The biggest name in online retail recently welcomed aboard new Amazon CEO Andy Jassy. Founder and former CEO Jeff Bezos decided to move on to rarefied heights. On July 20, Bezos will strap himself aboard his company Blue Origins’ spacecraft and fly off to outer space.
Meanwhile, Jassy will strap himself into the driver’s seat of the world’s largest online retailer. Before his new position, Jassy made waves as the head of AMazon’s most profitable division: Amazon Web services. Facing him immediately is a slew of challenges that will require his attention beginning Day 1.
How Do You Grow A Giant?
How does Jassy grow this business that’s already grown too big in too many areas? Amazon started as an online bookstore and turned into a monster that sells everything from books to barbecue sauce.
Even more, Amazon is more than just an online retailer. Its Amazon Web Services division (which Jassy used to lead) is currently holding the lead in the cloud computing business with a 32% share. Before Bezos left, Amazon also made inroads in healthcare (Amazon Care) and into entertainment (they bought MGM studios). How can Jassy grow something this big into something bigger?
In terms of share prices, Amazon is a huge success story. From a $1.50 share price 27 years ago, it’s now worth over $3,500 per share and $1.7 trillion total. Just keeping the market cap at this level should already pose a challenge for Jassy.
Unfortunately, stockholders would like to get more. In addition, Amazon just came out of a pandemic situation where almost everybody shopped online. As a result, 2020’s profit came out double at $21.3 billion over revenues of $386.1 billion.
Amazon’s annual profit almost doubled in 2020 to $21.3 billion. Amazon can thank the pandemic for that. Fear COVID-19 encouraged more consumers to shop online, helping the company grow revenue 38% to $386.1 billion.
Head Off Regulatory Challenges
With great size comes greater attention. Amazon’s presence is hard to ignore considering they’re everywhere on the planet. This is the main reason why a number of countries are asking for a piece of that revenue as their rightful tax.
At the same time, Amazon is facing a slew of antitrust challenges from regulators intent on breaking up the giant. President Joe Biden appointed Lina Khan as head of the Federal Trade Commission.
Khan is a known tech critic and will likely involve herself in the FTC’s ongoing investigation of Amazon. Meanwhile, Congress is seriously looking to update the Sherman Antitrust Act that covers tech companies’ hegemony. Plus, European regulators are also dead set on both collecting more taxes and imposing stricter anti-monopoly measures.
Address The Worker Issues
Jassy will also have his hands full on managing its workforce. Since last year, many Amazon warehouse workers are pushing for unionization in their branches. Unions are something that Bezos managed to successfully quash while he was in charge. Amazon narrowly escaped a unionization effort in Alabama, but labor groups vowed that round 2 is coming soon.
Meanwhile, the pandemic proved the feasibility of remote work for many companies with the requisite infrastructure. Amazon will now have to compete with startups and major companies that offer employees WFH employment as long as they want. Changes are coming for the workplace, and Amazon can’t afford to lose out on workers.
Square Off Against Domestic Rivals
On a lighter side, Amazon also faces traditional competition from local giants that are wising up on their online and delivery game plans. Walmart is sprucing up its delivery club to potentially head off Amazon Prime.
At the same time, Microsoft is going aggressive in signing up Amazon’s retail rivals including Walmart to switch to its Azure cloud space.
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