As an entrepreneurship consultant, I‘m often asked by small business owners about Amazon‘s powerful influence across so many industries. There‘s no doubt that Amazon‘s vast array of acquisitions has disrupted everything from grocery shopping to cloud computing.
In this comprehensive guide, I‘ll provide entrepreneurs with details on Amazon‘s major subsidiaries, the impact of its acquisitions, and perspective on competing with this corporate giant. Let‘s dive in.
Overview of Amazon‘s Major Acquisitions
Amazon has strategically acquired companies across multiple sectors:
- Retail industry: Amazon has acquired shoe retailer Zappos, grocery chain Whole Foods Market, and more to expand its e-commerce empire.
- Technology sector: The tech giant has purchased innovative startups like Kiva Systems (now Amazon Robotics) to ramp up automation in its warehouses.
- Media sphere: Amazon now owns film studio MGM, streaming platform Twitch, and IMDB to bolster its entertainment offerings.
- Healthcare field: The company is breaking into healthcare by acquiring companies like online pharmacy PillPack and primary care provider One Medical.
Amazon‘s ability to identify and purchase industry leaders in emerging sectors should concern small businesses who want to avoid competing directly against this corporate behemoth.
Details on Amazon‘s Most Notable Subsidiaries
Let‘s take a closer look at key subsidiaries across Amazon‘s portfolio:
Amazon Marketplace
- Launched in 2000
- Features over 5 million sellers worldwide
- Captures approximately 50% of Amazon‘s e-commerce volume
- Generates billions in revenue for Amazon through fees and commissions
For entrepreneurs: Amazon Marketplace‘s sheer size and selling power makes it difficult for independent e-commerce stores to compete on price and variety. Focus on excellent customer service and specialized offerings as differentiators.
Amazon Prime
- Over 200 million members globally
- Accounts for over $30 billion in annual revenues as of 2022
- Provides free shipping, streaming media, discounts, and other benefits
- Key driver of Amazon‘s e-commerce dominance
For entrepreneurs: Competing with Amazon‘s massive scale and supply chain is difficult. Cater to niche audiences instead of attempting to match Amazon‘s everything store model.
Amazon Web Services (AWS)
- Cloud platform with over 200 services including computing power, storage, databases and more
- Commands 33% market share of global cloud infrastructure services as of 2022
- Generated over $62 billion in revenue in 2021, up 37% from prior year
- Operating income of $18.5 billion in 2021 outpaced Amazon‘s e-commerce business
For entrepreneurs: Consider using AWS for your cloud needs rather than attempting to build comparable infrastructure. Focus engineering resources on applications instead of backend cloud tech.
Zappos
- Acquired by Amazon for $1.2 billion in 2009
- Remains profitable with revenues over $2 billion annually
- Differentiates itself via exemplary customer service like free returns
- Gives Amazon insight into fashion e-commerce segment
For entrepreneurs: Don‘t attempt to compete directly with Zappos in the online shoe market. Find your own niche or identify an underserved demographic.
Twitch
- Purchased by Amazon for $970 million in 2014
- Reports over 44 million daily active users as of 2022
- Leaders in the rapidly growing live streaming market
- Gives Amazon a foothold in the gaming industry
For entrepreneurs: Twitch dominates gaming live streaming. Pivot to an adjacent area like providing tools/services for live streamers instead.
Whole Foods Market
- Acquired in 2017 for $13.7 billion in Amazon‘s largest purchase
- 500+ locations in US, UK, and Canada
- Focuses on natural and organic products
- Amazon has aimed to integrate Whole Foods with its delivery capabilities
For entrepreneurs: Competing directly against Whole Foods in grocery will be challenging. Consider a specialty food shop or farmer‘s market instead.
As you can see, Amazon has systematically acquired industry leaders across e-commerce, technology, media, and other sectors. This makes competing head-to-head extremely difficult for small businesses. As an entrepreneur, I advise focusing your efforts on unmet niche markets and leveraging your agility and customer service.
Key Takeaways on Competing with This E-Commerce Giant
Based on Amazon‘s ever-expanding empire of subsidiaries, here is my advice for entrepreneurs looking to compete:
- Avoid competing directly in markets like online retail where Amazon dominates. Identify underserved B2B or niche consumer segments instead.
- Consider acquiring capabilities by partnering with or utilizing Amazon‘s technology services, like AWS, rather than building from scratch.
- Differentiate your company via strong branding, specialized offerings, superior customer service and support, and a spirit of innovation.
- Focus on smaller-scale disruptions and pivots rather than attempting to wrestle market share from Amazon head on. Remain nimble and ready to change course.
- Look for gaps in Amazon‘s offerings and underserved segments; don‘t go toe-to-toe with everything Amazon offers.
While Amazon will continue acquiring category leaders, small businesses can still carve out defensible niches. As an entrepreneurship consultant, I help clients identify growth opportunities by fully understanding Amazon‘s expanding ecosystem. Please reach out if you need personalized guidance on competing wisely against this corporate juggernaut.
