Amazon is ubiquitous in Seattle. Amazon lockers (where you can pick up Amazon deliveries instead of having them delivered to your home or office) are common outside supermarkets.Quantum Financial’s Tim Mackay visited the world’s only physical Amazon book store located in Seattle. He ordered online from Amazon from the suburbs of Seattle and a UPS trucked delivered his orders a few hours later on the same day.
The rise of Amazon in America has been impressive.
Established by Jeff Bezos in 1994, today Amazon is the 7th largest company in America, larger than Walmart, Costco and Target combined. Sales on Amazon over Christmas in 2016 represented 38% of all US online sales.
Amazon’s growth has decimated traditional retailers. Post-Christmas in the middle of the ‘Trump Bump’, Macy’s, Sears, and Kmart all announced they will close hundreds of stores across America. Americans are becoming more and more accustomed to purchasing online and there is no magical formula that can prevent the downward slide of traditional retailers.
Today Amazon is the only one of the “Fearsome Five” (Microsoft, Apple, Google, Facebook, and Amazon) yet to reach Australian shores.
However, in an ominous move for Australian retailers, Amazon has plans to roll out its business model in Australia. DJ’s, Myers & Harvey Norman won’t be navigating unchartered waters- they’ve watched in horror the destruction in value that Amazon caused their US peers.
If you own these stocks, then in our opinion now is a good time to review your holdings. Woolworths and Coles/Bunnings won’t be immune but Amazon’s foray into fresh food (Amazon Go) is still in its relative infancy.