This article was originally posted on Forbes.
No other company has done a better job of attracting constant media attention than Amazon ($AMZN). With shares hovering around $1,000 per share, the retail-tech giant now stands as one of the four largest companies in the S&P 500 with a nearly $500 billion market cap. That represents a more than 50,000% return from the $1.73 IPO price two decades earlier. Investors fortunate enough to snatch up shares when it first hit the public market can comfortably call themselves millionaires.
While shares no longer look cheap by any traditional metric, money managers believe ongoing investments will result in even greater future returns. This is because Amazon has shown a remarkable ability to succeed in new spaces that it expands into. This is in many ways, the opposite of conventional wisdom. Large corporations often struggle when they stray outside of their core competencies. Amazon has been able to flip this script.
Amazon’s ability to accomplish this comes in large part from the leadership of its CEO, Jeff Bezos, who has consistently pushed the philosophy of, “Day One.” This excerpt from Amazon’s last letter to shareholders illustrates his commitment:
“Jeff, what does Day 2 look like?”That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1. To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?
Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.”
Of course, the true measure of success for any public company and its philosophy is how its share price performs. As Amazon’s reach has broadened into new industries, the number of companies who need to mention Amazon as a competitor has broadened as well.
We used Sentieo’s advanced document search to construct a query that uncovers every mention of Amazon as a competitor in public company filings (10Ks, 10Qs, 8Ks, earnings calls, investor presentations, etc.) in the last 10 years. In the chart below, you can see that mentions of Amazon have grown considerably over the past 10 years while the stock price has also grown in lockstep.
Mentions of “amazon competitors” in public filings and AMZN stock price (Source: Sentieo Document Search)
Drilling down into specific sectors, the same pattern shows itself. Take Air Freight and Logistics, a nascent segment of Amazon’s business, for example. It was only in 2016 that Amazon first made an announcement to lease 20-40 Boeing jets to augment their distribution capabilities. If we look at the mentions of Amazon in only Air Freight and Logistics company filings, we again see the number of mentions skyrocket.
Mentions of “amazon competitor” in Logistics company filings
Making matters even worse for potential competitors, technological advancements in automation and robotics promise to reshape many consumer facing sectors. Amazon recently unveiled a cashier-free store, powered by computer sensors and machine learning, aimed at upending conventional grocery stores. Outside of a gentle attempt at fresh food delivery, supermarkets were previously an untouched market of the retail giant due to the logistical nightmare they create for distribution networks.
This makes Amazon’s recent acquisition of Whole Foods ($WFM) even scarier for players in the American grocery market. With the synergies provided through the Whole Foods acquisition, look for Amazon to continue this trend in the grocery industry. Competitors are already scared. Mentions of Amazon among grocers have again begun to climb immediately following the merger announcement.
Mentions of “amazon competitor” in Grocery company filings
E-commerce awareness has been on the rise in the grocery and food retail industry for a while now as well. Below is a chart showing all mentions of e-commerce in that sector since 2011. As Amazon has slowly driven into the market with efforts like Amazon Fresh, mentions have risen. Private companies like Instacart have had an effect here as well. Since the Whole Foods merger, mentions have shot up exponentially higher.
Mentions of “e-commerce” in Grocery/Retail company filings
Amazon’s penchant for disruption above generating a profit makes it difficult to create an accurate picture of the future. This also dampens the long-term outlook of Amazon’s victims, who span a growing set of sectors. While Amazon’s stranglehold on retail and technology doesn’t appear to be loosening, it’s only a matter of time before the online giant overturns another unsuspecting industry. Based on the influx of corporate filings mentioning Amazon, watch for a diverse group of companies to embrace technological change, or perish in Amazon’s wake.
