Updated: Jan 13
“The rich get richer and the poor get - children.” F. Scott Fitzgerald
As Elon Musk becomes the richest man on the globe, did Jeff Bezos blink an eye?
Which stock will outperform others in 2021? No idea but I bet Amazon will continue its relentless pursuit on top of the global summit, as one of the biggest companies in the world.
Why, many reasons, but two important ones as of now, the internet and the pandemic.
They say the rich get richer, this is undoubtedly a maxim that fits into the pocket of Amazon, effortlessly it seems.
The headline “Amazon plots a course into the healthcare industry” caught my eye recently, although I knew they had already started in the US recently, it now looks like they are coming across the pond. The competitors are worried. To give you an understanding of its power, do you recall Amazon postponed its annual "Black Friday" discounts in France, under pressure from the government. Yes, internet shopping mixed with the terrible pandemic is just a magic formula for the company in a perverse sense.
We all know the man.
His wealth is now estimated to be $171bn (£137bn), increasing it by tens of billions during the Covid-19 pandemic.
Amazon boss Jeff Bezos even has plans to take humans into space and much much more!! Seems all the billionaires want to be spacemen, the new frontier.
He started his e-commerce empire in 1994 out of his garage in Seattle. He runs it as CEO and owns an 11.1% stake. Between March and April 2020, amid the pandemic, Amazon said it hired 175,000 additional workers, whilst most other industries were laying off people.
Ok, I am not the type to be envious, but I admit I admire this man and the company and thus I follow the stock closely.
There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second. Jeff Bezos
This attitude has been proven true and why consumers love the brand. Handy, cheap, innovative, and current.
Global net revenue of Amazon Q3 2020, by product group.
Published by Tugba Sabanoglu, Dec 1, 2020
“In the third quarter of 2020, Amazon.com's net revenue from subscription services segment amounted to over 6.5 billion U.S. dollars. Subscription services include Amazon Prime, which is estimated to have 112 million members in the United States as of December 2019. The biggest revenue segment were online stores with 48.4 billion U.S. dollars in quarterly net sales.”
So, what next for the Company?
Last year, a lawsuit revealed Amazon’s planned to sell drugs directly to employers and also health plans. This would allow Amazon to become its own pharmacy benefit manager – an administrator of prescription drug programmes – which could really disrupt the $311 billion (£250bn) American pharmacy market. Amazon is also getting into America's $345.7 billion (£276.6bn) prescription drugs market, a move that should further lower healthcare costs across America. In June 2018, the company snapped up online pharmacy PillPack, enabling it to dispense prescriptions in 50 states, something that would have taken years to achieve otherwise.
In the UK, people are pharmaceutical businesses are getting worried.
"I think the impact would be huge," says Ahsan Bhatti, owner of online pharmacy Quick Meds.
He is concerned about the prospect of online giant Amazon moving into the pharmacy business in the UK.
"I'm worried. They'll have a massive marketing budget, and they'll definitely take a sizeable chunk out of every other pharmacy on the market. There will be closures as a direct result of it," he says.
In the US, the service introduced in November 2020, allows customers to make pharmacy transactions through Amazon and receive unlimited, free, two-day deliveries if they have a Prime membership.
Investors have taken note, with pharmacy chains like Walgreens and CVS seeing their share prices fall.
Although Amazon hasn't yet announced plans for other countries, chemists in the UK are preparing themselves for a new competitor.
Other Amazon's projects, from cashless stores to home robots.
In January 2018, Amazon opened its first cashier-less convenience store, called Amazon Go, in Seattle. The stores may ultimately revolutionise shopping, as the “Just Walk Out” stores mean that you do not need to queue for a cashier, instead, you pick up your goods and go, you can add items to your virtual cart in the Amazon Go app by just picking them off the shelves. Very relevant during this pandemic, right?
Will it take off worldwide? I think the pandemic is shaping the answer as shopping habits evolve.
In January last year, Bezos made an unannounced appearance at an Amazon event in Delhi, where he said the company would invest $1 billion in India over the next five years, bringing millions of small and midsize local businesses online.
As a global company, going to India seems to be at the forefront of Jeff Bezos’ mind. Population of India? 1.353 billion. 40% have internet access, GDP estimated at about 10% annually, do the maths.
AI-powered home robots
Bloomberg revealed that Amazon is working on a project that could really further empower them to their consumers: a next-generation smart robot for the home that will be powered by artificial intelligence (AI). Named Vesta.
Vesta is essentially Alexa with a robot body and equipped with cameras. By virtue of this design, the personal AI assistant would be able to roam around the house for added functionality. The project is reportedly under development by the Amazon research and development arm, Lab126.
We all know Alexa, its cloud-based voice assistant has helped Amazon dominate this growing field. Priya Abani, director of Amazon Voice Services, sums the company’s ambitions with AI. “We basically envision a world where Alexa is everywhere.”
Recently entering the market, coinciding with a massive surge in consumer demand due to the lockdowns etc. Again, money makes money, right? Amazon launched Luna.
A cloud gaming service that allows users to play on streaming devices without having to download or install games beforehand. Luna will work on any Bluetooth controller, but Amazon has also released its own Luna version which will connect directly to the cloud service.
Logistics, cutting out the middleman
Up until 2018 it wasn’t delivering its own parcels and relied on third-party postal services such as FedEx. But the introduction of Amazon’s own vans (up to 30,000 at the end of 2019) has led to an expansion of same-day delivery options and gives customers the chance to return products directly to the driver for them to be taken back to Amazon.
Amazon isn't stopping.
Amazon has recently purchased its own fleet of planes, as it expands its growing air freight network.
The additional 11 Boeing 767-300 planes would "support Amazon's growing customer base", it said.
Amazon's first air operation was launched in 2016, but prior planes have been leased.
Experts say buying its own aircraft will allow Amazon to become a credible competitor in the logistics market.
By 2021, it is estimated, that Amazon Air will have at least 70 cargo aircraft operating out of over 20 air gateways in the United States.
Fleets of delivery drones
There's been a lot of hype about the Amazon Prime Air drone delivery service since December 2013, when CEO Jeff Bezos mentioned the firm's plans to develop the concept during a US TV interview. Amazon is now well on the way to rolling out the service, which will deliver packages weighing up to five pounds within just 30 minutes using miniature drones. In December 2016, the first Prime Air package was delivered at breakneck speed in a testing ground in Cambridge, England, which has a Prime Air fulfilment hub nearby.
The list is endless and shows just how advanced their research is in moulding our future in terms of spending our money.
Therefore, sold yet? Do you buy it?
Over the last 10 years, Amazon has become one of the most powerful, respected, and backed companies in tech, and well beyond.
So Far Amazon has about 40% of the overall e-commerce market in the U.S., according to eMarketer, and far less worldwide, leaving plenty more growth potential.
Amazon.com, Inc. is estimated to report earnings on 02/04/2021. How will investors react to its latest earnings and more importantly its forecast for the next quarter?
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