- US President Donald Trump tweeted on Thursday that Amazon is “putting many thousands of retailers out of business.”
- Amazon‘s aggressive expansion into new industries has terrified competitors.
- Here are eight industries threatened by Amazon’s growth, from shoe stores to healthcare businesses.
US President Donald Trump seems determined to take down Amazon as the e-commerce juggernaut expands its reach.
“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 tweeted on Thursday morning.
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!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
Trump has a history of criticising Amazon. The president argues that Amazon has unfairly received prime tax benefits and preferential treatment from the US Postal Service, hurting brick-and-mortar retailers.
While Amazon denies that its aggressive growth hurts competitors, many analysts and executives agree that, often, when Amazon enters a new industry, rivals suffer.
These are eight industries that have been threatened by Amazon’s increasing domination:
Food delivery businesses
Blue Apron’s disastrous IPO reveals how big of an impact Amazon’s entrance in a new industry can have on competitors.
The company went public in June. When Amazon filed a trademark application for “prepared food kits” on July 6, Blue Apron’s stock sank 11%.
Amazon’s success has continued to plague Blue Apron. In January, the company’s shares fell more than 6% after One Click Retail’s 2017 Grocery Report showed that Amazon had made impressive gains in the US grocery market.
As customers shop for shoes directly from Amazon, analysts say companies like Foot Locker and Finish Line are in danger. In August 2017, UBS analyst Michael Binetti downgraded both companies, saying it is “almost certain” that sneaker retailers will lose market share to Amazon.
“The disruption that has characterised the retail industry recently is not going away,” Foot Locker’s CEO Richard Johnson said in a call with investors in February. “Consumers want experiences, they want cool products, and they want it all – fast.”
Foot Locker plans to close approximately 110 stores this year after closing 147 stores globally in 2017.
Amazon bought Whole Foods in August 2017, which dealt a massive blow to US grocery stores as it forced its way into the brick-and-mortar market and threatened to drive prices down.
The retailer is already the largest seller of groceries online. It’s estimated to have 18% of the US online grocery market, which is double the second-place share held by Walmart.
By having access to brick-and-mortar locations, the company is able to expand its reach across the US and use these stores as distribution centres for online orders. And, Amazon is building out its own brick-and-mortar concept, with the first Amazon Go store opening in Seattle in January.
The future of batteries may be online – and that’s bad news for companies like Energizer.
While online sales of batteries only make up roughly 5% of total battery sales today, UBS said in a note that it expects that figure to rise to 17% by 2025. With Amazon making up roughly 90% of online battery sales, often from its own private-label battery brand, this could create some major complications for Energizer.
“Internet retailers (led by Amazon) have added $US27.8 billion to their apparel revenue since 2005, while dept stores have lost $US29.6 billion,” Morgan Stanley analysts wrote in a 2016 note. “This share loss appears at risk of accelerating given 1) Amazon’s bigger push into fashion, and 2) consumer willingness/acceptance to shop fashion through Amazon.”
Launching the Prime Wardrobe service in June 2017 was “another nail into the department store coffin,” Wells Fargo analyst Ike Boruchow wrote in a note to clients.
Nordstrom is another traditional retailer getting hit hard by Amazon’s online dominance.
“Amazon knows more about the consumer than they do,” CNBC’s Jim Cramer wrote after Nordstrom reported another disappointing quarter in May 2017. “They – the best out there – are still doing guesswork, with one brick-and-mortar hand tied behind their backs.”
And in October, Scott Galloway, a professor of marketing at NYU Stern School of Business who correctly predicted the company would buy Whole Foods, said Amazon could buy Nordstrom next.
The Barnes & Noble versus Amazon battle has been going on for years. However, the discrepancy between the two has been especially grim recently.
Barnes & Noble reported in March that comparable sales decreased 5.8% in the most recent quarter. The biggest culprit: lower traffic, as fewer people visit stores.
Amazon’s latest venture with Warren Buffett’s Berkshire Hathaway and JPMorgan Chase & Co, announced in January, threatens to have a big impact on the US healthcare market.
The announcement sent ripples through the healthcare market; the share price at CVS and Walgreens dropped 4.5% to 6% in premarket trading, and UnitedHealth dropped 6.2%, Reuters reported.
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