SLOWING GROWTH AT AMAZON

In recent years, Amazon's revenue has consistently risen, but signs indicate this trend may be coming to a halt. For instance, in early 2018, Amazon reported quarterly profits of $2.24 billion, a notable rise from the previous year. Yet, revenue growth has significantly decelerated—compared to Q1 2017, the increase was only 20%. This deceleration appears to be a persistent trend rather than a temporary setback.

Some argue that Amazon distinguishes itself from other large corporations and that its innovative capacity grants it an invincible edge. However, Amazon's online sales growth had started to wane even before the pandemic, decreasing from nearly 30% annually to below 20%. In the second quarter of 2021, online sales rose by just 16%, falling short of analysts' predictions.

THE STOCK MARKET'S MESSAGE

Between 2017 and the summer of 2020, Amazon's stock price saw a steady rise, peaking at $3,500. Currently, its value has plummeted to nearly $1,000 less than that peak, and it hasn't reached new all-time highs for over a year. This drop in stock price suggests that investors might be losing faith in the company's future or are concerned about the sustainability of its current growth trajectory.

While many analysts speculate that Amazon will recover from this downturn and continue to expand, others contend that its current path might lead to stagnation or further decline.

BRANDS TURNING AWAY FROM AMAZON

A significant concern for Amazon is that several major brands are beginning to abandon the platform in favor of other e-commerce options. For example, Nike has recently disclosed plans to cease selling on Amazon, terminating a distribution agreement and moving many of its online operations to Walmart. Other prominent brands like Adidas and Under Armour are rumored to be considering similar moves.

These brands feel that Amazon no longer offers the competitive advantages it once did, or that they can achieve greater profitability elsewhere. Additionally, Amazon's tendency to dominate the market can overshadow individual brands, causing them to lose their distinctiveness amidst the vast array of products available on the platform. Consequently, many brands are choosing to direct traffic to their own websites, allowing them to reap various benefits and reducing their reliance on the leading e-commerce giant.

THE RISE OF DIRECT-TO-CONSUMER SALES

The emergence of zero-distance products—goods sold directly from manufacturers to consumers without intermediaries like Amazon—could signal the beginning of Amazon's decline. While Amazon currently leads the e-commerce market for third-party sellers, the shift towards direct sales may alter that landscape.

Furthermore, even brands that utilize Amazon for sales can opt to bypass the platform entirely by leveraging Amazon Web Services (AWS), thus avoiding sharing profits with Amazon. As brands increasingly transition to direct consumer sales, the platform's necessity may diminish, potentially leading to a drop in both sales and share value.

While it's impossible to predict definitively whether Amazon is facing doom, current signs do not bode well. Only time will reveal if the company can pivot or if it is headed for a significant decline. What is clear is that Jeff Bezos' empire is no longer as invulnerable as it once appeared.

INCREASED COMPETITION IN E-COMMERCE

Competition in the e-commerce arena has intensified, with numerous platforms now boasting impressive statistics comparable to Amazon’s. Giants like Google and Facebook are also encroaching on Amazon's core business of online advertising.

Among the rising contenders is Alibaba, which has emerged as one of China's largest tech firms and a significant global player. Unlike Amazon, Alibaba's growth trajectory shows no signs of slowing. Additionally, niche platforms such as Etsy, which focuses on handmade goods from independent artisans, and ThredUP, which specializes in second-hand clothing, have successfully carved out their own market segments.

These platforms illustrate the potential for Amazon's competitors to flourish, suggesting that the e-commerce landscape is evolving.