Death by Jeff. The juggernaut that is Amazon.com Inc. (AMZN) keeps rolling on, spending as
much as its 301 million active users make for it. One industry
after another, Amazon is putting its flag in the ground,
cementing itself as the global leader in virtually everything.
Left reeling in its path are companies that are having to adapt
or are close to giving up as the Bezos empire grows.
Whether it be its acquisition of Whole Foods Market Inc.
(WFM), its potential
partnership with Nike Inc. (NKE) or one of its many new
departments like “Wardrobe and Handmade,” Amazon is flying.
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In the past month, Amazon’s stock has traded above $1,000 a
share, its market cap has surpassed $500 billion, and Bezos has
dethroned Bill Gates as the richest person in the world. It’s
certainly good to be Jeff Bezos – not so these seven companies.
Barnes & Noble
The first retailer to come off the shelf (so to speak) was
Barnes & Noble Inc. (BKS). Amazon, which started as an
online bookstore in 1995 is now the world leader in book sales.
Launched in 2007, Amazon Kindle is now the dominant player in
the book market. In 2014, Forbes estimated that Kindle makes up 19.5 percent
of all book sales globally, and according to Morgan Stanley, Amazon has
sold $5 billion in Kindle devices. Since then it’s been uphill
for Amazon and downhill for the retailers.
In July 2015, Barnes & Noble’s share price reached an
all-time high of $28.66, but as Amazon grew, so did B&N’s
skeptics. Since that time Amazon shares have more than doubled
while shares in Barnes & Noble have plummeted, making an
all-time low Wednesday, trading at $6.80 a share, down 76
percent from its 2015 high. How long can Barnes & Noble
hang in there? Quartz recently ran an article titled “For nearly every
bookstore Barnes & Noble loses this year, Amazon will open
a new one.”
The decline of Macy’s Inc. (M)
has been coming for a while, and Amazon’s growth has hastened
its downfall. Macy’s 2017 first-quarter earnings disappointed,
missing estimates across all metrics. The report of a 39
percent drop in profit was followed by 17 percent plunge in the
stock price. The shares have been unable to recover, making a
seven-year low in June. The most recent hit was news that
Amazon was introducing Amazon Wardrobe, a service where
customers can try-before-you-buy with apparel, which analysts’
believe is a game changer. In a May research note, Morgan
Stanley estimated Amazon accounts for 7 percent of the apparel
market and expects this to reach 19 percent by 2020. (See also:
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Macy’s isn’t the only department store feeling the burn.
Nordstrom Inc. (JWN) and
Kohl’s Corp. (KSS) are feeling the same pressure, and if the
oracle of Omaha is
correct, the future is anything buy rosy. “The department store
is online now,” Warren Buffett said at Berkshire’s annual
meeting in May.
Costco Wholesale Corp. (COST) was once the big fish in the
retail market pond. Its subscription model was the first of its
type, putting pressure on the everyday retailer. However, as
Amazon continues to climb, Costco has stalled.
In 1993, Costco merged with Price Club, and in 24 years
subscriptions surpassed 80 million. Compare this to Amazon
Prime, which launched in 2005. As of July 2017, there were 85
million Prime members and growth is headed in the right
direction. Year-to-date, Amazon has added 10 million new
members and has doubled its subscriber base in a little over
While Costco is not simply a grocery store, the deal between
Amazon and Whole Foods was a hit to Costco and its investors.
After the announcement of the acquisition, shares of Costco
fell 10 percent and have slid into bear territory, trading to
$150 per share – its lowest level since December 2016.
Etsy Inc. (ETSY), the
online marketplace for boutique goods has been on a job-cutting spree of
late, firing 22 percent of its staff in two rounds. The cuts
come as big brother Amazon expands its Handmade brand, which
was launched in 2015. Some Etsy sellers refused to list on
Amazon after complaints it was copying their products and
selling them at a lower price.
Amazon’s growth has squeezed Etsy’s margins to a point where
listings continue to rise, but profits stagnate. After going
public in 2015, its stock price rose above $30 a share.
However, as profits flatlined, its share price fell, trading
back below its IPO price of $16
a share. Etsy’s survival hinges on its ability to retain its
The timing of the Blue Apron (APRN) IPO could not have been any
worse. Less than two weeks after Amazon’s $13.7 billion
acquisition of Whole Foods, the New York-based meal kit
delivery company hit the New York Stock Exchange and became the
biggest IPO flop of 2017. Finishing its first day flat, shares
of Blue Apron have tumbled below $7, making an all-time low of
The bad news for Blue Apron continued early July when Amazon
announced it plans to enter the ready-to-eat meal business.
Filing a patent with the slogan “We do the prep. You be the
chef,” was the last thing Blue Apron investors wanted to hear.
Sports apparel retailers are already up against it. More
competition, cheaper alternatives, and Millennials’ shopping
habits have put pressure on the company to keep store sales up.
Foot Locker Inc. (FL)
earnings for the first-quarter were a big miss that saw the
stock plunge 17 percent in one day, and the news that Nike – a
big product for Foot Locker – will begin selling on Amazon was
yet another blow for the flailing retailer. (See also: A Nike-Amazon Deal
The news was a big hit for the industry as a whole. “Shares in
several major sports chains hit 52-week lows on word that Nike
may soon be selling its gear directly on Amazon,” the
Associated Press said.
Every Grocery Store on Earth
Amazon’s recent shopping spree that included the $13.7 billion
bid for high-end grocery chain Whole Foods decimated the
supermarket industry’s stock prices in the four trading days
since the offer. The overlap of a high-end supermarket brand
and a trusted e-commerce giant is a scary thought for
A big dent to other food providers is Amazon’s access to Whole
Food’s own 365 Brand. Consumers, will no longer have to leave
the house to fulfill their organic shopping needs. The Trader
Joe’s run, or weekend farmers market visit could be replaced by
a click of the mouse.
The Bottom Line
The meteoric rise of Amazon is nothing short of phenomenal.
What started out as a small online bookstore has grown into a
$480 billion ship that continues to disrupt industries and
change the way goods are consumed and distributed. As its
partnerships and acquisitions continue, the company structure
may look a little confusing. However, the way it got there is
anything but confusing.
“We’ve had three big ideas at Amazon that we’ve stuck with for
18 years, and they’re the reason we’re successful: Put the
customer first. Invent. And be patient,” Amazon founder Jeff
Bezos said to the Washington Post.