Why does JEFF BEZOS see the demise of AMAZON as a real possibility?
It is hard to imagine that a company like an amazon could one day cease to exist as it is considered. One of the most valuable brands in the world. However, Jeff Bezos has referenced the subject at a few events. In gatherings and meetings. He has said that organizations have a short life and amazons will be upset one day and when asked, on the off chance that he was stressed over it, he answered. JEFF BEZOS
I’m not stressed because I know it’s unavoidable. Organizations travel every which way, and the most brilliant and generally significant of every period are no more. Assuming you take a gander at the large organizations, their life expectancy is generally more than 30 years, not north of 100. more than 100.
He likewise said his occupation was to defer amazon’s destruction date as far as might be feasible. Amazon turned 27 recently, so it is approaching that 30-year benchmark. So the questions are: how true could Jeff Bezos’s vision of his company’s demise be why amazon already failed in china and India is barely surviving, and why do companies last less than in the past, according to a 2017 study by the consulting firm Credit Suisse, the average life of companies in the standard and poor’s 500 indexes was 61 years in 1958 in 2012, the average lifespan was only 18 years, meaning that companies last on average 43 years less than in 1958.
this does not necessarily mean that companies disappear because they go bankrupt. It is also because they merge or are acquired by others. So jeff bezos’s prediction for amazon’s extinction is not as unreasonable as it seems. In fact, despite more than 20 years of experience and steady revenue, growth amazon failed in china, amazon entered the Chinese market in 2004 by acquiring joyo.com for 75 million dollars a popular online bookseller years later in 2001 it became amazon china. JEFF BEZOS
However, 15 years later, Amazon announced its exit from the Chinese market and closed all its operations, keeping only amazon web services kindle ebooks, and some import operations. But how did one of the world’s most valuable brands fail to succeed in the world’s most populous country, despite its early entry into the market, amazon found it increasingly difficult to compete with china’s e-commerce giants rivals such as jd.com and Alibaba? JEFF BEZOS
launched aggressive price wars and created shopping festivals such as the successful singles day, which is sort of like a Chinese black Friday. Another difficulty amazon had was that its general managers were not always Chinese and had never lived in china, which put amazon at a disadvantage compared to its rivals, who did understand consumer behavior extensively. JEFF BEZOS
This lack of knowledge of Chinese customers can be seen, for example, on amazon’s website, because it wanted to keep its image with a simple and minimalist design, while Alibaba’s and JD. JEFF BEZOS
om’s websites are very colorful and with many advertisements that are more targeted to the Chinese consumer. It also had a wider range and variety of products and faster delivery than amazon china. The Chinese consumer was already used to same-day delivery, while amazon was losing ground with two-day delivery. A decade ago, amazon had a 15 market share. JEFF BEZOS
It had a reputation in china as a website that offered original products and therefore enjoyed the trust of Chinese consumers. However, as competitors were able to eliminate much of the problem of counterfeit goods, amazon’s initial advantage disappeared in 2018 a year before it had closed operations in china, amazon had a market share of just 0.6, while Alibaba had 61 and jd.com had 24. JEFF BEZOS
On the other hand, in India, amazon is having difficulties not saying that it could have the same experience as in china. JEFF BEZOS
Despite a 6.5 billion dollar investment in just over seven years of operations in India, amazon has a complicated outlook in this Asian country. India was closed to multinationals and foreign investment from its independence in 1947 until 1991 and despite the liberalization of its economy. JEFF BEZOS
there is still a tendency to regulate foreign investment in 2020, India started applying a two percent tax on all foreign billings for digital services, provided in the country, another drawback is that amazon prime, is in criminal proceedings, because political leaders found a mini-series called tandav offensive to India. Another mini-series called Mirzapur also triggered another complaint against the company for hurting religious sentiments and defaming Hindus. JEFF BEZOS
These regulations and growing opposition to the brand have hampered amazon’s operations in India, but an even bigger problem is that e-commerce in this country is still very small. It accounts for only four percent of the country’s total retail sales in japan, for example, e-commerce accounts for 11 and in china 34 in India, most people are used to buying with cash in general.
Digital payments are not very popular in the country which logically, are fundamental for e-commerce. In addition, it is estimated that 90 of retail sales in India are made in small local family-run stores called Kirana, which have millions of loyal customers. JEFF BEZOS
Here they can buy everything from rice and lentils to brooms and shaving creams. It should be noted that, despite its investments and seven years of operation, Amazon has yet to make a profit in India. So if it wants to try to change this situation, local stores can be very valuable in this goal. JEFF BEZOS
One thing that Kirana stores have that multinationals like amazon, do not do is that they have a wide distribution network throughout the country, so they can serve as distribution, centers or as amazon’s wholesale customers. Although this is not an easy path. JEFF BEZOS
because of the rejection of the multinationals by local businesses and the consequent tendency of the government to protect them from foreign investment, the cases of china and India validate in some way Jeff Bezos’s vision of the end of amazon and that, despite its abundant resources, it does not always obtain the desired results either because of its own mistakes, local regulations, better performance of rivals or lack of knowledge in the local market. JEFF BEZOS
The principle that a company is too big to fail, which seems to protect large companies, because if it is allowed to fail, it represents a danger to the economy, does not translate into absolute protection. In any case, the large size of a company could be a disadvantage because it reaches a point of such complexity that it becomes more vulnerable as it needs more and more energy simply to keep running and ends up spending more time managing itself than focusing on customers. JEFF BEZOS
As companies age, they accumulate rules and systems that can make them less agile and a change in their processes can become more costly. For example, Amazon in china spent billions of dollars to open 15 distribution, centers controlling much of its inventory and building its infrastructure. JEFF BEZOS
To maintain most of its processes, after all, this idea had been successful in other countries, but while it was applied in china, this system, rules, and processes had been successful in other countries. Alibaba its biggest competitor was gaining more market share by making alliances with small local sellers to offer lower prices. JEFF BEZOS
The point is that their bigness and rules did not do much good in china. Another point is that amazon has not been judged by its profitability, but by its revenue, that is, investors who capitalize on the company do so based on its revenue growth, in the hope that profitability will come later. JEFF BEZOS
For the time being, investors have relied on that view, which is why it became the world’s most valuable brand in mid-2021. But as Amazon surpasses a whopping 200 billion dollars in revenue, it becomes increasingly difficult to find new revenue streams that will make a big impact.
On the other hand, the Chinese and Indian markets together represent 35 percent of the world’s total and considering that amazon no longer operates in china and that it has not made a profit in India. Despite substantial, investments means that it is losing access to almost 2.7 billion people, which translates into a much smaller market and fewer possible sources of income, even if it can continue to grow, not only amazon but any technological giant does not have a secure future.
There will always be the risk of being overshadowed by a young company by a change in the regulation of a country by new technology or by a change in consumer behavior.