Tuesday, November 11, 2014

Some Thoughts About #Amazon 's Strategy

First of all, let's remind ourselves that Amazon is one of the highest success in business the past two decades. But Lately, Amazon's results have not been as promising as it could have been expected to be.

Indeed, Amazon has never really gave dividends to its shareholders as it was focusing on investing its profits in growing faster. A bold move that allowed the company, who by the way is not 20 years old yet (started in 1995) to become one of the top 10 largest retailers, and soon to settle in the top 5.

But E commerce, even though the largest contributor of retail growth, the increase is slowing down. And competition become tougher and tougher, especially by brick & mortar companies like Walmart or Target that are investing strongly in it.

Shareholders hence are getting annoyed by the current strategy, and is eager to find operating income. Obviously, after 20 years of investment, they are expecting a different kind of balance sheet, especially as the investments of Amazon in new businesses are yet to perform.

How long this situtation will last? if Amazon can't convince shareholders to keep on investing, it will be tough for Amazon to go on with its strategy to invest in new business to dominate the E commerce. 

Maybe the time is now to show how the Amazon's business modell can be more oriented on profitability, which is what ultimately will allow Amazon to have a long term investment strategy.