How Will Amazon Become the World’s First $5 Trillion-Dollar Company?
Considering its sheer size, scope, and influence, Amazon is a record-breaking and trend-setting company. With continually soaring stock prices alongside innovative business products and models, Amazon is unique in almost every way imaginable — and I believe it only stands to become more groundbreaking and influential. Of course, there are many articles that offer predictions on how Amazon is going to shake up our lives. In this article, I want to move away from the obvious “Amazon is killing retail” and the “Amazon is killing jobs” diatribe because there is so much more to consider. Here are my five less-talked-about predictions for the Seattle-based Goliath as it continues to shape our homes, our workforce, our economy, and our world:
· Amazon will become a competitor to FedEx and UPS. Amazon’s entire distribution network is essentially geared for speed and efficiency — and I predict that the company will create a 4th shipping option for consumers alongside UPS, FedEx, and USPS. Doing this will help them improve profitability and eliminate the margin that is paid to their shippers currently. Amazon is already adding new distribution and fulfillment centers faster than we can keep track of, and they are also rolling out their own trailer fleet while simultaneously developing an Uber-like last mile delivery process by the name of “Flex.” Additionally, Amazon has expanded its influence in the international container shipper market and has started developing its own air parcel hubs featuring Amazon-only aircraft.
· Amazon’s private label retail brand will hurt P&G, Unilever, and others. Private labels tend to be standard practice for big retailers — walking into any grocery store will prove as much. These generic names are typically profitable as they undercut supplier markets and do not require a large marketing spend — they can be offered at bargain rates with guaranteed display space. Amazon’s foray into its proprietary “Amazon Basics” brand is no different, and they are poised to become a manufacturing juggernaut because their scope and reach into many varied products is something that most brands cannot compete with. What’s more is that Amazon has a wealth of data gathered from items sold on their marketplace that can be used to predict a user’s online shopping habits — and this can inform inventory decisions. And on top of this, they are making sure that consumers know that while their products might be cheap, they are definitely classy. Amazon is taking a page out of the Trader Joe’s playbook. Sure, it might be a no-brainer to buy something like Amazon Basics batteries over Energizer — they are just batteries. But what about products that are viewed as “premium.” Trader Joe’s figured this out first by offering gourmet fare under their own private brand — Amazon is simply taking this on in a bigger way with their Elements brand. I believe that no matter if consumers are faced with ordering Amazon-branded paper towel or Amazon-branded plantain chips, they are going to choose the least expensive item that arrives faster over a name brand competitor. P&G, Unilever, and others…watch out!
- Amazon will become the largest provider of video services in the US. Currently, there are an approximate 80 million people who use Amazon Prime and while not all of these users currently access the streaming video service, it is because of Amazon’s sheer scale and potential of Prime that I predict that the company will not only compete strongly with Netflix but also overtake traditional cable service providers like DirecTV and Comcast. Amazon is currently spending a huge dollar amount on content as well as signing exclusive sports content deals such as those with the NFL.
· Amazon will become the largest Enterprise Software Company in the world. Through Amazon Web Services (AWS), Amazon will continue to disrupt and reorganize the tech ecosystem. While it’s a competitor today, I predict that Amazon will overtake companies like Oracle, IBM, and others as it becomes the most important and largest enterprise software company in the world. Per the sourced article, when AWS debuted in 2013, it offered 280 services — today, there are over 1,000. And the platform continues to accelerate its expansion of services. What’s more is that I also agree with TechCrunch: Moving to the cloud is a business absolute. AWS already has a business that could be worth as much as $150 billion, which is almost as big as IBM and close to Oracle’s size, and growing at a torrid pace.
· Amazon is the largest threat to Google’s search dominance. As of May 2017, Amazon controlled almost 71 percent of the voice search market through its Echo-branded speaker and has a huge head start in terms of applications (or skills as Amazon calls it). As of early 2017, Amazon’s Alexa touted over 10,000 skills. While there are other respectable players such as Google and Apple trying to catch-up, I believe Amazon will remain #1 in voice search. It must also be noted that the existence of voice search on its own shows the vulnerability in Google’s armor, and this is where Amazon might be able to overpower the search giant. Plus, the Amazon Echo doesn’t need a screen — this could threaten Google’s ability to monetize ads. After all, if you get the answers you need simply by asking Alexa, what on earth do you need to go and click ads for?
In closing, it must be stated that yes, I do own Amazon stock. However, even if I didn’t I still wouldn’t bet against Amazon becoming the largest in market cap and possibly the first $5 trillion-dollar company in the next 10 years. The biggest threat of Amazon’s dominance isn’t other tech companies — it is the government here in the U.S. and in other places around the world deeming it as too powerful. As it stands, Amazon is in a race against Apple and Alphabet to become the first trillion-dollar company. I have little doubt that they will surge past these companies, well as others, as the future draws near.
ABOUT THE AUTHOR:
Abhishek (AJ) Ratani is the former President of RV Technology and CTO at Charlotte-based Red Ventures. Red Ventures is a technology-driven customer acquisition company that has grown significantly over the last 10-years. AJ has held various roles within the organization, starting as an Engineer 10-years ago and growing within the organization to run Red Ventures largest and fastest-growing businesses. AJ’s other passions range from being an investor in great ideas, finding ways to help other entrepreneurs succeed, and being a voice for woman’s equality and empowerment in the workplace.
The views and opinions expressed in this article are those of the author only.