Amazon’s Secret Weapon

Amazon is taking over the universe.  You’ve probably bought something from them.  Might even be a Prime subscription member. The online retail giant that revolutionized how a nation bought books, under founder Jeff Bezos (who attended River Oaks Elementary School in the 70’s), has expanded into selling – just about everything.  The company’s purchase of Whole Foods earlier this month opens another expansive avenue for a brand that has already redefined so many other areas of how we purchase what we purchase today.  “They already provide TV content through their Amazon Prime Video, and original productions; they have the Amazon credit card; they have home service repair; with the acquisition of Whole Foods they’ll be getting more aggressive into grocery deliveries,” says Rice University business management professor Dr. Scott Sonenshein, listing only a few divisions.   Amazon has become such a market leader in so many markets they’ve got to be making money hand over fist in their annual revenue reports, eh?

Sure, but not exactly.

“A lot of Amazon’s profitability comes from its cloud-based computing,” says Dr. Sonenshein. “Its web-services division -- that’s subsidizing a lot of the other investments Amazon is making.”  Amazon has a 45% share of the cloud-computing market.  Microsoft has 27%.  Walmart is trying to keep apace in online retail, and remains competitive in branch areas, but one after another, fueled by an aspect of their business most people are only casually aware of, if at all, Amazon is knocking off competitor after competitor in industry after industry.  “The question that’s going to play out is whether or not anyone is going to be able to catch up with Amazon, given all the money and capital that they’re investing in their business that’s being subsidized by a completely different market right now.”

At what point is Amazon too big to fail?

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