Since its launch in 1994, Jeff Bezos’ company has taken over all types of businesses and startups.Amazon has bought companies that have made it modify its processes or allowed it to enter new markets.Amazon’s most expensive acquisition to date is Whole Foods Market, for which it paid $13.7 billion.When Jeff Bezos founded in July 1994, Amazon was simply an online bookstore.25 years later, the company’s focus has shifted considerably and it’s opened up to an array of different goals.Given the multitude of sectors the Seattle-based tech giant is involved today, it’s actually somewhat difficult to pinpoint exactly what Amazon is as a company.
Though the giant is technically a marketplace for the sale of third-party products, it’s also an audiovisual content provider, a storage provider for companies, and it provides fresh product deliveries.Part of what makes Amazon so successful is the fact that the company has kept tabs on every single trend.Investing in a diverse range of products and markets has, in part, helped transform Amazon into the gargantuan company it is today last year alone, the firm made roughly $233 billion in net sales.Yet, to get to where it is now, the company has had to close multiple deals and spend billions of dollars.While a number of these deals have been significant purchases, others that may not have seemed particularly important also changed its path considerably.Throughout the history of the organization, there are two defining moments in particular that can be singled out as having been catalysts in the company’s metamorphosis.
One of these was the acquisition of Zappos shoe e-commerce in 2009 (for $1.2 billion) and the other, Quidsi, a year later which set Amazon back $545 million.Despite the fact that, in April 2017, Amazon did away with the latter business, the impact of its purchase was huge from a strategic point of view.”These acquisitions clearly identified Bezos’ goal to eventually transform into an online retailer of more than just books and third-party products, especially in the case of Quidsi,” economic journalist and author José Luis de Haro, told Business Insider. “The price war strategy upon which Amazon was based went down particularly well, especially after Walmart had also expressed interest in Quidsi.”
Another turning point for the firm took place in March 2012 although, at that time, the acquisition may not have been given the attention it deserved. Amazon spent $775 million on Kiva Systems, which is in the top three largest acquisitions the company has carried out so far.Kiva, re-dubbed Amazon Robotics in 2015, is involved in innovating for warehouses and logistics companies.The company’s operations focus on small robots and programmable, portable transport units able to transport over 540 kilograms per unit from one point to another.These robots have sensors to avoid colliding with each other and are guided by barcodes located on the ground. Subsequently, a model was also developed to load pallets of over 1,300 kilograms.At this point, Bezos had tapped into something big.Amazon canceled its contracts with companies including Office Depot and Staples for which they used to provide automated storage and retrieval systems and then began using Kiva’s technology exclusively and for its own purposes.That’s how all the operations so characteristic of its warehouses today, were born it’s only with Kiva that the company has been able to manage the huge volumes of shipments the Seattle company handles every day.Based in Boston, Amazon Robotics is ultimately responsible for using any kind of AI tech it has at its disposal to automate all the hubs’ operations.
The most economically important acquisitions
The largest of Amazon’s acquisitions by a long way took place in 2017 the Seattle giant announced it had purchased high-end supermarket Whole Foods for a whopping $13.7 billion.”Whole Foods has become a business that allows the company to test its distribution and sales strategies in a physical supermarket beyond its smaller establishments like Amazon Go,” de Haro told Business Insider.Interestingly, according to the author, this has led to a worse service for the supermarket.”It’s interesting to see how some of those supply dynamics the company implements to maximize cost reductions, have sometimes led to a lack of key products in Whole Foods,” says de Haro.Amazon has also made smaller acquisitions that have reaped a lot of economic benefits. In terms of profitability, Amazon’s best moves have involved Amazon’s cloud storage service, Amazon Web Services (AWS).In September 2015, Amazon purchased Elemental Technologies for $296 million this acquisition allowed the company to incorporate video services (processing, storage, packaging, distribution, etc.) under the umbrella of AWS Elemental as part of a new service offering for AWS.De Haro said that “AWS has transformed into a fundamental part” of the home.In 2018 alone, AWS reportedly earned Amazon $25.7 billion.”Despite competition from Azure (Microsoft) or Google Cloud, AWS continues to outdo other services,” said de Haro. “One potentially interesting move that’s been discussed extensively is branching off into a new company listed on the stock exchange, independent of Amazon,” he said.
So, what does the future hold for Amazon?
Considering the somewhat haphazard nature of where Amazon has cast its net in recent years, it’s actually quite hard to predict which the giant will set its sights on over the years to come.That said, this is what de Haro said on what he suspects Amazon will do next.”From a retail point of view, Amazon should be closely watching the myriad brick and mortar retailers being crushed by the ‘retail apocalypse,'” said de Haro. “This may provide opportunities to further expand Amazon’s physical presence, which will continue to be needed either in the form of stores or as distribution centers. There are also small companies like Warby Parker or Lululemon that could form part of its product strategy.”De Haro also believes Amazon could have an impact on the healthcare industry.”Buying a network of clinics or online services like Doc in a Box, or even going further and getting CVS Health would be a very interesting move,” said de Haro.It’s hardly a secret that the company has an interest in eHealth in June 2018, it made its foray into the sector by buying PillPack, an online pharmaceutical company that generates somewhere in the region of $100 million in annual revenue.The system allows prescription drugs to be shipped to patients across the country each user receives the pills and medical products they need on a monthly basis, along with a form specifying the frequency and days they should be taken.Interestingly, some of the larger American brick and mortar retailers able to keep up with Amazon have also started getting involved in the health sector.Walmart, for example, has set up branches called “The Clinic”, where users can get primary care for a small fee.