Is Amazon a threat?
If you have an equity portfolio and a well created portfolio with a moat should YOU have to worry about Amazon? Well, I seriously do not have an answer. However here is an attempt.
Amazon in India is not so much into services but imagine what that can do. Suppose I want an air-conditioner installed in my house. I list it on Amazon saying “I want….”. I know the price for this service should be about Rs. 7000 (about US $100). However, I list saying “willing to pay Rs. 3500 (US $ 50)”. I may find a mechanic loitering around in the locality with time to kill and do it for 3500. Bingo. I have hurt another shop which was earning $50 for locating a mechanic for me.
Amazon for services could get extended to all kind of services – cooking, hair cutting, television being hung on the wall, ….hey Bingo, taxi service too? why not?
Now extend it to Asset Management. What if 100,000 amateur fund managers were to list their portfolio skills on Amazon? and Amazon introduced a RATING mechanism? What if fund managers were asked to bid by a reverse mechanism by a Retirement fund having US $ 50 Billion?
What if Amazon creates an Amazon branded shaving blade which threatens Gillette? It already has a cloud platform which does threaten IBM. Threaten it enough for Warren Buffett to sell off IBM in a big way? Should Walmart be worried? Well they are trying to take a stake in Flipkart. What does that mean?
What if Amazon Funds launches a debt mutual fund – Dynamic bond fund – and allows you to buy all items and redeem units in lieu of purchases?
What if Amazon were to sell carbon credits? Solar power? services to install solar panels?
the options are amazing…or should I have said “the options are Amazon”
Himanshu
Subra sir, I would not be worried on Amazon on account of the gamut of services they can offer BUT over the exceptionally good service they provide compared to other vendors. Take health Insurance for matter. I had a tough time getting one from Apollo Munich inspite of paying the money upfornt and having no disease. I relish the thought of Amazon coming in and shaking all these “service providers” off
John
Thought provoking indeed. Competition is good. Monopolies and cartels can hurt (badly).
Pradeep
We Indians throng to those companies that gives us 50% discounts and cashback. When the day comes where all these discounts and cashback dries up, we would not bother much going there.
Thats exactly why so many online sellers have shutup shop. Of course some will survive longer due to deep pockets.
Look whats happening with Ola and Uber, their drivers go on strike every now and then. And customers take them as long as the costs are lower with cashback as advantage.
So Amazon can do whatever they want, but it will only work until we get big discounts