(Bloomberg Gadfly) — Amazon is taking over the world. And paradoxically that may hurt Amazon’s ability to take over the world.
It’s been clear for a while that Amazon’s ambitions know few bounds. Sure, Amazon is a global shopping mall. But it’s also making its own household products like baby wipes and batteries, becoming a silent giant in advertising, opening its own bookstores and grocery outlets, perhaps offering internet service, entertaining us with streaming music and TV, and tackling package delivery by land, sea, air and drone.
Amazon wants allies for its industry-spanning growth agenda, but it won’t be easy. Amazon has a reputation as a steamroller. Its success and suspicions about the company’s intentions may cost Amazon the customers or partners it needs to fulfill its manifest destiny.
For example, there are signs that retail companies are reluctant to use Amazon Web Services, the cloud computing service that is a favorite of Amazon investors. Morgan Stanley analyst Brian Nowak wrote recently that Google’s competitor to AWS has a chance to land retail customers that are fearful of using AWS. It makes sense that retailers are wary about paying one part of Amazon to finance the retail-killing playbook of another part. For the same reasons, some retailers also haven’t been eager to use Amazon’s digital payment tools or its marketplace for product sales by independent merchants.
Amazon’s reluctant allies go way beyond retailers. Amazon is trying to pitch the makers of household goods like cereal and cookies to remodel their product packaging and supply chain for online orders rather than optimize for sales in physical stores.
Remaking packaging is a reasonable idea that helps both Amazon and the household product companies as more people shop from their computers. But it’s also understandable if makers of laundry detergent and coffee might not believe Amazon has their best interests at heart, when Amazon is also making its own laundry detergent and coffee.
Amazon wants shipping changes at FedEx to quicken the brutal path from digital clicks to home delivery. It sounds great, until Amazon pushes FedEx to spend big to handle a surge in orders that never materializes — or until Amazon competes directly with FedEx.
Repeat this pattern in other industries, and you can see a lot of business Amazon might lose because of its power, impatience and aggression.
Some of this love-hate relationship with Amazon’s collaborators and customers is a natural consequence of a powerful company with its fingers in many pies. More tech titans are going to confront suspicion as they consolidate power and as more industries depend on them for their livelihood.
It is ironic, though, that Amazon’s ambitions, smarts and sheer ruthlessness are what propelled it to its first $100 billion in annual sales. And those same qualities may be a barrier to its march to its next $100 billion.
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April 7, 2017 at 04:07AM