The Prime Effect: What Amazon Will Transform Next
Amazon has utterly transformed — for better or worse — almost every business sector it’s entered, from retail to cloud computing.
So where will the trillion-dollar corporation go next?
How about, grocery stores? Prescription drugs?
Businesses across the board are in Amazon’s looming shadow.
“Amazon is a multi-billion-dollar company,” Brad Stone says. “The only way it can keep growing is to find large reservoirs of growth opportunities.”
Today, On Point: What Amazon will do next. It’s the final episode in our series The Prime Effect.
Joshua McNichols, reporter at KUOW, covering the “growing pains” beat—the nexus of housing, transportation, urban planning and the economy. Host of KUOW’s podcast Primed about Amazon. (@joshuamcnichols)
Brad Stone, senior executive editor for Bloomberg Technology. Author of “Amazon Unbound” and “The Everything Store.” (@BradStone)
Nadina Rosier, chief product officer and general manager of Pharmaceutical Solutions at the Health Transformation Alliance.
Sara Fischer, media reporter at Axios. She’s author of the weekly Axios Media Trends newsletter. (@sarafischer)
Amazon has big plans to enter new sectors. What is the company trying to achieve in putting up a grocery store in this Seattle neighborhood, for example?
Joshua McNichols: “At Amazon, you constantly hear it’s like in the water, they just talk about innovation all the time and how they’re always changing. And at this grocery store, too, they talk about constantly adapting to what customers want. So I see every Amazon Fresh location — and there are many, there are dozens — as test facilities, they are always testing the technology. So why are they in this neighborhood? You know, this is an area that’s really close to downtown. A lot of people are moving there.
“And also, I think they want to show that they can do things, they can be affordable and accessible. And this is a neighborhood where there’s a lot of concerns about price, especially for some of the older neighborhoods. And, you know, they advertise these specials like French bread for 89 cents and rotisserie chicken for $4.97. You know, kind of like Costco has big things, like hot dogs that they offer really cheap. Or slices of pizza. They’re kind of following that lead and trying to convince people that they are accessible and convenient and not just a sort of exclusive place for techies to shop.”
On Amazon’s foray into health care in the U.S.
Nadina Rosier: “Amazon has always been largely focused on consumer experience. They’ve mastered the art of getting to know consumers, not necessarily in the pharmacy space today, but given that we’ve seen this real paradigm shift in the industry where 20, 30 years ago a patient was looked upon as being rather passive, in the health care decision making process. A provider would effectively give a prescription to a patient. The patient would just accept it. They didn’t always know how to pronounce the medication, but they trusted that the prescriber knew what they were talking about. The doctor knew all.
“And they would walk into a standard brick and mortar pharmacy. They’d talk to Mr. or Mrs. Smith and they’d get their prescription, maybe talk about your children. And they would go upon their merry way. But that’s not necessarily the same experience, nor is it the same level of values that patients have today. Patients are now very active consumers in their health care. And Amazon is able to now insert itself into that valuable experience. That they can effectively save a consumer time, as well as offer a wide array of choices similar to what they’ve done in the retail industry.”
What are the other markets or sectors that Amazon has its eyes on?
Brad Stone: “It really just can’t be crystallized. But I would say, you know, in addition to physical retail, and grocery and health care, another big one is just entertainment and, in particular, live sports. You know, Amazon acquired the rights to Thursday Night Football, the U.S. Soccer League, English-language broadcast rights, League One in Europe, the Premier League in the U.K.
“I mean, the global sports market is hundreds of billions of dollars. Amazon is building this massive advertising business. It’s one of the fastest growing businesses in the company after AWS. And all that entertainment, like their $500 billion Lord of the Rings show. So, you know, in addition to being the Everything store, in addition to being an enterprise software juggernaut, it wants to be the new TV network. And that’s a fairly big ambition.”
Why is Amazon interested in entering media?
Sara Fischer: “For Amazon, it’s all about the flywheel effect. How can they build products that reinforce one another so that they grow bigger together? And the attractive thing about streaming, as Andy said, is that if they invest in that, then its Amazon Prime subscription will grow. And if its Amazon Prime subscriptions grow, then it can invest in other businesses. So it’s all about creating a flywheel that ultimately makes Amazon bigger and better.
“And the one thing I don’t want to forget here, too, is that Amazon is trying to build a little hardware business. They said that Amazon branded TVs are going to come out later this fall. So it’s not just about building Amazon Prime subscriptions, although that’s a huge moment of momentum for them. But the real big thing here, too, is this also helps to reinforce other potential products. Whether that’s the TV. … I’ve written a lot about how Amazon is looking to get into the audio space, that can dramatically help out some of its Amazon echo voice smart assistance products. So for them getting into media, getting into streaming, it’s about reinforcing all these other things that they’ve got there.”
Bottom line, is this good for people?
Sara Fischer: “I think it’s always good when consumers have choice, and that’s what regulators would tell you. There are going to be some little hiccups, though. Amazon provides people the ability to sign into some of their other accounts, and their other streaming services, like Roku, for example. Well, now that Amazon is trying to build up its streaming presence, there could be some sort of back log in trying to get those deals through.
“And sometimes consumers will complain about that. Why can’t I access my Peacock app with Amazon? Why can’t I access my Roku app with Amazon? Well, that’s because Amazon has, you know, certain incentives, and those deals are going to be hard. So I definitely think overwhelmingly, yes, this is going to be great for consumers. It’s good for them to have choice. But along the road, you’re going to come up across these little hiccups as we migrate into streaming. And that’s to be expected.”
On takeaways on Amazon’s power to transform America, media and more
Brad Stone: “One takeaway after writing two books about Amazon is how so many powerful advantages accrue to large technology companies. I mean, yes, Jeff Bezos has been brilliant. Yes, Amazon has pioneered a few industries. But this is a company that is sitting on a mountain of cash that is now free to invest and invade all these new industries.
“It has, along with Microsoft, and Apple, and Google and Facebook, this allure to the top technologists, the smartest engineers in the world, and a lot of advantages accrue there. And so, we can somehow kind of polish the halo over the company for trying new things. But it’s also easy for them to do, and they have this mandate to grow.”
“… Regulators and legislators are now moving perhaps tardily with such panic to try to evaluate the company, and slow down its growth. And impact some of the negative effects it has on consumers and the partners in its ecosystem. I think the one other thing that I would say and your listener, Marie, in Delray Beach had that great comment. Where she’s an Amazon almost addict, but she feels kind of bad about it, a little guilty.
“I think this is Amazon under Andy Jassy. He’s going to try to address that. I think they realize that it’s a threat and he’s added a couple of values to their kind of sacrosanct leadership principles. One of them is to understand that the company’s success brings broad responsibility and to be Earth’s best employer. They’ve got a long way to go, but I think they do listen to the critiques and shows like this one, and they’re at least trying to do something about it.”
From The Reading List
KUOW: “Seattle’s Central District divided over new Amazon Fresh store” — “A new grocery store has opened at 23rd and Jackson: Amazon Fresh. It’s on the same spot where the Red Apple grocery store used to stand. The Red Apple was a popular spot where neighbors ran into each other and said ‘Hi.’”
This article was originally published on WBUR.org.
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