Amazon is a giant. Nobody will deny this, but many people fail to recognize just how big they have become in recent years with their under the radar acquisitions and exponentially expanding line of products and services. The more Amazon grows, the more big companies struggle to maintain their market share.
Here are 11 once-prominent companies that Amazon is in the process of eliminating.
1. Macy’s
Amazon is well past the days where they just sold books online. They now sell an incredibly wide range of products that primarily features clothing, household items, accessories, and also furniture. These product categories happen to be the four primary departments that helped make Macy’s the world’s largest department store. Nowadays you can buy just about anything you could get at Macy’s on Amazon’s website for cheaper.
The convenience of online shopping has been the real tipping point for Amazon’s impact on Macy’s because customers don’t have to waste hours finding parking, walking around a store, and waiting in checkout lines. Macy’s does, in fact, have an online store, but their system is not as efficient or effective with search accessibility and shipping as Amazon’s. Amazon’s highly popular prime service has created a horde of loyal customers who love the fast shipping and diverse product options. Macy’s has seen their sales numbers drop for years now and is showing no signs of a turnaround. Macy’s (M) is currently trading at around $14 per share down from over $60 back in 2014.
2. UPS/FedEx
In the early days of Amazon’s rise, FedEx and UPS were two of the primary beneficiaries of their success. They had millions of new orders to help them ship out to customers, creating huge new streams of revenue. However, in recent years, Jeff Bezos wisely determined he could save his company money by getting into business shipping himself. The company ordered 20,000 vans in 2018 and Amazon Air now has over 50 planes flying out of major U.S. regional hubs.
As of this year, Amazon now delivers about 26% of its own orders directly to their customers. Morgan Stanley estimates that Amazon saves $2 to $4 per package when it uses its own fleet, which ends up equating to about $2 billion in annual savings. They are expanding their supply chain to include all legs of product delivery and are becoming premier players in the shipping industry. FedEx and UPS have both seen sharp declines in their share price since early 2018 when Amazon started to really ramp up their shipping business.
3. Walgreens
It was only a matter of time before Amazon entered the pharmaceutical industry, and now they are here to stay. In mid-2018, Amazon acquired PillPack, an online pharmaceutical company and has seen great success as customers are enjoying the convenience of online prescriptions with a brand in which they trust. Walgreen’s stock price is down 24% over the past year.
Amazon’s acquisition of Whole Foods and plans of physical storefronts also serve as a major threat to Walgreen’s and their spot as the nation’s top pharmacy chain. Walgreen’s has been fighting back after a recent deal with Microsoft in order to gain an edge in the cloud support business, but it is appearing inevitable that Amazon will continue to eat into their market share as they expand their full-service online pharmacy business.
4. Staples
Staples is another prominent retailer that has been hurt by the rise of Amazon. Staples specializes in office supplies, back to school items, and other products that are now essentially all available for cheaper prices on Amazon. Once again, customers are showing a preference for the convenience of ordering online. Staples appeared to hold off Amazon for a little bit with their wider selection of larger pieces of office furniture and more specialized items, but Amazon has continued to expand their capabilities and now you can easily purchase furniture items from their website with free shipping.
In 2015, Staples announced they were acquiring fellow declining retailer Office Depot for $6.3 Billion. This deal was their last hope at recapturing some of their lost market share, but two declining businesses do not make one thriving one. The merger ended up being blocked in court anyways and Staples continues to sell off its locations as the years go by. The once iconic retailer was purchased by Sycamore Partners in early 2017 in an attempt to restructure, but they have not seen much success so far.
5. Blue Apron
Blue Apron was looking like a promising, innovative company with their ingredient-and-recipe meal kit service. Then Amazon came into the picture and acquired Whole Foods right before Blue Apron went public in June of 2017, causing shares to immediately nosedive as they became the biggest IPO flop of the year.
The damage continued as Amazon pressed further into the ready-to-eat food business, taking advantage of their superior resources and brand equity. Blue Apron has struggled mightily to acquire new customers and even simply retain their own, as their estimated retention rate is only about 15%. Their stock is currently trading around a pedestrian $8 per share, down over 90% since their 2017 IPO, largely due to Amazon’s impact.
6. Energizer Holdings
Energizer Holdings Inc has long been a dominant market leader in the battery manufacturing and retail business, but they have taken a serious hit from Amazon in the recent years, despite being highly featured in their on-site product search results. Amazon has quietly been rolling out product lines of their own for a variety of consumer product lines and Amazon Basics batteries is one of them. They show up side by side with Energizer batteries, but Amazon’s are much cheaper.
Amazon is likely to be ENR investors’ biggest concern in the long-term, as it could affect up to 40 percent of Energizer’s sales. Amazon’s batteries, as well as other battery brands on their site, undercut Energizer’s in terms of price, which is highly important with household consumer products. Energizer’s stock is down over 28% year-to-date and they will continue to face pressure from the cheaper alternative of Amazon Basics batteries.
7. Foot Locker
Sports apparel retailers have been one of the primary targets of the retail apocalypse, and Foot Locker, in particular, has been hit hard by the Amazon Effect. They were slow to adapt to the changes in consumers’ preferences with the rise of e-commerce and now are rapidly declining as they closed 110 stores in 2018 and 147 the year before.
Foot Locker has seen declining growth numbers in the recent years and its outlook looks very weak after Nike, Foot Locker’s most popular product brand has started selling their products on Amazon. Almost any Foot Locker product can now be found at a lower price online while saving the consumer a trip to the store. Foot Locker’s share price is down over 39% since their last 52-week high at $68 per share.
More to Come
The Amazon Effect has taken its toll on numerous iconic and previously prosperous brands. They have swiftly and successfully evolved from an online bookseller to the most dominant retailer the world has ever seen, with the largest variety of products available at low prices. Amazon has aggressively captured market share in major product categories with strategic partnerships and innovation. The majority of retailers have seen sharp declines in the Amazon era as they simply cannot compete with their product line variety, prices, supply chain, and the convenience that Amazon offers to their wildly loyal customers. Amazon has mastered the art of customer retention with their genius Prime membership program and they are poised to continue their reign as the king of retail. We only chose seven companies to analyze today, but there are dozens more that have lost valuable market share to the behemoth that is Amazon.
Business Barrage 