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.
“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.
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
Over seven years as a media executive living in Asia, Brian Lee has made the two-hour hop from Seoul to Shanghai more times than he can remember. But his last flight, on March 9, will be difficult to forget. On arrival at Shanghai’s Pudong International Airport, Lee was told that regulations had tightened while he was in the air and all passengers arriving from South Korea now had to submit to 14 days’ government quarantine due to the COVID-19 outbreak.
The New Yorker was driven to a specially requisitioned three-star hotel, where nurses in hazmat suits handed him a mercury thermometer, to self-check his temperature twice daily, and a single plastic trash bag. Meals are left outside his door at 8:30 a.m., 12 noon and 6 p.m. each day. Other than opening his door to pick up his food, he has not seen beyond the drab confines of his room since. “I’m trying to stay active and positive,” says Lee, 27, a business manager for Shanghai-based media platform Radii. “I’ve been doing pushups and trying to do all the reading and writing that I haven’t had time for.”
As cases of COVID-19 stabilize in China and soar across the U.S., Middle East and Europe, the Beijing government has been busy recasting China as a sanctuary from the deadly virus, which has so far sickened 169,000 and killed at least 7,000 across the world. China’s strongman President Xi Jinping even visited the central city of Wuhan, the epicenter of the outbreak, on March 10. China’s strongest leader since Mao Zedong declared that the virus was “basically curbed” across Hubei province, where Wuhan is the capital.
Virus Expert on the Wuhan Coronavirus Outbreak: ‘Don’t Be Complacent. We Must Treat It Extremely Seriously’
Hong Kong infectious disease expert Yuen Kwok-yung discussed the situation of the Wuhan coronavirus outbreak with TIME in an exclusive interview. He warns that the disease is very infectious and control measures must be followed.
When TIME visited Wuhan in the early days of the outbreak on Jan. 22, students were still gossiping in cafes, while shoppers browsed for meat and fish for Lunar New Year festivities. But the city that Xi toured was a ghostly relic after seven weeks of bruising quarantine that has decimated the local economy. Still, China’s official press agency Xinhua has already announced a forthcoming book on how Xi’s “outstanding leadership as a great power leader” defeated the virus. The Great Power War will be available in six languages. State media has engaged in unabashed triumphalism while describing the U.S. response as “floundering.”
But even as Chinese Communist Party (CCP) propaganda ramps up, the experiences of people like Lee show that life across the Asian superpower remains far from normal. Offices are slowly reopening but central heating banned for fear of spreading germs. Taxi drivers hang sheets of plastic behind the front seats of their cabs to cocoon themselves from passengers. One friend in Beijing returned to work to find “the receptionist in a full white hazmat suit.” Another complained that the incessant spraying of germ-killing bleach had murdered all the office plants. The guy who installed my cable TV has also begun hawking medical masks, which are de rigueur for entering any supermarket. Grabbing noodles with my wife means sitting diagonally across a four-person table to comply with social distancing rules. When I tried to book an appointment with a lawyer, it had to be in Starbucks—her office had banned visitors—and even then the barista chastised her for standing closer than four feet while witnessing me signing documents.
More than anything, suspicion has shifted outward. Whereas ethnic Asians have faced prejudice around the globe due to the virus, inside China the tables have turned, with foreigners now the target of suspicion as cases rise overseas. This has been catalyzed by state propaganda leaping on China’s apparent success in stemming the virus as evidence that its political system is superior to Western-style democracy.
It would be “impossible for European countries to adopt the extreme measures that China has implemented” to fight the virus, the CCP mouthpiece Global Timesargued in a recent editorial. Sure enough, Robert Redfield, director the U.S. Centers for Disease Control and Prevention, told American lawmakers March 10 that [in terms of infections] “the new China is Europe.”
Security guards bark inquisitions when they see a foreign face—“what’s your nationality? where have you been for the last two weeks?”—so that many outsiders limit their social interactions to where they feel best known. My local barber says he not longer serves foreign customers.
Suspicion is especially pronounced for Italians, given their homeland’s rise to second in COVID-19 cases after China, with 25,000 infected. Ambra Schiliro, president of the Sicily Association in China, says that one Italian under self-quarantine in her Shanghai apartment had angry neighbors call the police to demand she move to a hotel. Andrea Fenn, a member of the Italian Chamber of Commerce in China, says that after some clients came to his office his Chinese partner discretely asked him, “Were they Italian? Where had they come from? Could I vouch for them?” Still, “It was an understandable reaction,” he says, “and nothing compared to the discrimination Asian people experienced in Italy at the beginning of the crisis.”
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Suspicion may be quite natural given Chinese state media’s self-serving tactic of highlighting the number of new COVID-19 cases that have arrived from overseas. On March 16, state media reported that 12 of the day’s 16 new COVID-19 infections were imported. On March 17, it was 20 out of 21. As such, in glaring doublespeak, Beijing’s own travel restrictions are deemed “essential measures,” even as countries that have closed borders with China are denounced.
Stefen Chow was lucky that he was permitted to self-quarantine in his own home upon arriving in Beijing after visiting his family home in Singapore. Only he was allowed to venture outside to collect deliveries, however, while his wife and two young children—aged four and six—couldn’t leave their front door for 14 days.
But much like what’s currently unfolding in the U.S., regulations for each Chinese city differ, and the lack of clarity regarding containment protocols has a chilling effect on business. Currently, even those traveling from Shanghai to the neighboring city of Suzhou for a meeting are technically required to submit to 14 days quarantine, perhaps even at a government facility, meaning few take the risk of venturing beyond the city limits. Those who have stayed at home must also self-quarantine if a roommate or family member returns from overseas or another province.
But in practice, implementation is largely at the discretion of CCP neighborhood committees, known as ju wei hui, or individual security guards — some of whom use their new power to shamelessly flirt with passers-by. “It has been frustratingly confusing,” says Ker Gibbs, president of the American Chamber of Commerce in Shanghai. “People don’t know if they can access their own apartment building, let alone their office.”
Returning to some semblance of normalcy is imperative for the Chinese and global economies. According to official data, China’s manufacturing and services sectors sank to record lows in February, car sales plunged by 80%, and China’s exports dropped 17.2% overall in January and February. As of March 18, China’s economy was operating at 71.% of typical output, according to policy research firm Trivium. Factories are being inspected one-by-one before getting the green light to reopen, but the pace of revival will depend on the nature of business; services can recover much faster than manufacturing, for example, given the latter’s reliance on knotty supply chains. High-tech and highly automated manufacturing also has a greater capacity to bounce back, being less labor-focused.
But with demand expected to crater across every sector, especially as the virus goes global, all anticipate lean times ahead. More than 100 real estate firms across the country filed for bankruptcy in January and February. Officials have been encouraging both state and private landlords to waive rents to prevent more firms going under. “I would still give [the government] reasonably high marks for communication and being proactive with business community,” says Gibbs.
Still, the state is keeping a very close eye on those attempting to re-energize the world’s number two economy. Across China, officials outside office buildings and residential compounds note visitors’ names, contact information, ID numbers and travel history in order to feed to a police database. People in some cities must register phone numbers with an app in order to take public transport. Online retail giant Alibaba has rolled out its Health Code App across 200 Chinese cities that rates users green, yellow or red dependent on travel history and possible contact with infected people. Anyone who has left the city in the past two weeks is liable to get a yellow code, and with green mandatory for access to most malls and office buildings in big cities, few book frivolous travel lest they jeopardize their score. A red code requires 14 day quarantine.
Apart from privacy concerns across what is already the world’s most surveilled state, the app has sparked consternation among those suddenly ordered to quarantine themselves with no explanation why.
There is growing weariness about measures that are little more than box-ticking. Masks are mandatory outside the home despite huge doubts over their efficacy. A temperature test is required to enter any shop, restaurant building, or even pass certain street corners. But these are so casually administered that people with readings so low as to indicate clinical hypothermia are routinely waved by. On countless occasions I’ve been rudely accosted by a supercilious doorman only for him to point the temperature gun at my coat sleeve. It’s especially frustrating since COVID-19 can spread while asymptomatic, rendering these tests ultimately pointless.
Bosses unused to employees working from home are putting them under extreme pressure, believing only increasing workload can ensure productivity at home. Miss Li, who works for Beijing start-up Bytedance and asked that TIME only uses one name as she was not permitted to speak with the media, says that she used to work 9 am to 9 pm, 6 days a week, commonly known by the shorthand “996” in China. “But now we joke that has become 007—midnight to midnight, 7 days a week,” she says.
And despite official efforts to spin the disaster, initial bungling and attempts to coverup the crisis mean the Party’s legitimacy will take a hit. A campaign to ensure the people of Hubei express “gratitude” to the CCP for containment efforts received short shrift. “The government should end its arrogance and humbly express gratitude to its masters—the millions of people in Wuhan,” wrote noted blogger Fang Fang in a post of remarkable bravery given China’s strict censorship.
Another comment appended to the profile of a whistleblower doctor quickly went viral: “The doctor risks her job to take interview, the reporter risks being charged with fabricating rumors to write the article, the media risks being shut down to publish the article, and people on WeChat risk having their accounts blocked to share the article. Today we need this ridiculous level of tacit cooperation just for a word of truth.”
Of course, truth in China is whatever the Party deems it to be. One recent afternoon, I noticed four medical personnel in hazmat suits loitering outside my apartment building. After a few minutes a neighbor pulls up with airport tags on her luggage. The medical staff check her temperature, make her sign various papers and escort her home. She won’t reappear for 14 days. Suddenly alarmed, I opened my Health Code App to check my rating is still green. China may spy victory over the virus, but normal lies a long way off, if it ever returns at all.
Mar.12 — The faltering return of China’s oil refineries, power plants and gas importers shows it’s too soon to count on the world’s biggest energy user to revive beleaguered global prices. Meanwhile, while corporate-debt markets shut down for issuers in the U.S. and Europe for a stretch in February, with investors spooked by the economic hit from the coronavirus, China had its busiest month on record. Bloomberg’s Selina Wang reports on “Bloomberg Markets: Asia.”
On Wednesday night, Trump finally took the coronavirus COVID-19 seriously. He banned all travel to EU countries for 30 days.
The disease may seem benign to some. Around 95% or more of the people who get it will survive and symptoms are generally mild and far from scary. But what is scary is how fast it spreads. And there are too many unknowns about the disease to find comfort in the fact that less than 1,000 people have it.
China went from 1,000 patients to 80,000 in a matter of roughly six weeks, mostly all of it in a self contained, quarantined state called Hubei.
Italy went from around 20 cases two and half weeks ago to over 12,000. It is now the Hubei of the Western world.
Travel bans on China helped mitigate spread from travelers coming to the U.S. from there. All early cases last month were from China travelers. They have since healed.
The U.S. was caught flat footed by Europe, cruises, and European business travelers at major conferences. The U.S. is now playing catch-up in the mitigation phase.
Trump reiterated what the World Health Organization said this week, calling the coronavirus a global pandemic.
We are probably one sick politician, or one more circuit-breaker on the Dow away from declaring a national emergency, forcing the NYSE to close.
“When people don’t want to go out to crowded events you start to wonder if fear begets more fear. We are seeing a lot of that now,” says Patrick Healey, founder and president of Caliber Financial Partners in Jersey City, N.J. “Until you see fewer cases in Europe, I’d be worried. The threat of spread is greater there than it was in China,” he says, citing France, Spain, Germany and the U.K.’s slow response to the crisis.
Cutting The Tail
Italy was about two weeks too late, but at least they are doing something to save Europe. They shut themselves off. This is literally a “stop the world I want to get off” moment. Italy took the China approach. They put themselves on lockdown.
The U.S. has two fairly solid case studies with how to respond to COVID-19. One is the China path of lockdowns and forced quarantining, coupled with massive stimulus.
The other model is South Korea’s massive free testing and treatment, which also corralled the disease and kept infection rates low. Mortality rates are even lower at just under 1%.
A hybrid model of both seems to be best: lockdown clusters of the virus. Test like crazy.
China is healing. It’s already got its stimulus plan lined up.
“The China approach has worked. It’s been a draconian clampdown and takes away quarterly growth,” says Philipp Carlsson-Szlezak, chief economist for Boston Consulting Group in New York. “The high frequency data in China, the proxies for movement for goods and people, all of those see a nice pick up. And the infection rate curve of new cases in South Korea has bent downward. Just hope we don’t see any worsening outbreaks.”
By slowing the spread of the virus, which includes potential spreaders who came from high risk countries like Italy, China, South Korea and Iran, buys healthcare officials time. It keeps hospitals from being overwhelmed, which is what is happening now in Italy as cases rise, Italy still seems to be fine with ICU bed capacity at hospitals.
A nearly three month lockdown of Hubei, the epicenter province, means Hubei now officially has fewer infections than Italy. The number of new patients in China’s “ground zero” has slowed to double digits, instead of thousands three to four weeks ago.
Eventually, South Korea may also be forced to implement a version of the lockdown model to stop the spread of infection after someone working in a call center tested positive for the disease.
Without any firm facts on transmission, the risk of spreading the disease without showing signs of it are high.
As a result, China has maintained strict control of peoples movements in major cities. The South Korea testing model is harder for China due to its massive, urban population, which is why it is so important to keep those cities fairly inoculated.
From on the ground accounts in Beijing, that inoculation requires school closures, no movies, no malls, no non-essential businesses open and most bank branches closed.
Businesses close at 6pm to get sprayed with disinfectant. Street fumigation takes place regularly. Building sterilization takes place several times a day.
Italy is doing exactly this now. Spraying public spaces, primarily.
In China, face masks must always be worn or else you can’t ride in taxis, take public transportation, or enter any business. Temperature readings are mandatory upon entering an office building. People with slight temps get sent straight to quarantine, according to sources there.
Entire neighborhoods are blocked off to non-residents, with security personnel patrolling to check for proof of residence.
Apartments housing someone with the coronavirus are forced into quarantine. No one can leave.
Beijing has under 200 cases today. Shanghai has under 30, according to Johns Hopkins University data.
“We just can’t impose a China style quarantine, but corporations can impose a work from home policy. You can cut off work travel and that is already happening,” says Brendan Ahern, CIO of KraneShares, who is working from home on Thursday. “Corporations here are acting pretty quickly.”
NBA has canceled its entire season. The NHL put the rest of its season on hold. Major League Baseball is thinking of postponing opening day. The BNP Paribas Tennis Open was canceled, scheduled for this week in Indian Wells. Coachella, the outdoor indie rock event, was postponed. Broadway has postponed shows for a month. Private colleges are sending kids home for the semester. Princess Cruises isn’t setting a course for adventure for the next 60 days.
If the U.S. is dragged reluctantly into a South Korea/China lockdown model, it would usher in a further drop in economic activity. Mega stimulus will be only thing keeping it alive.
It is unclear if Republicans and Democrats can work together on this, as some may see a destroyed economy as a way to finally get rid of Trump in 2021.
“You’ll have the market constantly repricing and mispring,” says Nancy Perez, a portfolio manager at wealth management firm Boston Private in Miami. “Both political parties will have to take this on. No party wants to be blamed for not doing something.”
To offset the drag, fiscal stimulus is necessary to make sure companies can meet payroll and rollover debts, preferably at no interest directly from the Fed.
Disaster relief legislation from Congress can draw on the unlimited checkbook of the Fed to help keep individual, corporate, and even municipal bankruptcies from soaring.
“I’m looking at dozens of companies in the S&P 500 right now that can literally go bankrupt if the government doesn’t act together on this,” CNBC star Jim Cramer said on Squawk Box this morning. “The government should not be collecting any cash right now.”
Quarantining a city like New York would represent a significant tax on all business activity. Administration talk of a payroll tax cut is not enough. Bold tax cuts and deferments would be best. For Cramer, a tax holiday for six months or longer is even better.
In the first 8 days of the month, China has:
Required banks to provide a grace period for the virus-hit small and medium sized enterprises (SME) immediately upon application in repaying the principal and interest of their outstanding loans until June 30.
Waived penalty interest
Banks are providing special loan quotas for firms in Hubei, and lowering the financing costs for SMEs.
The Politburo called for accelerating the investment on “new infrastructure”, including 5G networks and data centers
Beijing waived social security taxes for SMEs for five months retroactive to February 1.
Phases Of A Pandemic
According to the Center for Disease Control’s “Pandemic Influenza Plan,” updated in 2017, there are four distinct pandemic stages in terms of caseloads — initiation, acceleration, deceleration and preparation for the next wave.
Europe and the U.S. are now in the acceleration stage.
Hubei is in the deceleration phase, but this comes following two months of lockdown.
Self-protective quarantine, lockdowns of outbreak clusters and testing are the best precautionary approach to pandemic outbreaks, writes Nassim Nicholas Taleb, famous “black swan” forecaster and author of the book Skin in the Game.
Taleb and colleagues from New York University and the New England Complex Systems Institute wrote in a note published recently that cutting mobility in the early stages of an outbreak, especially when little is known about the pathogen, are essential.
“It will cost something to reduce mobility in the short term, but to fail do so will eventually cost everything,” they wrote.
Earlier this week, a shutdown announcement posted outside a hospital in Hubei province’s capital city of Wuhan, touted the treatment of more than 1,700 patients since February 2 without a single fatality.
“If a general return to work occurs this week and new infections do not spike, Chinese markets could quickly be on the mend,” thinks Vladimir Signorelli, head of Bretton Woods Research in Long Valley, New Jersey.
Indeed, they are doing better than the U.S. The S&P 500 is down 23.2%. The CSI-300 Index in Shanghai is down 8.3%.
Should new cases balloon out in Shanghai and Beijing, it would be a huge blow to containment efforts and worsen the global economic outlook. Investors would then calculate similar re-occurring outbreaks in Europe and then in the U.S. once they get cleared of the one they are dealing with now, possibly taking them well into the summer.
“We may have a couple quarters of negative growth and a technical recession because of demand destruction,” says Perez. “Prepare for the volatility.”
Says BCG’s Carlsson-Szlezak, “If we are still dealing with this until the summer, with China-style quarantine measures in effect in places like New York, it will have a massive impact on the economy,” he says. “How massive? We don’t know.”
I’ve spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big emerging markets exclusively for Forbes. My work has appeared in The Boston Globe, The Nation, Salon and USA Today. Occasional BBC guest. Former holder of the FINRA Series 7 and 66. Doesn’t follow the herd.
The Dow fell more than 12% in total last week. Peter Kraus, chairman and CEO of Aperture Investors, and Liz Young, director of market strategy at BNY Mellon Investment Management, join “Squawk Box” to discuss the week ahead in the markets as investors brace for more turbulence.
Topline: As the coronavirus pandemic wipes out markets, closes schools and colleges, suspends major conferences, sports leagues and cultural events as well as upends the travel industry, businesses losing out on cash flow have started laying off workers.
Here’s who’s axed staff so far:
Norwegian Air said Thursday that it would temporarily lay off up to 50% of its workforce (and suspend 4,000 flights) due to the pandemic.
50 employees of music and culture festival South By Southwest were let go after this year’s event was canceled, the Washington Post reported.
The Port of Los Angeles let go of 145 drivers after ships from China stopped arriving.
Christie Lights, an Orlando, Florida, based stage lighting company, laid off 100 employees.
HMSHost, a Seattle, Washington, global restaurant-services provider said it would lay off 200 people and an area corporate shuttle service would lay off 75, HuffPost reported, while an area hotel chain eliminated an entire department, according to the Post.
Travel agencies in Los Angeles, California, along with Atlanta, Georgia, had to let employees go as the pandemic battered their industry.
Aid workers in Las Vegas are reportedly seeing a surge in requests for food assistance and other help as events and trade shows get canceled.
What to watch for: If any U.S. airlines end up laying off workers. Delta Airlines said Tuesday it was cutting flights and freezing hiring. American Airlines is also cutting flights, and delaying trainings for new flight attendants and pilots. Reuters reported Thursday that jobless claims are down for the week, but coronavirus-related layoffs are likely on the horizon.
Big number: 2,352 points. That’s how far the Dow Jones Industrial Average plummeted Thursday, which is a 10% drop. The S&P 500 fell 9.5%, while the Nasdaq Composite sank 9.4%.
Key background: There are now more than 1,300 reported coronavirus cases in the U.S. and at least 38 deaths, according to data from Johns Hopkins University. Worldwide cases now amount to almost 128,000 infected and more than 4,700 dead. Meanwhile, Congress is in conflicted talks over a coronavirus relief bill that may not pass this week, while New York and other state governments begin to implement bans on large gatherings to stem the spread of disease. Cancelations of concerts, sports leagues, festivals, religious gatherings and other large events have impacted millions of people. At least 135 colleges have so far canceled in-person classes. On Wednesday night, President Trump announced a 30 day travel ban from Europe (excluding the U.K. and Ireland) that sent airlines and travelers scrambling to adjust.
I’m a New York-based journalist covering breaking news at Forbes. I hold a master’s degree from Columbia University’s Graduate School of Journalism. Previous bylines: Gotham Gazette, Bklyner, Thrillist, Task & Purpose and xoJane.