The Amazon Affect: Are You Ready For It?
THE AFFECT
The Seattle-based tech and online retail giant founded and run by billionaire Jeff Bezos announced the plan to establish a second headquarters for its company. It gave states, metropolitan areas, and provinces through Oct. 19 to deliver proposals for the $5 billion project. Amazon expects to announce a decision on “HQ2" in 2018.
The company wants an urban or suburban area with more than one million people, shovel-ready real estate, quality of life and a “stable and business-friendly environment.”
But what does this mean for you?
The retail and technological marketplace are set to shift in a likely unchangeable way. One that you must be ready for if you’re on the consumer end, and especially if you are on the employee side of things.
Amazon said it wanted an urban or suburban area with more than one million people, shovel-ready real estate, quality of life and a “stable and business-friendly environment.” Last month, it was searching nationally for a second corporate headquarters. Cities and counties across the nation have scrambled to assemble bids that could entice the corporate retailer. Issued documents reveal how Amazon said it was looking for a location with good universities, a strong workforce, and a highly connected transportation infrastructure, including a major airport, highways and rail access. Amazon plans to invest more than $5 billion in whichever city it chooses.
During a time where the mobile phone playing field had been growing through a rough patch, Bezos may have smelled blood in the water as Apple Inc. had been 3 years without their fearless leader — Steve Jobs. Then came the Amazon Fire Phone that was — emphasis on “was”. Unfortunately for the retail giant, fire never never spread for the product, not even with their consumer base. But that was just a blip on the company’s radar, as they quickly rebounded with plans to introduce the more accessible Fire Tablet, the Echo, and drone shipping. Like the original iPhone, Amazon is on their way to revolutionizing retail and the marketplace as a whole.
WHAT TO EXPECT
Retail continues to suffer with notoriously thin profit margins. According to CNBC, “The e-tail (electronic retail) space is especially tricky, where only two pure-play e-tailers (Amazon and Overstock) have become and stayed profitable.”
Amazon tailors itself to a higher income demographic, while a larger proportion of Americans shop at Walmart. During a recession, consumers tend to pull back on the consumption of nonessential goods, which would disproportionately impact Amazon. Walmart’s broader base is that of lower-income customers. Therefore, a recession will hit Amazon harder because of the amount of luxury goods it sells. If Walmart can maintain profitability as it expands into e-tail, it will be setting itself up to be more recession-proof than Amazon.
Bezos company has enjoyed year to year growth for the past 4 years, while improvement of the retail industry as a whole has been sporadic at best. Officials in Philadelphia, Camden, Atlantic City and Bensalem, as well as in the state of Delaware, have all indicated they are planning to submit bids, which are due on Thursday. Philadelphia has said it is pitching three sites to Amazon: The Schuylkill Yards and uCity Square sites in West Philadelphia, and South Philadelphia’s Navy Yard. Other cities vying for the bid include Detriot, IL, Birmingham, AL, Stonecrest, GA, Tucson, AZ, and Westchester County, NY.
Home improvement stores such as Lowe’s and Home Depot have continued to thrive despite news of Amazon’s new plans. You’ll still want to pick out your kitchen tile or washer machine in-person before paying a few hundred dollars. However, higher-end grocery stores now lie in the crosshairs of Amazon’s new move, and so does its workers and customers. On the day that the retail mammoth announced its plans to build a second headquarters for is company, Kroger shares plunged more than 9%, while Target fell 5.1%, and Wal-Mart dropped 4.7%. A Forbes article points to how “some shoppers noticed what appeared to be the beta version of a new “Hire a Realtor” service on Amazon’s home page. Soon screen shots of the page were circulating on trade Web sites, while the stock price of would-be competitor Zillow tumbled 3.5%.” Very few companies appear to be exempt from the new merger.
PREPARE
Whether Amazon settles their second headquarters in your city or not isn’t the main issue. The bigger matter is that change isn’t coming, it’s already here. When the Apple iPhone first debuted a decade ago, there was nothing like it in terms of the touch screen and its capabilities. Today, that same tech is baked into products ranging from automobiles to checkout kiosks, and home appliances. Our lives have never been the same since. Here we are, in 2017 and ten years later facing another revolutionary culture change at the hand of a different company and a name that begins with the letter “A” (…whatever that means). The greatest casualty will be the small business owner and associate. Now that millions of Americans can have their goods delivered to them within a 24 hour window, they will unlikely inconvenience themselves in making a trip to the neighborhood store. My family and I really enjoy being able to order unrelated items from Amazon in one shot, and at a lesser cost. But that doens’t pan out well for our local Target and CVS stores. If you work at either place, own stock, are a ride-share driver, you will experience a dip in revenue at some point in the foreseeable future. So now is the time to make that income adjustment for the better.
The climate is ripe for starting that new business you’ve dreamed about from your 4x3 cubicle, or from even the comfort of your living room. Since 2012, over 70% of American families are one emergency circumstance from financial disaster. Yes, that’s unfortunate, but it doesn’t have to be your future. Tip: if you’re making “payments to own”, you don’t own it. More imperative than owning things, you should own your future. I’m speaking to you small business owner, freelancer, retail employee, college student, you also, stay-at-home-mom. Launching your business can start at a very low cost — you and your family are worth the investment.
Over 65% of the internet is accessed from a mobile device, hence the huge uptick for the e-Entreprenuer. Brick and mortar retail will not go away, but the face of it is changing, and must be strategically present online. Take action today!
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Sources: Forbes, CNBC
