AMAZON’S EXPANSION/RETRACTION – ACQUISITIONS

We’ve been talking for the past two days about companies and their acquisitions – First, about WeWork and its seemingly untoward acquisitions; and, yesterday, about General Electric’s ongoing struggle to turn around the circumstances surrounding acquisitions made by past CEOs – acquisitions that were untoward in their own right and certainly, misguided.  Today, it’s Amazon’s turn.

Amazon is a company that has, thus far, done well with its acquisitions (well over 100 acquisitions by this time), the most notable in recent years of which is the Whole Foods purchase in 2017.  In reviewing a listing of the Amazon acquisitions, all are within its core business realm, as that business has grown and expanded over the past two decades.  The Whole Foods acquisition came at the point in time when the company was seeking an ability to expand its online grocery selections and determined that there would be an advantage in investing in brick and mortar (BAM) stores that could allow a different sort of expansion –  the BAM arrangements allowing flexibility and opportunity.  To date, Amazon has made good use of the Whole Foods purchase, using its acquisition to bolster online business of the company’s other merchandise and purveying information, such as joining Amazon.Advantage,  to shoppers at the grocery stores.  Amazon’s latest decision is to institute the addition of “dozens of grocery stores in several major U.S. cities,” (ref. WSJ), as the “retail giant looks to broaden its reach in the food business and touch more aspects of consumers’ lives.”  Current plans include the opening of the first grocery store in LA at the end of 2019, with others to follow shortly, including stores in San Francisco, Seattle, Chicago, Washington, DC, and Philadelphia.  It’s said that the new stores will be a departure from Amazon’s upscale Whole Foods, offering a different variety of products from the Whole Foods selections that are intended to be priced lower.  Amazon is still working on its food-delivery business and hopes to better understand how it can cater to grocery shoppers.  (A more cost-effective pick-up and delivery process for consumers is on the minds of most of the large food corporations currently.)  For its new stores, Amazon is targeting new developments and occupied stores with leases ending soon.  As a matter of fact, shopping centers that once blasted Amazon for destroying their businesses, are beginning to see Amazon as a savior.  This ongoing effort for the new stores will undoubtedly intersect with both the AmazonGo effort, where Amazon has been testing out its cashierless efforts in urban stores; as well as with the effort of expanding the footprint of Whole Foods.  In the meantime, Amazon is discontinuing its Pop-Up Stores in the U.S., which have been kiosk-like stores that showcased devices such as voice-assistants, tablets and Kindle e-readers, that allowed shoppers to sample the newest products.  At the same time as closing the Pop-Ups, Amazon is expanding its bookstores as well as its “4-Star Stores” – stores that feature products rated as 4-star or higher by Amazon online customers.  Products at these stores will now include books, toys, games (finally, a solution to the dissolution of Toys “R” Us – ?), home and kitchen goods, electronics, and Amazon devices.  It’s a rare opportunity to follow a corporate leader through the process of expanding, and even contracting, but with purpose.  

ALL THE MOVING PARTS:  ONE PART (DIVISION, DEPARTMENT) OF AN ENTERPRISE CANNOT EXIST ON ITS OWN – ALL THE PARTS OF A COMPANY MUST MOVE TOGETHER WITH PURPOSE AND DESIGNATED DIRECTION.

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