When Jeff Bezos founded Amazon in 1994, he clearly had big plans. He originally called the company Cadabra but after some friends pointed out that the name sounded too much like “cadaver” he decided to change it. Relentless was another name choice for the company. That would have been more closely aligned with Bezos’ aspirations. He has, after all, turned a company he started in his garage into the 56th largest company in the country and the 15th largest retailer.
But the Princeton grad eventually settled on the name Amazon. It seemed like a strange choice to many. But Bezos could appreciate the implications of naming his new company after the widest river in the world.
Indeed, he has worked to make sure Amazon reaches every sector of the vast American market. The river metaphor is apt. Amazon now has a well developed tributary system that drains money from consumers into a river of cash flowing directly into Bezos’ bank accountants. The company did $74 billion in sales last year. That was up from $61 billion in 2012; a year that saw another $13 billion increase over 2011. With growth and sales like that, it seems worth reminding readers that the company started out as an online book retailer.
But Bezos never planned to stop at books. His was always driven to achieve more, as is evidenced by his choice in names. Now in its 20th year and resting on $74 billion in recent sales, Amazon and Bezos continue to grow reverse tributaries. These radiate out from the home office in Seattle looking for ways to expand Amazon’s reach.
Bezos laid out plans for some of these tributaries in his recent letter to shareholders. But he didn’t name all of them. What follows is a list of five ways Bezos will continue his conquest to dominate not only the world of business, but also of information.
Bezos mentioned these in his letter to shareholders but he didn’t call them drones. He wrote, “the Prime Air team is already flight testing our 5th and 6th generation aerial vehicles, and we are in the design phase on generations seven and eight."
Whatever they are called, these aerial vehicles will break down one of the last barriers for Amazon to completely dominate retail. Many consumers have balked at having to wait for two days — or more — to receive home delivery of a product purchased from Amazon. The company entered into negotiations with the U.S. Postal Service last year to extend Sunday delivery to some areas. That would increase delivery options, but true to his relentless aspirations, Bezos demanded more.
The drones would allow home delivery anytime, anywhere. Sound creepy? Maybe it should. Sound like fantasy? Maybe it does. But as Daniel Kline pointed out in a recent article for the Motley Fool, so too did video chat and other things that we now take for granted.
If Amazon can literally and figuratively get these delivery drones off the ground, world domination may be near.
The prospect of expanding into the grocery business may not seem as sexy as the idea of aerial drones. But the size of the grocery business can not be ignored. Nor can the implications of Amazon’s expansion into the food sector. Everyone eats food. Everyone. Sales for groceries in supermarkets alone in 2012 broke $600 billion. That makes Amazon’s $74 billion in the same year seem downright quaint.
It’s certainly the kind of money that Bezos can’t ignore. He has been trying to get the company to break into the business for five years. That’s how long the company has been running trials in Seattle. The service is marketed under the name Prime Fresh, and for $299 dollars a year customers can receive same-day and early-morning delivery of groceries and other items. Amazon announced this year that it will expand service to Los Angeles and San Francisco.
The move signals that Amazon is working on numerous fronts to perfect rapid delivery, but that it is also very serious about breaking into the enormous grocery business.
Bezos made clear he plans further expansion.
"We'll continue our methodical approach – measuring and refining Amazon Fresh – with the goal of bringing this incredible service to more cities over time,” he wrote in his letter to shareholders.
If that happens grocery stores, and the world, should watch out.
3 The Kindle
The Kindle may seem like old news to many. And it is. But its age, in no way diminishes its importance as far as domination of information by Amazon is concerned. In many ways the Kindle is the ideal device for Amazon. It is a handheld device through which Amazon can control a flow of information. With it, users can buy, publish, and trade books. They can also view television shows and movies on the enhanced versions of the Kindle Fire.
The Kindle is important because it proved that Amazon recognized e-commerce would shift from desktop computers to tablets. The Kindle which — readers should be reminded again — started out as a mere digital reader for books was really Amazon’s foray into the world of tablets. The device is also a portal into Amazon’s markets. A double-dip for the company that gets to sell the device and then dictate, with that device, from whom new products are purchased.
The Kindle Fire and its Amazon-variant Android software also laid the groundwork for a smartphone offering from the Seattle company. That is due out later this year.
The Kindle is a major tributary in its own right for Amazon. A vital revenue stream capable of bursting the dams of other cash filled reservoirs like the smartphone market.
It is also an excellent source of information in the form of books and news. All controlled by Amazon.
2 The Washington Post
Speaking of news, it's no secret that Jeff Bezos purchased The Washington Post last year for $250 million. The deal ended 80 years of control over the paper by the Graham family.
Bezos and editors for the paper are quick to point out that the purchase of the paper was a private investment by Bezos and that it, in no way, links the paper to his Seattle retailing behemoth.
But seeing as how Bezos owns over 83 million shares of Amazon stock, skeptics may be forgiven for wondering if the association is tighter than interested parties claim. 83 million shares? Yes. The next closest is investment firm Capital World Investors, with 30.6 million shares. No other individual even comes close.
Remember the Kindle? The slick device, so capable of delivering information. What better addition to an arsenal of information sources than a newspaper?
It didn’t take long for people to complain either. In January a group known as RootsAction.org collected 25,000 on petition and presented it to the editors of the Post. The petition expressed concern that the paper would not be able to be impartial in covering the CIA following an announcement that Amazon has just signed a $600 million deal that made the agency a major customer of the company’s cloud services.
1 Cloud Services
Didn’t know Amazon had a cloud? It does, and it is huge. In fact, a recent story from NPR reported that it is the biggest provider of cloud services in the country.
“If you've ever watched streaming TV on Netflix, clicked on a Pinterest pin, or listened to music on Spotify, you've used Amazon Web Services,” the story claimed.
The service started eight years ago and represents $3.8 billion in annual revenue for Amazon.
It is big business that promises to get much bigger.
Amazon had a head start in the business and they are considered the leader. It controls five times the amount of information as its next 14 competitors, combined. That is truly information domination. It also means it is good at what it does. Which is presumably why the CIA signed on as a customer.
That mix of business between government, newspaper and information manager is precisely what gave organizers at RootsAction.org the creeps.
"A basic principle of journalism is to acknowledge when the owner of a media outlet has a major financial relationship with the subject of coverage,” read their petition. “We strongly urge the Washington Post to be fully candid with its readers about the fact that the newspaper's new owner, Jeff Bezos, is the founder and CEO of Amazon which recently landed a $600 million contract with the CIA.”
The paper met the criticism with usual points that Bezos invested privately in the Post, not through Amazon, and that $600 million was mere pennies in terms of Amazon’s overall business.
That might be the case, but Bezos bought the Washington Post for half that amount. At the very least this first confrontation as Bezos continues his quest for dominance of various markets should raise the question: Have Amazon’s tributaries expanded too far?