TIME has another "Amazon is going to take over the world" story:
http://business.time.com/2012/07/16/...ver-the-world/
It does have a few interesting nuggets, including this one:
Quote:
The Infrastructure of Commerce
Amazon’s most daring gambit, and the one that may position the company for the kind of earnings growth that the stock market expects, is its foray into business-to-business services. In recent years, Amazon has ramped up its so called “cloud computing” services, or its business of leasing out of server space in its large data centers around the world so that small businesses don’t have to risk such upfront capital investment. It has also greatly expanded its third party marketplace, where merchants all over the world can set up their own virtual stores on Amazon.com, and sell their products alongside Amazon’s — all the while leveraging Amazon’s large customer base and credit card processing services.
In fact, retailers who use Amazon’s third-party marketplace now account for 35% to 40% of all units that Amazon sells per year. Amazon takes a healthy commission off of each sale it makes — making third-party sales a higher margin venture than its core retail business — without having the risk of developing those products or holding the inventory. And the sellers get the advantage of Amazon’s vast distribution network and built-in customer base. Amazon’s reach into third-party businesses has become so great that The Financial Times wrote last week:
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“This has lifted Amazon’s economic influence beyond its tech peers Apple, Google, and Facebook and taken it into the realm of network businesses such as stock exchanges, power grid operators, credit-card processors and shipping lines.”
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Indeed this new development has exponentially extended Amazon’s retail-industry influence in ways that a company like Walmart – the revenues of which far outstrip Amazon’s – could never dream of.
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The
italics are mine; it occurs to me that their self-pub services fall in that very same category of Business-to-business services, enabling small businesses to play on a more level laying field with the big entrenched players.
The
bold-italic bit?
The other segment that caught my eye explains *why* Amazon's services are worth their cut of the revenue:
Quote:
Reestablishing the Retail Relationship
Back when mom-and-pop retailers ruled the land, one-on-one relationships between purveyors and customers were easy to foster. Business owners knew their customers well — understood their tastes, how they shopped, and what they needed. As chain stores began to dominate, however, this one-on-one relationship was lost. There was no way those running a national retail operation to understand their customers on such an individual basis.
But Amazon changed that. According to Greg Girard, a retail industry analyst for IDC, Amazon’s greatest strength is that “it’s customer relationships are inherently one-to-one, more akin to what telecoms and banks have with their customers.” While brick and mortar stores are black boxes — customer behavior inside the store is effectively invisible to managers — Amazon is able to collect endlessly useful information about shoppers, and use it to sell more stuff by targeting customers through email and the website itself. Says Girard:
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“Whenever a customer buys something from Amazon, or logs in without buying something, Amazon is collecting all kinds of information about that person. There’s a lot of data that can be mined about how they peruse the website, what they put in the cart, what they abandon, and how the customer actually goes about searching for a product.”
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This relationship, and what Amazon can do with it, is invaluable, and puts Amazon in a prime position to turn the growing role of ecommerce into revenue growth for itself.
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To their business partners--big, small, and tiny--Amazon is a direct *marketing* conduit to a large customer base. A *front-end* counterpart to the back-end enablers like UPS, Paypal, VISA, MASTERCARD, etc. (And that is in *addition* to their own backend services listed above.)
Viewed that way, Amazon looks a lot more like EBAY (with its Paypal subsidiary) and a lot less like a Walmart, Sears, or Best Buy.
Seen as an infrastructure play, Amazon expanding into local repositories for next day or even same day delivery looks inevitable.
(And even more likely to take them into UPS territory--via partnership, merger, or... competition?)
Hmm...
How are FedEx finances?
Or... We know USPS has all those under-used facilities... maybe Amazon will take over USPS?
