Amazon will take Manhattan, then they take Berlin, and Disneyland
Amazon’s ~$14B acquisition of Wholefoods has caught the world by surprise. Here are some thoughts about the next mega-targets the Seattle Empire might try to acquire on its mission to take over the galaxy.
For those involved in the global e-commerce business in recent years, it was considered a universal truth that (post the Zappos and Quidsi acquisitions) Amazon would only buy pure tech companies for small-to-medium size checks.
We witnessed Amazon’s purchase of tech companies like Annapurna labs ($0.4B) out of Israel for AWS, Elemental ($0.5B) to strengthen their core video-tech, Kiva Systems ($0.8B) to beef up their robotics squad, as well as Audible ($0.3B) and Alexa ($0.3B) for obvious reasons. They did make a couple of vertical e-commerce acquisitions in the past- Zappos ($1.2B) and Diapers.com (Quidsi, $0.5B) — to reach an even more dominant position in the Shoes/Fashion and Diapers verticals (in their core market -US).
The Twitch acquisition was somewhat more surprising. Twitch is a streaming website for online games’ fans. The logic of that acquisition was to tap into a hard-to-penetrate community of teens which already consisted of dozens of millions, and continues to grow extremely fast every day.
A couple of years ago there were rumors about Amazon looking to buy one of the e-commerce leaders in India, but eventually Bezos decided to go all in by himself, supposedly investing over $2B USD (with commitment for up to $B more) to take over that market, after losing China to Alibaba. In a April 2017 communication, Bezos sort of declared victory, stating that Amazon is now the leading player in Indian e-commerce (measured by site/app visits/downloads, which may not be the perfect metric to measure e-com leadership).
And so, it came as a surprise when Amazon bought Souq.com, as a mean to quickly penetrate the Middle East.
I guess by now we should have understood that we cannot fully comprehend how Bezos thinks. Like most geniuses, he’s hard to read and predict. But how unpredictably unpredictable he is, well, we only understood on Friday, when he spent $13.7 billion in cash to buy a brick & mortar American groceries chain.
In a recent post, I mentioned Alibaba’s Jack Ma who claims that while Amazon’s vision is to take over the entire supply chain and eco-system, Ma’s vision is to empower the partners in its eco-system — millions of small businesses. Buying Wholefoods kind of makes Ma’s point, and scares the heck out of many. Is Amazon becoming too powerful? Is it on its way to world domination?
What’s next on Jeff’s menu? As the Danish proverb says, it is always dangerous to prophesy, particularly about the future. Nonetheless, I’ll take my chances at guessing/betting on what are the surprising acquisitions Amazon could make in the next couple of years.
Post Wholefoods: 4 big bets Amazon could make
- Lending Club
What: America’s largest online marketplace connecting borrowers and investors.
Market Cap: $2.2B
Revenues 2016: $1.9B
Why: Providing short term financing, factoring and other cash management services to both sides of Amazon’s market-place (buyers and merchants), can bring more volume to the market place and will create a new business for Amazon. With the data collected and purchase history Amazon can build a huge, and profitable bank.
What: The leading global online payments system.
Market Cap: $63B
Revenues 2016: $10.8B
Why: For the same reasons eBay bought Paypal in 1998. In 2015 Paypal was spun off because it outgrew its parent. Amazon is big enough to use Paypal to increase its strength and competitive advantage (think data, think cross promotion, micro-financing, etc), and thus get closer to world domination.
3. The Walt Disney Company (What?!)
What: One of the world’s leading entertainment groups. Owns studios (Disney, Pixar, Lucasfilms) and content (Mickey Mouse, Star Wars), TV Cable Networks (including ESPN), amusement parks and Merchandising divisions.
Market Cap: $164B
Revenue 2016: $55B
Why: Entertainment is high on Amazon’s agenda, and there is no better entertainment group than Disney — imagine if Disney’s content was exclusive only to Prime subscribers… And — If I were a rich man, the world’s richest man (as Bezos will be soon), one of the first things I would do would be to buy Star Wars, just because I can.
What: Micronesia is a country spread across the more than 600 islands. Micronesia is known for palm-shaded beaches, wreck-filled dives and ancient ruins. In 2015 it had a population of 104,460.
Market Cap: Your guess is as good as mine.
GDP: $314m (2014)
Why: To get to world domination they must. It will give them a vote in the UN and a seat at the nations table.
Or am I?
Got better ideas for what Amazon might buy next which no one expects? Share!