The crypto market seems to be finally getting out of the mid-summer doldrums. Bitcoin is 14% up from its Friday close, trading at $38,474 as of 6:48 a.m. ET, a price level not seen since mid-June. All major assets are also bouncing up. Ethereum is back above $2,000, trading at $2,354. Cardano and Dogecoin are the biggest movers in the top 10, up by 10.5% and 15% respectively. The broader market is returning 9.85% over the past 24 hours.
The surge began amid the swirling rumors that Amazon AMZN+1.2% is starting to move into crypto. On June 22, the company published a job posting for a ‘digital currency and blockchain lead’ and this weekend London-based business publication CityAM published an unconfirmed report (based on an anonymous ‘insider’), saying that Amazon could start accepting bitcoin payments “by the end of the year” and is investigating its own token for 2022. It also noted that the company was getting ready to accept payments in bitcoin, ether, cardano, and bitcoin cash.
Blockchain is no stranger to the retail and cloud computing giant – it was a member of the Forbes Blockchain 50 list in 2020 and 2019, offering services such as a toolkit on top of Amazon Web Services for clients to build permissioned blockchains, and is, in fact, the primary host for Infura, a middleware solution for nodes to access the Ethereum blockchain. However, the company has largely kept a firewall between itself and virtual currencies.
The rally gained further steam early Monday due to short squeezes among bitcoin bears. Thousands of traders liquidated $883 million in short positions overnight, according to data from Bybt, a cryptocurrency derivatives trading and information platform. Shorts on bitcoin accounted for $720 million, or 81% of those liquidations.
Bendik Norheim Schei, head of research at Norwegian crypto analytics firm Arcane Research, noted in a message to Forbes that “this was the largest short liquidation (short squeeze) we have recorded to date.” He also speculated that Amazon rumors could have been a major catalyst behind the surge.
It remains unclear whether the rally could be sustained but analysts offer positive outlooks. “As simple as it might be to say, the bottom is in,” writes Maxwell Koopsen, senior copy editor at crypto exchange OKEx. “Now that resistance has formed at $40,000, it may either take substantiation to the claims of Amazon’s intentions or a strong show by the buyers at $34,000–$36,000.”
I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.
In 2020, the pandemic provided a powerful sales boost for both of retail’s two biggest companies. Walmart’s WMT+0.9% annual revenue last year rose 6.7% to $559.15 billion. It was the fastest top line growth in 12 years, and kept the Bentonville, Ark.-based behemoth in first place among the entire Global 2000 for total sales.
The surge was even stronger for Amazon.com AMZN+1.9%, which saw sales soar 37.6% to $386.06 billion in 2020, the second highest of any Global 2000 company on this year’s list. The jump was Seattle-based Amazon’s biggest year-over-year percentage revenue increase since 2011.
Walmart for now has the highest sales of any company in the Global 2000, but Amazon, currently ranked second, should overtake Walmart in revenue by the end of next year, according to analysts’ forecasts. Amazon’s overall Global 2000 ranking is already ahead of Walmart’s (No. 10 vs. No 18), and one three of the four criteria considered for company size: profits (No. 16 vs. No. 34); assets (No. 129 vs. No. 160); and market value (No. 4 vs. No. 17).
Thanks to buoyancy in its stock price, Amazon in 2020 became a trillion-dollar company by market capitalization. Amazon shares gained 41% for the year ending April 16, more than five times Walmart’s 8% return, and its $1.71 trillion market value is more than quadruple Walmart’s $396 billion.
The two titans of retail often battle to win business from the other, like in the lucrative grocery business, where Walmart enjoys a nearly 20% market share compared to 2% for Amazon, which owns the Whole Foods WFM0.0% grocery chain. Walmart’s lead is under assault from Amazon and from local grocery stores using services like Instacart to leaning more heavily into online sales.
One initiative literally bearing fruit for Amazon is its growing number of Amazon Fresh AMZN+1.9% locations set up to peddle perishable products to grocery shoppers in a brick-and-mortar store. Walmart for its part is not standing still and expanding its presence in the online channel where sales surged 79% last year.
The third biggest retailer in the Global 2000 is China’s e-commerce giant, Alibaba Group Holding Ltd., which outranks both Amazon and Walmart in terms of profit, and whose market value of $658 billion exceeds that of Walmart. Overall, it’s the 23rd biggest company in the Global 2000. Although Alibaba is the heavyweight of online commerce in China, competition is fierce with rivals like JD.com, the world’s sixth biggest retailer with an overall rank in 2021 of No. 101, up sharply from No. 238 last year.
Business was brisk in 2020 for home improvement retailers, as both Home Depot HD-0.6% and Lowe’s moved up in overall ranking. The pandemic also helped to propel some new names from the retail world into the Global 2000, including Williams-Sonoma WSM+2.5% (No. 1319), Dick’s Sporting Goods DKS+3.4% (No. 1848), and Big Lots BIG+3.5% (No. 1848).
I am the deputy editor of investing content for Forbes Media. I’m responsible for money and investing coverage on Forbes.com and in Forbes magazine. As editor of the Forbes Dividend Investor newsletter service, I send out two dividend stock recommendations per week and send out weekly updates with the best 25 current buys. I’m also a Senior Editor for Forbes Newsletter Group, including its virtual events business, Forbes iConferences. Prior to joining the company, I spent five years with CNN Financial News working with Lou Dobbs, where I produced long-form pieces and reported on management, entrepreneurship and financial markets. I’ve also worked for Bloomberg TV and Inc. Magazine.
Civil rights groups are calling on Amazon to permanently ban use of its facial recognition software, as an approaching deadline looms on the future of the technology.
In an open letter addressed to Amazon CEO Jeff Bezos and incoming CEO Andy Jassy, 44 civil rights groups pointed to ongoing instances of police violence against the Black community as evidence that Amazon should stop selling facial recognition technology to law enforcement. “As a company, Amazon has a choice to make: Will you continue to profit from selling surveillance technology to law enforcement? Or will you stand for Black lives and divest from giving law enforcement these harmful tools?” said the letter, which was published Monday.
After national protests that followed the death of George Floyd last year, Amazon followed Microsoft and IBM in stopping the sale of its facial recognition technology to law enforcement. However, unlike IBM, which abandoned its program, and Microsoft, which indefinitely suspended police use of its facial recognition until a federal law is introduced, Amazon opted to impose a one-year ban to “give Congress enough time to implement appropriate rules” to govern the use of the technology.
While some cities have imposed bans on facial recognition technology being used by police departments, the technology isn’t regulated by federal authorities. Amazon has yet to say whether it will continue its moratorium after it expires next month, or lift the ban and sell the technology to law enforcement.
“They did share that they are committed to standing with the Black community and standing for racial justice,” says Jennifer Lee, technology and liberty project manager at the ACLU in Washington State, where Amazon is headquartered. “If they’re going to do that they need to permanently divest from selling facial recognition technology and cease involvement with police and law enforcement.”
Amazon didn’t respond to requests for comment. However, the Seattle-based giant is pushing against shareholder calls for more transparency around the use of its facial recognition software, called Rekognition.
Ahead of the company’s annual general meeting on May 26, one shareholder proposal is calling for an independent third-party audit on the risks linked with government use of Rekognition, citing calls of more than 70 civil rights organizations to stop selling the technology, who said it contributed to “government surveillance infrastructure.” Another shareholder proposal is calling for an independent report on how Amazon conducts due diligence on its customers, including law enforcement agencies that use Rekognition.
In a proxy memo filed with the Securities and Exchange Commission, Amazon said that it has “conscientiously acted to review and address the concerns expressed in the proposal and transparently provided information regarding our actions to the public” and that it is actively engaged in policy debates around facial recognition regulation.
Amazon introduced Rekognition, a cloud-based technology that uses artificial intelligence and machine learning to identify people and objects in photos and video, in 2016. But the technology became a lightning rod for civil rights groups and anti-surveillance advocates after researchers at MIT found it identified gender of certain ethnicities less accurately than similar products made by Microsoft and IBM.
(Amazon said the MIT findings were “misleading and drawing on false conclusions” and asserted that its own tests had found no such inaccuracies.) After it was revealed the company pitched the software to the Immigration and Customs Enforcement agency, hundreds of Amazon employees sent an internal letter to CEO Jeff Bezos stating that they “refuse to contribute to tools that violate human rights.”
The heightened awareness around racial equality and concerns about police surveillance are making such shareholder proposals harder to ignore for institutional investors. Glass Lewis, a proxy advisory firm, issued a report last week recommending investors vote in favor of both shareholder proposals about Rekognition, given the previous controversies linked to the software, and the fact that no federal regulations appear set to pass before the moratorium passes.
“We have to draft these proposals in a way to get them on the ballot, so we go with a softer approach,” says Brianna Harrington, shareholder Advocacy Coordinator at Harrington Investments, which is bringing the proposal calling for an audit of risks linked to government use of Rekognition. “In a perfect world they’d stop selling the technology.”
I’m a staff reporter at Forbes covering tech companies. I previously reported for The Real Deal, where I covered WeWork, real estate tech startups and commercial real estate. As a freelancer, I’ve also written for The New York Times, Associated Press and other outlets. I’m a graduate of Columbia Journalism School, where I was a Toni Stabile Investigative Fellow. Before arriving in the U.S., I was a police reporter in Australia. Follow me on Twitter at @davidjeans2 and email me at djeans@forbes.com
In July 2018, the A.C.L.U. ran a study that it said matched the headshots of 28 members of Congress to mugshots of known criminals. A secondary test performed by the M.I.T. Media Lab in January 2019 and reported by The New York Times found that Recognition had a hard time identifying female faces and the faces of dark-skinned individuals. Representatives from Amazon, however, pushed back against those claims, saying both the A.C.L.U. and M.I.T. Media Lab studies didn’t use the Recognition technology properly.
The company also issued a lengthy response statement on how it uses Recognition. Lawmakers and other tech companies, though, are calling for greater oversight over the technology. The response to facial recognition Ahead of Amazon’s shareholders meeting, the San Francisco Board of Supervisors voted to ban the use of facial recognition technology by law enforcement groups, while Massachusetts currently has a bill seeking to put a moratorium on the tech in committee.
Microsoft (MSFT) President Brad Smith has said that his company rejected the sale of its own facial recognition technology to a police department out of fear that it would disproportionately impact women and minorities. Smith said that the technology had primarily been trained with white males, and, as a result, wouldn’t have been accurate. The company also denied the sale of its tech to a foreign country. Google (GOOG, GOOGL), meanwhile, has chosen not to sell its technology at all. For more on Yahoo Finance’s and Dan Howley’s coverage of this story please click: https://finance.yahoo.com/news/amazon…
Ecommerce juggernaut Amazon reported its best first-quarter sales ever Thursday after the market closed, beating out analyst expectations and tacking on to a slew of recent blockbuster reports from big-tech giants as stocks climb to new highs.
Key Facts
Seattle-based Amazon reported revenue of $108.5 billion in the first quarter, surging 44% year over year and beating out analyst expectations of $104.5 billion.
Boosted by stimulus checks and improving sales of Amazon Web Services (AWS), net income hit $15.79 per share, or roughly $8.1 billion—eclipsing expectations of $9.54 per share and more than tripling from $2.5 billion one year ago.
The release marks Amazon’s second-biggest quarter ever for sales, behind only the $125.6 billion nabbed in last year’s fourth quarter thanks to a later-than-usual Prime Day and the pandemic holiday season.
Amazon shares jumped 5% in after-hours trading immediately after the announcement; the stock ticked up 0.4% Thursday, lifting its year-to-date gain to about 9%—lower than the tech-heavy Nasdaq’s 11% increase.
Crucial Quote
“In just 15 years, AWS has become a $54 billion annual sales… business competing against the world’s largest technology companies, and its growth is accelerating—up 32% year over year,” Amazon Founder and CEO Jeff Bezos said in the earnings release, touting the fast-growing segment that analysts expect will drive the bulk of Amazon’s future growth. “Companies from Airbnb to McDonald’s to Volkswagen come to AWS because we offer what is by far the broadest set of tools and services available, and we continue to invent relentlessly on their behalf.”
Key Background
Now worth an estimated $202 billion, Jeff Bezos started Amazon as an online bookseller operating out of his Seattle garage in 1994, and the company has since grown to become one of the world’s most valuable companies with businesses spanning cloud storage, video streaming, groceries and more.
Last year, about 56% of Amazon’s $386 billion in total sales came from products sold on the platform, while the rest came from services like AWS, Amazon Prime and advertising. In February, Amazon announced Bezos would step down as CEO in the third quarter after 27 years at the company’s helm, ceding the position to AWS CEO Andy Jassy—a sign the company could double-down on its quickly growing service offerings.
What To Watch For
Amazon’s first-quarter earnings call is at 5:30 p.m. EDT Thursday. Forte says he’ll be listening for details on “heir apparent” Jassy’s leadership transition, potential government regulation, the Alabama vote against unionization and costs incurred as a result of the Covid-19 pandemic.
Big Number
$3,993. That’s how high analysts think Amazon shares can go over the next year, according to Bloomberg data, implying that the stock could soar about 14% from current prices of about $3,474.
Surprising Fact
A booming pandemic rally helped Amazon shares nearly double since the start of last year, creating the nation’s third-largest company with a market capitalization of nearly $1.8 trillion.
Tangent
“Last year, Amazon lost sales to competition—including Walmart, Target, eBay and others—because it couldn’t keep up with demand, and it made a strategic decision to emphasize essentials during the start of the pandemic,” Tom Forte, a senior research analyst at investment bank D.A. Davidson said in a pre-earnings note. “Since then, it has ramped up staffing and fulfillment-center square footage and, in our view, is better positioned to recapture those sales.”
I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.
The company spent slightly less than $2 billion on coronavirus-related operating costs in the quarter, Brian Olsavsky, Amazon’s chief financial officer, said on a call with investors and analysts. Its labor costs, meanwhile, are set to increase: The company announced this week it plans to boost pay for about 500,000 U.S. workers, who will receive hourly raises between 50 cents and $3. It already pays employees a $15 minimum starting wage.
Amazon has been on an unprecedented mass hiring spree, swelling its ranks by 430,000 workers in the past year to cope with pandemic-induced demand. It also faces growing worker activism. Amazon defeated its second union drive in the company’s 26-year history when employees at a warehouse complex in Bessemer, Alabama, declined to join the Retail Wholesale and Department Store Union last month. The company faces another unionizing effort in four facilities around Staten Island, New York.
Right now, Jeff Bezos is the richest man in the world thanks to Amazon , his leading online sales company. However, retail expert Doug Stephens predicts that the giant could fall over the next decade, even going bankrupt.
On his Business of Fashion corporate page, Retail Prophet’s founder and advisor to some of the world’s most respected brands predicts “the end of Amazon.”
“I think that in ten years Amazon is going to decline and these are just some of the reasons,” Stephens wrote.
Amazon follows in Walmart’s footsteps
One of the reasons for the possible bankruptcy of the online trading platform would be that it is following the same patterns as other companies. Stephens gives Walmart an example.
“Between 1962 and the early 2000s, Walmart led the retail business, beating out dozens of competitors large and small. By 2010, Walmart had opened a staggering 4,393 stores, of which more than 3,000 opened after 1990, ” explains the expert.
After suffering a big drop in sales in 2015, Walmart has failed to take off in online retail. “The decline of the once impenetrable giant has shown that even the most titanic companies can fall,” Stephens said.
Amazon offers efficiency, but no shopping experience
The specialist considers it dangerous that Bezos intends to maintain the same long-term operating model. “In our retail business, we know that customers want low prices, and I know that is going to be true 10 years from now. They want fast delivery; they want a wide selection, “ said the tycoon in statements taken up by Business of Fashion.
However, Stephens believes that people don’t just buy because they want the products as quickly as possible. They also want the full shopping experience : getting out of the house, touching the products, comparing them with each other, trying new things or getting inspired. In that sense, the disadvantage of Amazon is limited to online purchases.
Focus on customer service will be lost
When a company has a powerful leader like Jeff Bezos at the helm, it would hardly function without him. The expert predicts that, as Amazon continues its expansion, the figure of Bezos could dissipate or disappear. Then it would be possible that you lose your initial mission, which is customer satisfaction, to prioritize the optimization of processes based on figures and data.
He also anticipates that the company will innovate less. “The energy, once directed to improving the business, will be depleted in simply working to maintain the organizational infrastructure ,” Stephens noted.
Dough Stephens cites other reasons for Amazon’s potential downfall , such as the rumored toxic work environment and the migration of current partners to other,
friendlier delivery platforms.
The combination of these factors could cause Amazon to suffer losses over the next decade and be replaced by another similar company that offers better conditions for partners, workers and customers.
Support Out of Frame on Patreon: https://www.patreon.com/OutofFrameShow Watch our newest video, “The Social Dilemma Is Dangerously Wrong… Part II”: https://youtu.be/pOYxN_a7zL4 Check out our podcast, Out of Frame: Behind the Scenes: https://www.youtube.com/channel/UCiS5… Bob thinks we should just confiscate all the wealth from all the billionaires in America to pay for government programs. But even if that were possible… would it even work? ______________________________ CREDITS: Written by Seamus Coughlin & Jennifer Maffessanti Animated by Seamus Coughlin Produced by Sean W. Malone
Here’s some good news for anyone who missed the boat on Amazon Prime Day deals. Although Prime Day ended late last night, many deals on products have not. There are still some outstanding Amazon deals to be had across all categories, from tech devices to beauty — and now these discounts are available to everyone, not just Prime members.
Eagle-eyed shoppers will notice that now in place of “Prime Day Deals” there’s a category called “Holiday Deals” — that’s right, Amazon is sliding Prime Day right into the holiday shopping marketing push. But don’t be totally fooled by the company’s “Holiday Deals” promise. Several items seem to be included for their everyday low price, rather than an actual discount. There are also a number of sold-out items still floating around, like the 3rd generation Echo Dot, which was one of the most popular deals this week.
Nonetheless, I’ve scanned hundreds of on-sale items to find you some of the best options. See my favorite 16 Amazon deals you can shop now below.
The Best Amazon Deals Still Going Strong After Prime Day
Amazon
Nokia 5.3 Fully Unlocked Smartphone
Deal Duration: Now through October 18
Amazon
Fujifilm Instax Mini 11 Instant Camera
Amazon
Philips Sonicare HX9690/05 ExpertClean 7500 Bluetooth Rechargeable Electric Toothbrush
Amazon
YI 4pc Home Camera, 1080p Wireless IP Security Surveillance System
Amazon
Roku Premiere | HD/4K/HDR Streaming Media Player
Amazon
Kasa Smart Plug Mini
Amazon
KODAK Smile Instant Digital Bluetooth Printer
Amazon
LG 24MK600M-B 24” Full HD IPS Display
Amazon
Sony a7R II Full-Frame Mirrorless Interchangeable Lens Camera
Amazon
SAMSUNG 65-inch Class QLED Q800T Series
Amazon
Kasa Smart Light Switch by TP-Link
Amazon
Samsung Galaxy Watch Active (40mm, GPS, Bluetooth) Smart Watch with Fitness Tracking
Amazon
Sony X900H 55 Inch TV: 4K Ultra HD Smart LED TV with HDR
Amazon
Sunday Riley Power Couple Kit
Amazon
Apple AirPods Pro
Amazon
JBL Boombox – Waterproof Portable Bluetooth Speaker
Amazon
Certified Refurbished Ring Video Doorbell Pro with Certified Refurbished Echo Show 5 (Charcoal)
Amazon
AquaSonic VIBE Series Ultra Whitening Pink Electric Toothbrush
Amazon
JBL Quantum 300 – Wired Over-Ear Gaming Headphones with JBL Quantum Engine Software – Black
Amazon
AstroAI Mini Fridge 6 Liter/8 Can Skincare Fridge for Bedroom
Amazon
Tuft & Needle Mattress Topper, Queen, Grey
Amazon
Facial Steamer SPA+ by Microderm GLO
Amazon
KOIOS Air Purifier, Desktop Air Cleaner with 3-in-1 True HEPA Filter
Prime members can save an additional $8 on this item; for everyone else it is priced at $54.
Amazon
Nebula Capsule II Smart Mini Projector, by Anker
Amazon
Klipsch Synergy Black Label Sub-100 Subwoofer
Amazon
GOKOO Smart Watch Fitness Tracker for Home Health
Amazon
Sony XBR-55A9G 55 Inch TV: MASTER Series BRAVIA OLED 4K Ultra HD Smart TV with HDR and Alexa Compatibility
Amazon
Marshall Kilburn II Portable Bluetooth Speaker – Black (1002634)
After Oracle confirmed reports that it won a bid to partner on TikTok’s US business, Walmart said it remains interested in a joint deal to buy TikTok’s US business, which has been under intense scrutiny from the Trump administration. Walmart and Microsoft view the possible acquisition as a way to compete against e-commerce giant Amazon. Walmart cited TikTok’s small but growing ad business as part of the reason why it’s interested in TikTok.
“The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets,” Walmart said earlier in a statement to Business Insider. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators.”
It’s not clear how much of an impact TikTok would have on Walmart’s advertising business, but the hot video app has been making inroads with big ad agencies and brands that want to reach its lucrative Gen Z audience. TikTok also recently launched a self-serve ad platform, which could in theory help Walmart attract a new group of advertisers outside of its core consumer-packaged-goods advertisers.
Walmart declined to comment further on both its bid with Microsoft to acquire TikTok and its advertising business.
Walmart has made a big push into advertising over the past year, poaching talent from large media companies and agencies. After splitting from longtime agency Triad, Walmart has been building an ad business in-house that rivals Amazon’s growing ad business by selling ads to consumer-packaged-goods brands and others that place ads on Walmart’s app and website.
Business Insider recently spoke with five e-commerce agencies and adtech companies about how Walmart’s ad business stacks up against Amazon. They said that while Walmart is ramping up its advertising business, it’s significantly smaller and less sophisticated than Amazon’s.
Curtis Rummel, lead client strategist at e-commerce agency Marketplace Strategy, estimated that clients put 5% to 10% of the budgets that are spent advertising on Amazon with advertising on Walmart. He added that Walmart pitches its advertising business as the company starting from scratch with limited features, even though Walmart had its advertising business Walmart Media Group for years through the now-defunct, WPP-owned ad agency Triad Retail.
“It’s probably not going to be a huge 2020 opportunity but it will probably be 2021 or 2022 when we start to see it pick up pace,” he said.
Advertisers say that they want similar measurement on Walmart and Amazon
In January, Walmart formally launched a self-serve ad platform and API that lets advertisers and a small group of adtech companies buy and manage campaigns on their own. In July, Walmart rolled out a measurement tool that tracks how online ads drive in-store and e-commerce sales.
Rummel said that Amazon’s reporting tools are limited and built using old software, which could give Walmart an opportunity to provide better tools to advertisers…..
If there was a “stock of the century” award, Amazon (AMZN) would be the favorite. Since 2001, AMZN has rocketed above $3,300, turning every $1,000 into just shy of $600,000.Obviously, anyone who got into Amazon early and held on is living the high life and deserves a round of applause. But now, it’s time to come to terms with a sad truth: Amazon’s glory days are over.
Because it has finally met its match. And it’s all because of one simple reason: It finally has legitimate competition.
Below, I’ll show you the three companies—what I call the “anti-Amazon” alliance—all coming for Amazon’s throat. All are rapidly stealing key parts of Amazon’s business. And all will prove to be much better investments in the coming years… Recommended For You
And its new “secret weapon” Walmart+ could dethrone Amazon’s online dominance. Amazon launched its wildly popular Prime delivery service 15 years ago. Today there are more Prime subscribers than there are full-time workers in America!
Creating an “everyday goods” subscription with free delivery was genius. Why would members ever shop anywhere else when they can click a button and have practically anything show up on their doorstep in two days? In short, Prime transformed Amazon from an $18 billion internet retailer into a $1.5 trillion beast.
Walmart+ is a total game-changer. Walmart will sell over $75 billion-worth of goods through Walmart.com this year. In fact, it’s overtaken eBay to become America’s second-largest online seller.
The thing is, roughly 90% of sales still happen in-store. Walmart+ is going to transform Walmart into a true online behemoth.
The subscription will cost $98 a year, and include perks like unlimited same-day delivery, access to its new two-hour delivery offering, and discounts on fuel at Walmart gas stations. Clicking a button on Walmart.com and having groceries and other items show up on your doorstep the same day is huge.
Leading market research firm NPD Group tracks millions of online and in-store receipts. And its research shows 95% of US consumers shopped at a Walmart store last year. That’s roughly 225 million people.
I expect at least 10% of consumers will jump at the chance to sign up for Walmart+. And once these folks are “locked in,” they won’t want to shop anywhere else. In short, this will add hundreds of billions of dollars to Walmart’s value over the coming years. I believe the stock will double over the next 18 months.
An Army of Small Businesses Are Moving Online
Shopify (SHOP) is what I call the “anti-Amazon.” It helps entrepreneurs create and manage their own online stores.
Think of Shopify like an invisible partner that allows you to build your own brand. Regular RiskHedge readers know it now runs websites for over one million mom-and-pop shops.
There are 30 million small businesses in the US. These small businesses make up 99.9% of all companies in America. They are the beating heart of communities across the country. And according to IRS data, firms with less than $100,000 in annual sales raked in a combined $2.2 trillion last year.
Yet almost none of this happens online. A recent CNBC poll found almost half of small businesses don’t even have a website. And according to Gallup, two-thirds of mom-and-pop stores that sell online generate less than 10% of their sales on the internet.
But coronavirus lockdowns have sparked a once-in-a-lifetime shift. It forced tens of millions of businesses to close their doors for months. And the only way to keep cash coming in is to sell online.
In short, mom-and-pop shops moving online for the first time ever is the next great internet boom. And they’re choosing to sell through Shopify over Amazon. In 2012, it had just 42,000 merchants. Today, more than 1,000,000 businesses around the globe have set up an online store with Shopify.
This is the world’s most disruptive retailer that most investors aren’t paying attention to. It’s a stock to own for the next decade.
Here’s the Disruptor Amazon Can’t Compete With
Etsy (ETSY) is another member of the “anti-Amazon” alliance.
Etsy is an internet marketplace for artisans selling handcrafted, one-of-a-kind items. You’ll find everything from vintage jewelry… to solid wood picture frames… to custom wedding invitations on the website. It’s essentially a department store for craft goods.
In short, Etsy has become the “go-to” for artisans selling online. It currently has 65 million items you can’t find anywhere else. For example, my cousin recently bought my grandmother a family tree on Etsy. It was custom-made with all the grandkids’ names
And unlike buying stuff at big box stores, which is a chore, spending money on Etsy feels “good.” You can click on each item and read the story behind the person who made it. In short, it’s rewarding to know your dollars are going into the pockets of small businesses.
For example, my colleague just bought a $400 laundry rack on Etsy. He could have picked one up on Amazon for 50 bucks. When I asked why he bought one on Etsy he replied, “A woman in rural Maine handmade the rack. It feels good having it in my home.”
The Amazon machine simply can’t compete with this. In fact, becoming the “Amazon for artisans” is Etsy’s big opportunity. Roughly $5 billion worth of craft goods were sold through its marketplace last year. Yet the Association for Creative Industries shows folks in these markets spent $100 billion on handcrafted and unique products last year.
So Etsy has only realized 5% of its potential so far. It has years—even decades—of rapid growth left in the tank. As it helps millions of artisans sell their talents to the world, it’s sure to become an online titan. This is a stock that can double many times over in the coming years.
Amazon Won’t Dominate the Next 20 Years of E-Commerce
Amazon has been one of the most dominant, disruptive stocks over the past two decades. And it will continue to be a major force in online shopping. But its time as America’s undisrupted online king is drawing to a close.Disruptors like Walmart, Shopify, and Etsy are nipping at its heels. And I’m betting these three stocks will outperform Amazon over the coming years.
I’m a professional investor and the chief analyst at RiskHedge, a disruption research firm. My team and I hunt for under-the-radar “disruptive” companies that are changing the world and making investors rich in the process. Get my latest analysis at RiskHedge.com.
An Amazon delivery might not be that exciting for you, but your cat is probably thrilled to be getting a new cardboard home. Amazon has made that sentiment official with new eco-friendly boxes that can be recycled into cat condos, forts and even a putt-putt golf windmill. It’s all part of the company’s “less packaging, more smiles” program aimed at reducing cardboard consumption.
Amazon noted that over the years, it has reduced packaging weight by 33 percent, eliminating the equivalent of about 1.5 billion boxes and reducing its carbon footprint. “Inventing and innovating in new types of packaging is one of the many actions we are taking as part of the climate pledge — our commitment to become net-zero carbon by 2040 — 10 years ahead of the Paris Agreement,” Amazon VP Kim Houchens told USA Today.
Despite the efforts, Amazon still shipped about 5 billion packages in 2018 out of 165 billion shipped in total in the US. Even though 92 percent of cardboard boxes are recycled, that’s still a lot of waste and forest destruction.
Only certain orders will be delivered in the more environmentally friendly boxes, starting this week. If you get one, you can create your own Chateau Fluffy by scanning a QR code or heading to Amazon.com/ThisBox for detailed instructions.
N THE SUMMER of 1995 Jeff Bezos was a skinny obsessive working in a basement alongside his wife, packing paperbacks into boxes. Today, 25 years on, he is perhaps the 21st century’s most important tycoon: a muscle-ripped divorcé who finances space missions and newspapers for fun, and who receives adulation from Warren Buffett and abuse from Donald Trump. Amazon, his firm, is no longer just a bookseller but a digital conglomerate worth $1.3trn that consumers love, politicians love to hate, and investors and rivals have learned never to bet against.
Now the pandemic has fuelled a digital surge that shows how important Amazon is to ordinary life in America and Europe, because of its crucial role in e-commerce, logistics and cloud computing (see article). In response to the crisis, Mr Bezos has put aside his side-hustles and returned to day-to-day management. Superficially it could not be a better time, but the world’s fourth-most-valuable firm faces problems: a fraying social contract, financial bloating and re-energised competition.
The digital surge began with online “pantry-loading” as consumers bulk-ordered toilet rolls and pasta. Amazon’s first-quarter sales rose by 26% year on year. When stimulus cheques arrived in mid-April Americans let rip on a broader range of goods. Two rivals, eBay and Costco, say online activity accelerated in May. There has been a scramble to meet demand, with Mr Bezos doing daily inventory checks once again. Amazon has hired 175,000 staff, equipped its people with 34m gloves, and leased 12 new cargo aircraft, bringing its fleet to 82. Undergirding the e-commerce surge is an infrastructure of cloud computing and payments systems. Amazon owns a chunk of that, too, through AWS, its cloud arm, which saw first-quarter sales rise by 33%.
One question is whether the digital surge will subside. Shops are reopening, even if customers have to pay at tills shielded by Perspex. Yet the signs are that some of the boom will last, because it has involved not just the same people doing more of the same. A new cohort has taken to shopping online. In America “silver” customers in their 60s have set up digital-payment accounts. Many physical retailers have suffered fatal damage. Dozens have defaulted or are on the brink, including J Crew and Neiman Marcus. In the past year the shares of warehousing firms, which thrive on e-commerce, have outperformed those of shopping-mall landlords by 48 percentage points.
All this might appear to fit the script Mr Bezos has written over the years in his letters to shareholders, which are now pored over by investors as meticulously as those of Mr Buffett. He argues that Amazon is in a perpetual virtuous circle in which it spends money to win market share and expands into adjacent industries. From books it leapt to e-commerce, then opened its cloud and logistics arms to third-party retailers, making them vast new businesses in their own right. Customers are kept loyal by perks such as Prime, a subscription service, and Alexa, a voice-assistant. By this account, the new digital surge confirms Amazon’s inexorable rise. That is the view on Wall Street, where Amazon’s shares reached an all-time high on June 17th.
Yet from his ranch in west Texas, Mr Bezos has to wrestle with those tricky problems. Start with the fraying social contract. Some common criticisms of Amazon are simply misguided. Unlike, say, Google in search, it is not a monopoly. Last year Amazon had a 40% share of American e-commerce and 6% of all retail sales. There is little evidence that it kills jobs. Studies of the “Amazon effect” suggest that new warehouse and delivery jobs offset the decline in shop assistants, and the firm’s minimum hourly wage of $15 in America is above the median for the retail trade.
But Amazon’s strategy does imply huge creative disruption in the jobs market even as the economy reels. In addition, viral outbreaks at its warehouses have reignited fears about working conditions: 13 American state attorneys-general have voiced concern. And Amazon’s role as a digital jack-of-all-trades creates conflicts of interest. Does its platform, for example, treat third-party sellers on equal terms with its own products? Congress and the EU are investigating this. And how comfortable should other firms be about giving their sensitive data to AWS given that it is part of a larger conglomerate which competes with them?
Amazon’s second problem is bloating. As Mr Bezos has expanded into industry after industry, his firm has gone from being asset-light to having a balance-sheet heavier than a Soviet tractor factory. Today it has $104bn of plant, including leased assets, not far off the $119bn of its old-economy rival, Walmart. As a result, returns excluding AWS are puny and the pandemic is squeezing margins in e-commerce further. Mr Bezos says the firm can become more than the sum of its parts by harvesting data and selling ads and subscriptions. So far investors have taken this on trust. But the weak e-commerce margins make it harder for Amazon to spin off AWS. This would get regulators off its back and liberate AWS, but would deprive Amazon of the money-machine that funds everything else.
Mr Bezos’s last worry is competition. He has long said that he watches customers, not competitors, but he must have noticed how his rivals have been energised by the pandemic. Digital sales at Walmart, Target and Costco probably doubled or more in April, year on year. Independent digital firms are thriving. If you create a stockmarket clone of Amazon lookalikes, including Shopify, Netflix and UPS, it has outperformed Amazon this year. In much of the world regional competitors rule, not Amazon; among them are MercadoLibre in Latin America, Jio in India and Shopee in South-East Asia. China is dominated by Alibaba, JD.com and brash new contenders like Pinduoduo.
Imitation is the sincerest form of capitalism
The world’s most admired business is thus left having to solve several puzzles. If Amazon raises wages to placate politicians in a populist era, it will lose its low-cost edge. If it spins off AWS to please regulators, the rump will be financially fragile. And if it raises prices to satisfy shareholders its new competitors will win market share. Twenty-five years on, Mr Bezos’s vision of a world that shops, watches and reads online is coming true faster than ever. But the job of running Amazon has become no easier, even if it no longer involves packing boxes.
Tim Lesko of Granite Investment Advisors says it’s hard to imagine a better backdrop for Amazon, with the surge in online sales during the virus outbreak, and as for Apple, expectations weren’t very high for iPhone sales this year, even before the pandemic. Amazon reported its first-quarter earnings after the bell on Thursday, revealing the pandemic’s impact on the business that has been a rare bright spot on the stock market. The stock fell about 5% after hours after missing estimates on earnings while beating revenue expectations.
