Amazon.com, Inc. (ticker: AMZN) does pretty much everything retail.
What started as an online bookseller quickly expanded into other product verticals like electronics, clothing and toys, and eventually morphed into an all-encompassing web store with virtually every legal product you can imagine. AMZN even helped put a few billion-dollar businesses — RadioShack, Borders and Circuit City being three of the most prominent — out of business along the way.
There’s arguably no other American company ever that’s been so successful in so many areas.
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That’s not to say there haven’t been flops. Amazon Local, the Fire Phone and Amazon Destinations each failed; the Fire Phone arguably registered as one of the biggest tech flops of the last decade. Still, Amazon’s track record of success far exceeds its failures, and with a hard-charging billionaire intent on taking humans to Mars at its helm, Amazon investors and competitors alike should be prepping for its next ambitious business expansion.
With so many irons in the fire, here’s a look at the ones with the potential to become the hottest over the coming years and decades:
Shipping. Watch out United Parcel Service ( UPS), FedEx Corp. ( FDX), and DHL — Amazon is coming for you!
In recent years Amazon has been building up a fleet of aircrafts and branded trucks, has entered the ocean freight industry, and has lead the way lobbying regulators on drone delivery. Former Boeing exec and current CEO of the fleet/aviation software company BoldIQ, Roei Ganzarski, says these steps are necessary if Amazon wants to control the “entire supply chain,” which it does.
Amazon’s lightning-fast 2-day delivery for Prime members (it’s even testing same-day delivery for some products and locations) is a demanding timeframe for third-parties like UPS and FedEx to adhere to. So, like so many things, Amazon is in-housing logistics. The next step, Ganzarski says, is selling its shipping services to others once its capacity is large enough.
“Look at how they started Amazon Web Services,” the company’s cloud computing platform, Ganzarski says. “It was first based on internal need … when they figured out they don’t always need all of it, why not provide it to externals?”
Banking. Amazon’s eventual move into banking and financial services is equally inevitable.
Earlier this year, it teamed with Wells Fargo & Co. ( WFC) to offer discounted student loans to Amazon Prime Student members. And Laura Crozier, global industry director of banking at Software AG, only sees Amazon getting more ambitious going forward.
She eventually sees AMZN becoming a “banking platform,” that offers solutions from “big banks, fintechs such as roboadvisors, payments, and foreign exchange providers.” Crozier also called Amazon’s decision to open a credit card marketplace a “critical step” for the company.
But some may read its willingness to open a credit card marketplace as more than just a step on the way to becoming an aggregator of other’s offerings.
“Typically what they do when entering a new business is they start out with a marketplace and then figure out which one of those products are the right products to go and build themselves,” says Sanjay Parthasarathy, founder and CEO of Indix Corp.
Parthasarathy added that Amazon’s brand strength, as well as its sprawling network of Prime members, appropriately puts it in “prime” position to eventually offer services that compete with the likes of PayPal Holdings ( PYPL) and Square ( SQ).
Search. “When people are looking for products and they want to buy something, they’re already starting on Amazon.com, not Google ( GOOG, GOOGL),” says Phil Barrett, senior vice president and general manager of Purch.
Barrett believes that Amazon Alexa, the company’s AI-powered, voice-activated personal assistant, could become the Google Search of what he calls the “post-app” world.
Alexa products like the Amazon Echo and Amazon Echo Dot have been surprise hits for Amazon, and that, combined with Alexa’s ease of use and impressive functionality, makes Alexa a serious contender to be the search engine of the future, Barrett says.
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Alexa is also an open platform for developers to add skills, enabling the assistant to become even smarter. In contrast, Siri had been closed to developers until very recently, and Google Assistant is only now commercially available in the Pixel phone.
“In the future it’s not gonna be Android vs iOS, it’s gonna be Alexa vs. Siri or Alexa vs. Google Assistant,” Barrett says. And that makes Amazon’s sizable head start in virtual assistants all the more valuable.
“That for me is potentially very scary for Google,” Barrett says.
Health care. Unlike Apple ( AAPL) and Google, which both have health monitoring apps or devices, Amazon isn’t hands-on in health care — yet. But Barrett thinks AMZN could easily move into that vertical as well.
“Whether that’s as simple as contact lenses or it’s actual health care services, they can do that because they already have the customer trust, they already know a lot about you, and they have reach and scale that really makes them hard to compete with. I think they can leverage that and enter the space,” Barrett says.
Travel, further cable disruption. Amazon has previously tried its hand at online hotel booking with Amazon Destinations, a venture that closed a mere six months after launching. But don’t be surprised if Amazon tries again.
“People are used to buying travel online, that’s where Amazon’s customer service, brand, and Prime can come into play,” Parthasarathy says.
“Amazon can harness the power of its algorithms to enhance the overall customer experience and combine products and services, such as buying luggage when booking flights,” Parthasarathy says.
Regardless of what path Amazon takes into travel, don’t be surprised if they refuse to give up on it and try again.
Another area Amazon will almost certainly continue to build out is Amazon Prime Video, its streaming TV service. Along with Netflix ( NFLX) and Hulu, Amazon has helped disrupt the traditional cable TV industry, and will likely offer new bundles and more original content going forward.
Amazon has been set on expanding its horizons since the day it was founded, and in doing so CEO Jeff Bezos has created an ambitious, disruptive culture of innovation, one that’s been almost fearless when entering new markets.
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Don’t expect that to stop anytime soon.
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