We need to talk about an all-powerful Amazon
Mildly put, Amazon’s phenomenal growth has businesses and regulators concerned.
“If you are John Lewis and 80 percent of your tax bill is on paying for buildings and people, you are not going to compete (with online giants such as Amazon). Yet go around the cities in the UK and ask them which of the stores most contributed to city center regeneration, well, it wasn’t an Amazon warehouse, I can tell you, Amazon should be broken up into three different businesses as the first step.”
So said Martin Taylor, Chief Executive of the RSA, last week.
A couple of days later, Amazon announced its US$1 billion acquisition of online pharmacy, PillPack, which was labeled “a warning shot in what is about to become a major battle within the pharmacy space” by Neil Saunders, Managing Director of GlobalData Retail.
More than GBP13 billion (US$17.17 billion) was wiped off the value of top American drug sellers after the deal was announced.
“In our view, this is only the first play in what will be an increasingly aggressive strategy by Amazon to develop a much more significant presence in the pharmacy market,” Saunders commented.
“This is incredibly bad news for traditional players, like Walgreens and CVS, who stand to lose the most from Amazon’s determination to grow its share.”
The e-commerce giant has also set its sights on banking. Its financial services division could grow to more than 70 million US consumer relationships over the next five years or so, the same as Wells Fargo, the third largest bank Stateside.
That’s according to Bain & Company, which bases its estimate on slightly more than half of Amazon’s estimated US customer base choosing a financial relationship with the firm.
Can the Jeff Bezos-driven juggernaut be stopped?
There was a glimmer of hope for its rivals when earlier this year President Trump tweeted: ‘I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!’
Trump took to social media in the immediate aftermath of an article going live on the Axios website. Citing five different sources, this claimed that, whilst Capitol Hill is gunning for Facebook, the President would rather duke it out with Amazon.
“Trump has talked about changing the company’s tax treatment because he’s worried about mom-and-pop retailers being put out of business,” the report stated.
“A source who’s spoken to POTUS says: ‘He’s wondered aloud if there may be any way to go after Amazon with antitrust or competition law’ Trump’s wealthy friends tell him Amazon is destroying their businesses.”
Is he the savior of traditional retailers and the nemesis of Jeff Bezos? Probably not. Trump has a tendency to blast people on Twitter then quickly move on to another spat. But Amazon would be foolish to bank on such criticism just fading away.
Its all-consuming nature (it has, for instance, an estimated 44 percent share of US e-commerce sales) will continue to make the company vulnerable to accusations that it is too powerful.
But do any politicians or regulators have it in them to take a stand?
2 December 2022