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Amazon Looks to Dominate a Post Pandemic World

The pandemic has sharply divided the world into have and have-nots. While most organizations struggled to stay afloat, some rode the wave, and used the pandemic to their advantage.

Amazon is a case in point.

It’s good to be king…

The behemoth not only emerged unscathed from the pandemic, but also multiplied its revenues through the course of the last year. As lockdowns became the means of checking the spread of the virus, online retail stores became the lifelines consumers. And Amazon has

But the company moved beyond e-commerce. With its huge potential to invest and expand, Amazon gained significant traction— pushing many small and medium businesses out of the market.

In spite of being appreciated for “changing the retail forever”, the e-commerce giant has also been accused of “destroying the retail industry” by limiting competition. Moreover, in countries like India, Amazon has come under attack for destroying small businesses. Launched in 1994 as an online bookstore by Jeff Bezos, Amazon’s rise was not immediate. Steadily through the 2000s, Amazon started expanding—moving from books to music, and other retail items. Amazon’s ambition has not abated and has proved to be disruptive for many ventures. Given the importance of the topic, it is vital to delve further and assess the impact that the rise and growth of Amazon has had on different industries.

Healthcare

Amazon’s advent in healthcare has had a significant impact on other retailers in the sector. After acquiring the online pharmacy service PillPack in 2018, the company launched Amazon Pharmacy. Its new acquisition enabled it to secure distribution licenses throughout the US, which proved to be a fatal blow to other retailers. While Amazon bought PillPack at $750 million, the value of Walgreens, CVS, and Rite-Aid, the prime US pharmacies plunged by $11 billion overnight in the stock market.

Meanwhile, the Covid-19 pandemic and the need for delivering medications, further fed the competition. Amazon’s ambition is not limited to pharmacies but extends to the entire healthcare sector. According to reports, Amazon is developing health solutions and venturing into claims management and billing. It is also working on an internal project called Hera that processes electronic medical records to trace misdiagnoses and Amazon Care that provides virtual healthcare. Talks of voice applications like Alexa being used for hospital management are also doing the rounds.

Grocery Delivery

Amazon entered the grocery delivery market with the launch of Amazon Fresh and quickly bought Whole Foods in 2017. Capturing the market further, it subsequently launched its own supermarket called Amazon Go. In response to these developments the shares of prominent grocers’ took a nosedive in the stock market. Moreover, Amazon gained from the increased demand for grocery home deliveries during the pandemic. While other grocers’ battled low profit margins, Amazon played to its strengths, ably managing logistics and supply chain challenges throughout the pandemic.

In a tough market like the UK, Amazon used new strategies to gain a lead. It offered free deliveries on bulk orders, as well as schemes like “postcode lottery”, to seize a significant portion of the market, even as several discount grocers like Aldi, Sainsbury’s, Walmart and Kroger suffered. Amazon’s hold on the grocery delivery industry is expected to continue as it launched stores in prominent Indian cities of Kolkata, Ahmedabad, Pune and Chennai during the pandemic.

Insurance

Another industry that Amazon expanded into during the pandemic was insurance. While the ecommerce giant had launched insurance services like Amazon Protect in the UK in 2016, it entered India in 2018 by investing in a start-up called Acko. Dealing with automobiles’ insurance policies, Amazon-Acko partnership revealed a broader trend of retail giants taking an interest in the insurance industry.

The sector has proved to be lucrative during the pandemic, as automobiles insurance claims have diminished owing to less travel during lockdowns. Partnering with Acko, Amazon has also started offering free health insurance to its sellers in India. Moreover, according to studies Amazon could emerge as a major competitor for traditional players in the insurance sector. Previously, reports have suggested that given a choice a remarkable percentage of customers worldwide would prefer to buy insurance from technology firms like Google and Amazon.

Housing

The slump in the housing industry has not dampened Amazon’s interest in it. In January 2021, Jeff Bezos announced that the ecommerce giant would launch a $2 billion housing equity fund to preserve and build more than 20,000 affordable houses across the US.

The plan is to build houses in particular areas of Arlington, Virginia, and Nashville with the goal of offering affordable housing to moderate and low-income families. According to Forbes, through the first investment of $381.9 million, Amazon would provide loans and grants at low interest rates to the Washington Housing Conservancy.  By the means of the first investment, 1,300 affordable homes would be built. While, Amazon’s gesture is being appreciated, many argue that the decision has been made by the multinational to offset the effect that the company’s presence has had on the housing market of Arlington. Meanwhile, since the behemoth entered the housing industry, its further expansion in the sector is predicted.

Future Trends

Termed as, “one of the most influential economic and cultural forces in the world”, Amazon’s journey has been phenomenal. Compared to other players, Amazon has several advantages. Besides logistics and delivery capabilities, it has an incredible reach. Currently, Amazon has more than 150 million paid Prime members and over 300 million active customer accounts world over.  While it has been acknowledged globally that Amazon’s growth and revenues would further soar in the coming years, there are internal changes that are scheduled to occur. The company has announced that in 2021,Jeff Bezos would step down and Andy Jassy will take his place as the CEO of Amazon.

Meanwhile, Amazon representatives has been incessantly arguing that the company is creating jobs and providing its competitors a conducive environment to grow along with it. However, its advantage in data collection as well as use of economic muscle to restraint other businesses is well known. It remains to be seen if on entering the new industries, Amazon would democratize them or crush competition heavy-handedly to establish its dominance.

Date added
07.04.2021

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