Amazon is among the most diversified business model in the tech industry. The company is well-positioned to dominate e-commerce further. And while its online stores have tight profit margins, Amazon still unlocks cash for growth, while consolidating its dominance in the cloud and grabbing new opportunities like voice.
- Strong brand: Amazon is the most valuable brand on earth. Launched as a bookstore, it eventually became the “everything store,” and from there, it dominated several other industries. Amazon today is exceptionally well-positioned to keep expanding its online stores’ capabilities.
- Diversified business model: Amazon is among the tech giants who have the most diversified business model. Spanning from e-commerce to cloud, advertising, and more.
- Massive growth potential: While Amazon passed the trillion-dollar in market capitalization, it is also positioned on several markets that might become trillion-dollar industries.
- Direct distribution/flywheels: Amazon enjoys massive flywheel effects thanks to its built-in growth mechanisms, which made it the company we know today.
- Online e-commerce has tighter margins: the online e-commerce side of Amazon has tighter profitability compared to other parts of the business. However, the same e-commerce is the platform around which the company has been developed. Thus, it needs to be judged based on cash flows.
- Global competition and tech wars: As tech giants try to consolidate and keep the dominance in their industries, they also move in adjacent markets, thus overlapping part of their value proposition to consumers. This triggers expensive tech wars that might end up causing losses for Amazon as well.
- Regulation: Amazon has become a massive company made of many moving parts. This raises the question of whether it makes sense to break it up to prevent the company from abusing its dominant position in several industries (e-commerce, cloud voice).
- Global expansion: While Amazon has been growing at a crazy speed, its space for global expansion is still wide.
- New industries consolidation and definition: As Amazon expands, it also develops new markets. For instance, Amazon is a key player in the cloud industry. And it’s a dominant player in the voice industry, among the most interesting in the coming years.
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