Warning all megalomaniacs: There’s a precipice ahead
One way or another, the big players just keep getting bigger. Every large tech company has an M&A team that seem like they were reared on Pac-Man. They gobble up businesses at every turn, hopefully because they add value, occasionally so that competitors don’t do so first, and apparently, sometimes, because they can. In other instances, they study successful businesses and roll out their own flavor even if it does not directly correlate to their core business. Among the latest is Amazon’s new local marketplace and food ordering initiative.
The leading internet merchant is not satisfied squeezing brick & mortar retailers and disrupting long established retail models by adding services like same-day delivery, fresh grocery items and a phone that can order products with the touch of a dedicated button. Now Amazon is venturing into divergent areas already disrupted by other established internet brands.
The question is: How far can they go before falling flat on their face? Sure, they have wads of cash and an amazing logistics system. They have a massive customer base and a top-notch reputation among millions of consumers. They’re the first place many people think of shopping these days and they have successfully integrated other web-only merchants. Does that mean that they are infallible? Will consumers accept anything and everything they do as they grow tentacles in ever more verticals?
I think a reckoning is coming. The fan boys (a.k.a. Fire Phone pre-order geeks) will suck up anything and everything Master Bezos throws their way. But more mainstream consumers may begin to get their fill of Amazon being everywhere (Google too) and limit their dealings with the merchant to its core function; purveying "stuff." Lots of Amazon customers are heavily vested in local services with Yelp, GrubHub Seamless, Angie’s List, etc. and are unlikely to abandon ship just because big A has arrived and put its brand on things.
In fairness, the company has a strong track record and it isn’t the only entity that can be accused of drinking its own Kool-Aid. Yet, the issue is this: Can the Amazon brand justify taking such extended risks, possibly overstepping its reach, attempting to become the be-all end-all, or should it continue to hone its core services? After all, Amazon remains far, far away from capturing even one percent of retail sales or even 50 percent of Walmart sales, potentially making the pursuit of extraneous businesses a diversion, or worse, a serious miscalculation.
- Exclusive: Amazon.com plans local services marketplace this year – sources – Reuters
- Amazon Is Quietly Launching A Local Takeout Service To Rival Seamless And DeliveryHero – TechCrunch
- Top 100 Retailers Chart 2014 – National Retail Federation
- Amazon’s Fire Phone is all about selling stuff on Amazon.com – RetailWire
What do you think of Amazon moving into the local marketplace and a food takeout service areas? Will consumers welcome Amazon’s expansion into such areas? What are the potential benefits and risks of extending into non-core businesses?