Company in Focus: Amazon Part 3 – What Does the Future Hold?

Introduction:

Welcome back to “Company in Focus” – a weekly series where I discuss some of the world’s largest companies, including Google, Facebook, Amazon, Twitter and many more of the business world’s behemoths. Each company will be profiled in three sections across three articles. In the last article, we looked at how Amazon (AMZN) became the second trillion-dollar company in the world. This week, we will be detailing what lies ahead for Amazon and the projects they will embark on in the years to come. 

Key Statistics:

Amazon’s revenue has seen a seven-fold increase in the last ten years. Between 2010 ($34.2bn) and 2020 ($279.1bn), Amazon’s revenue increased by a gargantuan $244.9bn, representing a 716% increase. Amazon has also become the second-largest employer in the U.S, with a 2105% increase in full-time employees between 2010 (34,000 employees) and 2020 (750,000 employees).

Amazon’s share price is expected to continue to grow in the coming years, with a share price forecast of $4372 for January 2023 (+34.23% from January 2021).

So which innovations will be playing a pivotal role in maintaining Amazon’s growth?

Amazon Go:

In January 2018, Amazon opened its first cashier-less store, called Amazon Go. Located in Seattle, the stores are fitted with weight sensors and cameras, so customers can add items to their virtual cart in the Amazon Go app by picking them off the shelves. At present, there are 26 checkout-free Amazon Go stores across several major cities, including Chicago and San Francisco, with plans to open a London store in 2021. Amazon Go stores will be commonplace in many major cities worldwide by 2030, with Amazon vigorously scouting for potential locations. 

Amazon One – Biometric Payments:

In 2020, Amazon announced a new payment system which uses a simple wave of the hand. The new Amazon One scanner registers an image of the user’s palm, allowing them to pay by waving their hand over a scanner. The product will be trialled at two Amazon Go stores in Seattle. The intricacy of the vein patterns that will be catalogued ensures that biometric payments are resistant to forgery, theoretically making it a safer payment method than bank cards or cash. Amazon believes its revolutionary payment system can have broad applicability beyond its retail stores such as “entering a location like a stadium”. 

Investing in India:

In January 2020, Amazon CEO Jeff Bezos announced a $1bn (£732.85m) investment in digitising small and medium businesses in India. Speaking at a company event in New Delhi, he stated that the 21st Century is “going to be the Indian century”.  He went on to add: “The dynamism, the energy… the growth. This country has something special.”

Amazon expects to export $10bn worth of Indian-made goods by 2025 and has already committed to $5.5bn of investment in the country. These moves are crucial as Amazon attempts to secure a firm position in the country’s retail market in the coming years. 

Artificial Intelligence:

Amazon’s chief technology officer, Werner Vogels believes “when Jeff (Bezos) started Amazon, he wasn’t thinking about starting a bookshop. He was really fascinated by the internet.” 

In its 2019 Re:Mars event in Las Vegas, Amazon demonstrated through presentations about machine learning, robotics and space, that the firm is going through a transition phase. Amazon’s sophisticated systems are no longer just being used to provide good deals or fast delivery times. The company’s big data capabilities are now the tool of police forces, and in the future will be potentially used by militaries. 

In the coming years, Amazon plans to offer companies access to AI-based technologies that they could not create themselves, such as Textract, which automatically extracts text and data from scanned documents. Another tool, albeit controversial, being offered to companies is Amazon Rekognition. Amazon Rekognition can scan video footage, pick up people’s faces which can then be checked against a client’s database. 

Conclusion:

Whilst it is difficult to predict where Amazon will be in 5, 10 or 20 years from now, Amazon shows no signs of losing its influence anytime soon. Even if growth rates slow over time, its Amazon Web Services (AWS) division leads an industry expected to maintain double-digit growth for at least the next seven years.

In the future, Amazon may provide cash returns for stockholders as it currently is the largest company not to pay a dividend. With $71bn in cash and equivalents, the company can offer a pay-out, increasing Amazon’s attractiveness to income-orientated investors.  

Having now wrapped up Amazon’s three-part profile, tune back into The Corporate Feed next week as I being to analyse the origins of Facebook (FB) and how the social media giant became bigger than 3 of the world’s biggest countries. 

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