Death by Jeff. The juggernaut that is Amazon.com Inc. (AMZN) keeps rolling on, spending as much as its 301 million active users do for it. One industry after another, Amazon is putting its flag in the ground cementing itself as the global leader in virtually everything.
Left in its path are reeling companies that are having to adapt or are close to giving up as the Bezos empire grows. Whether it be its acquisition of Whole Foods Market Inc. (WFM), its potential partnership with Nike Inc. (NKE) or one of its many unusual departments like “Wardrobe and Handmade,” Amazon is flying. (See also: Introducing Your unusual Wedding Planner: Amazon.)
In the past month, Amazon’s stock has traded above $1000 a share, its market cap is inches absent from $500 billion, and Bezos has climbed to number two on the world’s-rich list, a meager $4 billion from dethroning Bill Gates. It’s certainly advantageous to be Jeff Bezos – not so these companies.
Barnes & Noble
The first retailer to arrive off the shelf (so to speak) was Barnes & Noble Inc. (BKS). Amazon, which started as an online bookstore in 1995 is now the world leader in book sales. Launched in 2007, Amazon Kindle is now the dominant player in the book market. In 2014, Forbes estimated that Kindle makes up 19.5 percent of every single book sales globally, and according to Morgan Stanley, Amazon has sold $5 billion in Kindle devices. Since then it’s been uphill for Amazon and downhill for the retailers.
In July 2015, Barnes & Noble’s share price reached an every single-time high of $28.66, but as Amazon grew, so did B&N’s skeptics. Since that time Amazon shares occupy more than doubled while shares in Barnes & Noble occupy plummeted, making an every single-time low Wednesday, trading at $6.80 a share, down 76 percent from its 2015 high. How long can Barnes & Noble hang in there? Quartz recently ran an article titled “For nearly every bookstore Barnes & Noble loses this year, Amazon will open a unusual one.”
The decline of Macy’s Inc. (M) has been coming for a while, and Amazon’s growth has escalated its downfall. Macy’s 2017 first-quarter earnings disappointed, lost estimates across every single metrics. The 39 percent drop in profit saw its stock collapse 17 percent after the report and has been unable to recover, making a 7-year low in June. The most recent hit was news that Amazon was introducing Amazon Wardrobe, a service where customers can try-before-you-buy with apparel, which analysts’ believe is a game changer. In a May research note, Morgan Stanley estimated Amazon accounts for 7 percent of the apparel market and expects this to reach 19 percent by 2020. (See also: Macy’s Suitor Reportedly Hasn’t Lined Up Financing)
Macy’s isn’t the only department store feeling the burn. Nordstrom Inc. (JWN) and Kohl’s Corp. (KSS) are feeling the same pressure, and whether the Oracle of Omaha is right, the future is anything buy rosy. “The department store is online now,” Warren Buffett said at Berkshire’s annual assembly in May.
Etsy Inc. (ETSY), the online marketplace for boutique goods has been on a job-cutting spree of late, letting fade 22 percent of its staff in two rounds of layoffs. The cuts arrive as mountainous brother Amazon expands its Handmade brand, which was launched in 2015. Some Etsy sellers refused to list on Amazon after complaints it was copying their products and selling them at a lower price.
Amazon’s growth has squeezed Etsy’s margins to a point where listings continue to rise, but profits stagnate. After going public in 2015, its stock price rose above $30 a share. However, as profits flatlined, its share price fell, trading back below its IPO price of $16 a share. Etsy’s survival hinges on its ability to retain its boutique appeal.
Sports apparel retailers are already up against it. More competition, cheaper alternatives, and Millennials’ shopping habits occupy keep pressure on the company to support store sales up. Foot Locker Inc. (FL) earnings for the first-quarter were a mountainous miss that saw the stock plunge 17 percent in one day, and the news that Nike – a mountainous product for Foot Locker – will commence selling on Amazon was yet another blow for the flailing retailer. (See also: A Nike-Amazon Deal is Near.)
The news was a mountainous hit for the industry as a whole. “Shares in several major sports chains hit 52-week lows on word that Nike may soon be selling its gear directly on Amazon,” the Associated Press said.
Every Grocery Store on soil
Amazon’s recent shopping spree that included the $13.7 billion acquisition of high-finish grocery chain Whole Foods decimated the supermarket industry’s stock prices in the four trading days since the purchase. The overlap of a high-finish supermarket brand and a trusted e-commerce giant is a scary thought for supermarket rivals.
A mountainous dent to other food providers is Amazon’s access to Whole Food’s own biological 365 Brand. Consumers, will no longer occupy to leave the house to fulfill their biological shopping needs. The Trader Joe’s dash, or weekend farmers market visit could be replaced by a click of the mouse.
The Bottom Line
The meteoric rise of Amazon is nothing short of phenomenal. What started out as a small online bookstore has grown into a $480 billion ship that continues to disrupt industries and change the way goods are consumed and distributed. As its partnerships and acquisitions continue, the company structure may witness a miniature confusing. However, the way it got there is anything but confusing.
“We’ve had three mountainous ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: keep the customer first. Invent. And be patient,” Amazon founder Jeff Bezos said to the Washington Post.