought effects that have gone beyond customer expenditure to impact the economy. Amazon has impacted investments, job opportunities and inflation.