14 ms·

Why is Amazon expanding into brick and mortar with Whole Foods and now Landmark? Have they really saturated and squeezed all they can out of digital? I like Ap

Why is Amazon expanding into brick and mortar with Whole Foods and now Landmark? Have they really saturated and squeezed all they can out of digital? I like Apple's strategy better of sitting on piles of cash until they know what to do with it.

angersock 8y ago
The difference in strategy is why Apple sells toys and Amazon has an empire.
- analogmemory 8y ago
  An empire of garbage knockoffs ‍️
maym86 8y ago
They have a supply chain for content/products why not have the option to sell it through any medium including cinemas/stores. Brick and mortar isn't going away and they want their cut too.
ReverseCold 8y ago
> Have they really saturated and squeezed all they can out of digital? They have about half of US online retail. Returns on expansion probably get a lot smaller at that point.
- mtgx 8y ago
  Yes, but you're thinking local. Amazon could go global. It's still pretty tiny in most other countries. Not that I'm looking forward to a global e-commerce company, just saying that would probably be a better strategy for them.
  - kamaal 8y ago
    >>Amazon could go global. Amazon is already global. In India they are now competing with the likes of Walmart and Flipkart. And India is a huge market, not just for their ecommerce buisiness, but also for other offerings like aws and prime.
- SomewhatLikely 8y ago
  But online retail is still small compared to all retail.
  - bonesss 8y ago
    And Amazons entry into retail foreshadows an awesome and terrifying hybrid online/real-world juggernaut who can use its drones & delivery fleet to get your cheapo purchases to its stores as you're finishing up shopping, or bring it all back to your place along with your groceries if you want to go out for dinner, all under the umbrella of an integrated subscription service.
megaremote 8y ago
> I like Apple's strategy better of sitting on piles of cash until they know what to do with it. This is exactly the wrong strategy. Money is nothing compared to investing in business'.
- everdev 8y ago
  I'm sure they have it invested in bonds or some minimal appreciating investment to fight inflation. Many businesses have headed south by expanding into less profitable or unfamiliar business segments.
  - dmoy 8y ago
    Yea apple has like $200b+ in us treasuries, corporate bonds, etc.
  - mcintyre1994 8y ago
    They own their own asset management company, which last year managed $268bn: https://en.m.wikipedia.org/wiki/Braeburn_Capital https://en.m.wikipedia.org/wiki/Braeburn_Capital Investopedia says the largest hedge fund in the world last year had $122bn under management: https://www.investopedia.com/news/what-are-biggest-hedge-funds-world/ https://www.investopedia.com/news/what-are-biggest-hedge-fun... I'm guessing they exclude Apple because it's private and outside investors can't invest in it, but Apple's is twice as big as the biggest public one.
    - jjeaff 8y ago
      Apple's wealth is staggering, but I take solace in the fact that the wealth is spread out quite a bit with the largest individual shareholder only having around a million shared. The largest institutional shareholders are Berkshire Hathaway and vanguard, which are also owned by lots of investors and have minority stakes. I worry a bit more about large companies with individuals who have outsized control (like Amazon or Facebook).
- Hypx 8y ago
  Unless it is "diworsification," where companies or individuals water down successful investments with tons of bad ones.
stale2002 8y ago
If you are sitting on piles of cash, you are basically admitting that you no longer know what to do with your business, as you have zero ideas in how to invest that money and make it grow.
- atomical 8y ago
  So Berkshire Hathaway is clueless?
  - stale2002 8y ago
    Umm, yes? They have a 100 billion dollars of cash on hand. Or in other words, they have no idea what to do with that money, so they rather have it waste away, and lose money to inflation. Berkshire Hathaway has basically admitted that it has no idea what to invest in. Because if it DID have an idea of what to invest in, well then they would put their money into that, as oppose to continuing to set it on fire due to inflation. Perhaps in the PAST they had a good idea of what to invest in. But those days are no longer. Past performance is not a prediction of future performance.
    - kamaal 8y ago
      Berkshire Hathaway isn't a company like Amazon or Apple. They don't have a business or a product to invest in. They are a investment company, which has to identify successful businesses and invest there. Also after a while so you sort of max out of how much you can play that game over the years. And Warren Buffet is a man who is very picky about where he puts his money. Its hard to get a never ending supply of companies with Moats.
    - sokoloff 8y ago
      Having cash on hand as an investment company is not prima facie evidence of cluelessness, IMO. Mr Buffet is famously patient and selective about what Berkshire invests in. If he believes that overall assets are inflated beyond reason and that too much other money is sloshing around chasing companies, it’s entirely reasonable to wait on the sidelines until a moment when his capital is properly valued. Past performance is not a guarantee of future performance. It is however a reasonable predictor of future performance, IMO.
paxys 8y ago
Compare their growth over the last 5 years and you will see the difference.
- everdev 8y ago
  Not really fair to compare companies that started decades apart as it's easier to grow when you're smaller. There are startups that have 5x+ growth YoY, but it's not sustainable and it doesn't mean they're outperforming Apple or Amazon. It's just a factor of starting from a much smaller number.
  - paxys 8y ago
    Amazon wasn't the tiny startup you are making it out to be. In fact its market cap was larger than Apple's through the late 90s to mid 2000s. Apple has seen sustained but slowing growth since ~2008, while Amazon has absolutely exploded in the last 3-5 years. Here's a 10-year stock chart for comparison: https://i.imgur.com/PKLfYbG.png https://i.imgur.com/PKLfYbG.png
    - everdev 8y ago
      I think the point is that just because Snap, Inc. [or insert unicorn here] had rapid growth over the last few years doesn't mean it's a better or stronger company than those it outpaced. Past stock prices unfortunately are not guarantees or even good predictors of future success. I think the other point is that Apple started decades before Amazon. I'd be curious to see a year 1-24 side by side comparison (adjusted for inflation). So, '76-'00 for Apple vs. '94-'18 for Amazon. Companies grow slower as they age so saying Amazon's 24th year outpaced Apple's 42nd year isn't really apples to apples.
deleted 8y ago
[deleted]
manigandham 8y ago
They don't have to be finished with digital (and they clearly aren't) to start expansion elsewhere. Amazon is a slow and steady machine that eats entire industries, often planning 5 years ahead. Jeff Bezos is an amazing risk taker who has no problem spending billions on experiments to find the next area of growth. Apple is now sorely lacking this kind of leadership which has led to a relatively "meh" level of product output these days.
- jjeaff 8y ago
  >entire industries They dominate e-commerce and cloud hosting. But have they really had much success elsewhere?
  - smegger001 8y ago
    They pretty much own the Audiobook market with Audible all of the publishers licence them their collections, Kindle is the largest E-book market along with the E-reader market. The kindle fire is pretty much the market leader in sub $100 the bargain bin tablet segment last I checked.
    - no_speculation 8y ago
      They don't own the audiobooks I buy. https://www.downpour.com https://www.downpour.com
    - softwaredoug 8y ago
      Really? I pretty much exclusively buy from iBooks. Is there any data to back your claim up?
      - Jackim 8y ago
        Between Audible and Amazon directly they account for ~50% of audiobook sales[1]. [1] https://www.bloomberg.com/news/articles/2018-03-13/amazon-turbocharged-audible-s-domination-of-audiobooks https://www.bloomberg.com/news/articles/2018-03-13/amazon-tu...
rosege 8y ago
Similar to Buffet's. But he is buying back Berkshire because he believes the market is over valued.
- gruez 8y ago
  why would you do buybacks when the price is overvalued? if anything, its going to drive up the price even more '
  - rosege 8y ago
    I think he sees other stocks as overvalued and his own as the best value - I guess!
trocadero 8y ago
Whole Foods allowed Amazon to move into grocery delivery much quicker and bigger than they would have otherwise. That purchase made a lot of sense because even though Whole Foods is brick and mortar it extended Amazon's online offerings. This is more of a head scratcher. The only thing I can think of is adding 1/2 tickets a month to Prime benefits. I suppose it also makes them more competitive in buying/producing content because they can get part of the theater sales.
Kagerjay 8y ago
Wouldn't surprise me. Amazon looks like it has dominated the ecommerce and cloud market already, so now it wants to branch into physical locations now. There's more room for oppurtunity and they haven't saturated those areas yet In many ways, Amazon is becoming a real estate company now. For some reason I imagine Amazon's next big purchase is going to be gyms, it just makes the most sense to which market segments they are heading towards now(consumers who are on the middle-end to higher end spectrum). Its probably going to something like gold's gym or LA fitness. I mean they have "Amazon GO" stores already, which works perfectly next door to gyms because of its smaller footprint. I also wager Amazon will want to expand into the oil & gas as well afterward. We'll see the equivalent Amazon version of Wawa gas stations. Its differentiator is going to be based on its own technology + ideas from Japan's technology innovations. This will also be a test-bed infrastructure for electric vehicles and its footwork into the car industry, 30-40+ years down the road. Amazon probably is looking to convert its whole foods store into its "Amazon GO" concept, although this is a long process in the making. Wholefoods 365 (the ones after the merger) might be the testbed market first though, not the original Wholefoods. I've done some actual work with Amazon here too Amazon is already in the police survelliance market in orlando. Everyone's face in downtown is under high resolution CCTV's routed through AWS. More real estate means more areas to use it too. We have China as a test market for social media credit scores already, amazon is just potentially laying more footwork for the American market if it ever pivots and gains wider acceptance. Amazon's long term goal is to essentially have everything "essential" route through them. It'll be like a black mirror episode in the making. Bezo want influence, the best way to do this is dominate every major market sector that people deal with daily/weekly. 20 years from now, you'll deal with Amazon on a daily basis even if you didn't want too, because there's no better alternatives. Companies like facebook, google, amazon etc have far more power and influence on different levels than many countries. Why build a country when you can build a global business empire? At least that's how I imagine Bezos is thinking
crazygringo 8y ago
Why would a company need to "saturate and squeeze" one market before going after another? The business world isn't a place where companies politely wait their turns... Presumably Amazon thinks Landmark could help its overall media/Prime strategy, just like it thought Whole Foods could help its grocery/Prime strategy. Doesn't matter if it's digital or not as long if it thinks that's the smartest investment to be made at the time.

angersock 8y ago

The difference in strategy is why Apple sells toys and Amazon has an empire.

analogmemory 8y ago
An empire of garbage knockoffs ‍️

maym86 8y ago

They have a supply chain for content/products why not have the option to sell it through any medium including cinemas/stores. Brick and mortar isn't going away and they want their cut too.

ReverseCold 8y ago

> Have they really saturated and squeezed all they can out of digital? They have about half of US online retail. Returns on expansion probably get a lot smaller at that point.

mtgx 8y ago
Yes, but you're thinking local. Amazon could go global. It's still pretty tiny in most other countries. Not that I'm looking forward to a global e-commerce company, just saying that would probably be a better strategy for them.
- kamaal 8y ago
  >>Amazon could go global. Amazon is already global. In India they are now competing with the likes of Walmart and Flipkart. And India is a huge market, not just for their ecommerce buisiness, but also for other offerings like aws and prime.
SomewhatLikely 8y ago
But online retail is still small compared to all retail.
- bonesss 8y ago
  And Amazons entry into retail foreshadows an awesome and terrifying hybrid online/real-world juggernaut who can use its drones & delivery fleet to get your cheapo purchases to its stores as you're finishing up shopping, or bring it all back to your place along with your groceries if you want to go out for dinner, all under the umbrella of an integrated subscription service.

megaremote 8y ago

> I like Apple's strategy better of sitting on piles of cash until they know what to do with it. This is exactly the wrong strategy. Money is nothing compared to investing in business'.

everdev 8y ago
I'm sure they have it invested in bonds or some minimal appreciating investment to fight inflation. Many businesses have headed south by expanding into less profitable or unfamiliar business segments.
- dmoy 8y ago
  Yea apple has like $200b+ in us treasuries, corporate bonds, etc.
- mcintyre1994 8y ago
  They own their own asset management company, which last year managed $268bn: https://en.m.wikipedia.org/wiki/Braeburn_Capital https://en.m.wikipedia.org/wiki/Braeburn_Capital Investopedia says the largest hedge fund in the world last year had $122bn under management: https://www.investopedia.com/news/what-are-biggest-hedge-funds-world/ https://www.investopedia.com/news/what-are-biggest-hedge-fun... I'm guessing they exclude Apple because it's private and outside investors can't invest in it, but Apple's is twice as big as the biggest public one.
  - jjeaff 8y ago
    Apple's wealth is staggering, but I take solace in the fact that the wealth is spread out quite a bit with the largest individual shareholder only having around a million shared. The largest institutional shareholders are Berkshire Hathaway and vanguard, which are also owned by lots of investors and have minority stakes. I worry a bit more about large companies with individuals who have outsized control (like Amazon or Facebook).
Hypx 8y ago
Unless it is "diworsification," where companies or individuals water down successful investments with tons of bad ones.

stale2002 8y ago

If you are sitting on piles of cash, you are basically admitting that you no longer know what to do with your business, as you have zero ideas in how to invest that money and make it grow.

atomical 8y ago
So Berkshire Hathaway is clueless?
- stale2002 8y ago
  Umm, yes? They have a 100 billion dollars of cash on hand. Or in other words, they have no idea what to do with that money, so they rather have it waste away, and lose money to inflation. Berkshire Hathaway has basically admitted that it has no idea what to invest in. Because if it DID have an idea of what to invest in, well then they would put their money into that, as oppose to continuing to set it on fire due to inflation. Perhaps in the PAST they had a good idea of what to invest in. But those days are no longer. Past performance is not a prediction of future performance.
  - kamaal 8y ago
    Berkshire Hathaway isn't a company like Amazon or Apple. They don't have a business or a product to invest in. They are a investment company, which has to identify successful businesses and invest there. Also after a while so you sort of max out of how much you can play that game over the years. And Warren Buffet is a man who is very picky about where he puts his money. Its hard to get a never ending supply of companies with Moats.
  - sokoloff 8y ago
    Having cash on hand as an investment company is not prima facie evidence of cluelessness, IMO. Mr Buffet is famously patient and selective about what Berkshire invests in. If he believes that overall assets are inflated beyond reason and that too much other money is sloshing around chasing companies, it’s entirely reasonable to wait on the sidelines until a moment when his capital is properly valued. Past performance is not a guarantee of future performance. It is however a reasonable predictor of future performance, IMO.

paxys 8y ago

Compare their growth over the last 5 years and you will see the difference.

everdev 8y ago
Not really fair to compare companies that started decades apart as it's easier to grow when you're smaller. There are startups that have 5x+ growth YoY, but it's not sustainable and it doesn't mean they're outperforming Apple or Amazon. It's just a factor of starting from a much smaller number.
- paxys 8y ago
  Amazon wasn't the tiny startup you are making it out to be. In fact its market cap was larger than Apple's through the late 90s to mid 2000s. Apple has seen sustained but slowing growth since ~2008, while Amazon has absolutely exploded in the last 3-5 years. Here's a 10-year stock chart for comparison: https://i.imgur.com/PKLfYbG.png https://i.imgur.com/PKLfYbG.png
  - everdev 8y ago
    I think the point is that just because Snap, Inc. [or insert unicorn here] had rapid growth over the last few years doesn't mean it's a better or stronger company than those it outpaced. Past stock prices unfortunately are not guarantees or even good predictors of future success. I think the other point is that Apple started decades before Amazon. I'd be curious to see a year 1-24 side by side comparison (adjusted for inflation). So, '76-'00 for Apple vs. '94-'18 for Amazon. Companies grow slower as they age so saying Amazon's 24th year outpaced Apple's 42nd year isn't really apples to apples.

deleted 8y ago

[deleted]

manigandham 8y ago

They don't have to be finished with digital (and they clearly aren't) to start expansion elsewhere. Amazon is a slow and steady machine that eats entire industries, often planning 5 years ahead. Jeff Bezos is an amazing risk taker who has no problem spending billions on experiments to find the next area of growth. Apple is now sorely lacking this kind of leadership which has led to a relatively "meh" level of product output these days.

jjeaff 8y ago
>entire industries They dominate e-commerce and cloud hosting. But have they really had much success elsewhere?
- smegger001 8y ago
  They pretty much own the Audiobook market with Audible all of the publishers licence them their collections, Kindle is the largest E-book market along with the E-reader market. The kindle fire is pretty much the market leader in sub $100 the bargain bin tablet segment last I checked.
  - no_speculation 8y ago
    They don't own the audiobooks I buy. https://www.downpour.com https://www.downpour.com
  - softwaredoug 8y ago
    Really? I pretty much exclusively buy from iBooks. Is there any data to back your claim up?
    - Jackim 8y ago
      Between Audible and Amazon directly they account for ~50% of audiobook sales[1]. [1] https://www.bloomberg.com/news/articles/2018-03-13/amazon-turbocharged-audible-s-domination-of-audiobooks https://www.bloomberg.com/news/articles/2018-03-13/amazon-tu...

rosege 8y ago

Similar to Buffet's. But he is buying back Berkshire because he believes the market is over valued.

gruez 8y ago
why would you do buybacks when the price is overvalued? if anything, its going to drive up the price even more '
- rosege 8y ago
  I think he sees other stocks as overvalued and his own as the best value - I guess!

trocadero 8y ago

Whole Foods allowed Amazon to move into grocery delivery much quicker and bigger than they would have otherwise. That purchase made a lot of sense because even though Whole Foods is brick and mortar it extended Amazon's online offerings. This is more of a head scratcher. The only thing I can think of is adding 1/2 tickets a month to Prime benefits. I suppose it also makes them more competitive in buying/producing content because they can get part of the theater sales.

Kagerjay 8y ago

Wouldn't surprise me. Amazon looks like it has dominated the ecommerce and cloud market already, so now it wants to branch into physical locations now. There's more room for oppurtunity and they haven't saturated those areas yet In many ways, Amazon is becoming a real estate company now. For some reason I imagine Amazon's next big purchase is going to be gyms, it just makes the most sense to which market segments they are heading towards now(consumers who are on the middle-end to higher end spectrum). Its probably going to something like gold's gym or LA fitness. I mean they have "Amazon GO" stores already, which works perfectly next door to gyms because of its smaller footprint. I also wager Amazon will want to expand into the oil & gas as well afterward. We'll see the equivalent Amazon version of Wawa gas stations. Its differentiator is going to be based on its own technology + ideas from Japan's technology innovations. This will also be a test-bed infrastructure for electric vehicles and its footwork into the car industry, 30-40+ years down the road. Amazon probably is looking to convert its whole foods store into its "Amazon GO" concept, although this is a long process in the making. Wholefoods 365 (the ones after the merger) might be the testbed market first though, not the original Wholefoods. I've done some actual work with Amazon here too Amazon is already in the police survelliance market in orlando. Everyone's face in downtown is under high resolution CCTV's routed through AWS. More real estate means more areas to use it too. We have China as a test market for social media credit scores already, amazon is just potentially laying more footwork for the American market if it ever pivots and gains wider acceptance. Amazon's long term goal is to essentially have everything "essential" route through them. It'll be like a black mirror episode in the making. Bezo want influence, the best way to do this is dominate every major market sector that people deal with daily/weekly. 20 years from now, you'll deal with Amazon on a daily basis even if you didn't want too, because there's no better alternatives. Companies like facebook, google, amazon etc have far more power and influence on different levels than many countries. Why build a country when you can build a global business empire? At least that's how I imagine Bezos is thinking

crazygringo 8y ago

Why would a company need to "saturate and squeeze" one market before going after another? The business world isn't a place where companies politely wait their turns... Presumably Amazon thinks Landmark could help its overall media/Prime strategy, just like it thought Whole Foods could help its grocery/Prime strategy. Doesn't matter if it's digital or not as long if it thinks that's the smartest investment to be made at the time.