317 – Digital Transformation Update

A few months ago, Amazon acquired Whole Foods for $13.7 Billion, one of the largest amounts paid to acquire a company. This is all apart of Jeff Bezos’ strategy to bring cheaper products to the consumer market. This acquisition may be great for consumers, but Bezos’ purchase will force other companies to digitally transform.

Towards the end of August, Amazon began dropping the prices of Whole Foods products by significant amounts. This acquisition has clearly impacted grocery stocks, which have struggled since the merge. A main reason why Amazon is successful is because they minimize their profits as much as possible and reinvest capital back into the company. By doing this, Amazon will continue dropping prices so that customers will run into their inexpensive services.

At the moment, Amazon/Whole Foods is competing at the same level of competition as other grocery markets, but this is unlikely to last for long. Eventually, Amazon will implement their new Artificial Intelligence that will make shopping simpler and faster. However, there is a huge down side that will come with this new technology. Although this technology will eliminate store lines, and allow the option to pay for items later, the technology will displace millions of cashier jobs across America. Eventually, this AI will be found in every store, and the near future may include different variations of this technology for small businesses (unless you are paying in cash).

Many companies are struggling to compete with Amazon’s advanced technologies and strategic business decisions. Toys R Us, Sears, and Macy’s are just a few companies that are being affected by Amazon’s success, and they are running out of ideas to save themselves. The reason why these companies fail to compete with Amazon is because they do not offer the wide range of services that Amazon does. Amazon competes in almost every market, and none of these companies can make the expansion into multiple markets like Amazon already has.

Additionally, Amazon has outperformed these companies digitally. Amazon has disrupted many businesses through their innovative technologies and AI. There is a lot of good that has come out of Amazon (such as Amazon Go) which is why I believe the government has not stepped in on their monopoly yet, the government would not want to hinder their incredible progress. On the other hand, what Amazon is doing is arguably illegal. Although the technology Amazon has come up with is considerably brilliant, it cannot mask the fact that it will destroy millions of jobs and hundreds of multi-million dollar companies.

Given the Whole Foods deal has been approved, there are no signs of Amazon slowing down. Something needs to be done in order to prevent companies like Amazon from expanding too large. The outcomes will impact the economy more negatively than positively. In the near future, Amazon’s innovative ideas like Amazon Go will be embraced, but not unless it is shared among other businesses. If Amazon grows too large, there will be no room for other companies to grow, no competition, and fewer jobs. For now, companies need to focus on keeping up with Amazon so they do not fall behind. I believe Amazon will be stalled eventually, but until then, the market MUST adapt to technological advancements.

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