Amazon boss set to become world’s richest man
Amazon’s bid to buy Whole Foods supermarkets has boosted the company’s value — and that of its boss Jeff Bezos. The acquisition will make Amazon more powerful than ever. Is this good or bad?
Not all Amazon’s ventures have taken off. But if early indications are reliable, its latest move is a masterstroke.
On Friday the company announced that it is buying Whole Foods, the US supermarket chain, for $13.7 billion. This is Amazon’s biggest purchase so far. Its stock instantly skyrocketed, breaking all laws of business. The net worth of its boss Jeff Bezos also jumped, bringing him within touching distance of the world’s richest man, Bill Gates.
The company’s move into physical stores adds territory to Bezos’s rapidly expanding business empire. He already owns The Washington Post newspaper and space travel firm Blue Origin. At the heart of it all is Amazon, one of the world’s largest retailers.
Bezos is known for his ambition: Amazon’s nickname is “The Everything Store”. His management style is built on a few strong (and sometimes counter-intuitive) principles. In a recent letter to shareholders, he outlined the key tenets of the “Bezos way”:
“True customer obsession”: Use imagination and intuition to come up with appealing products, including ones customers never knew they wanted.
“Resist proxies”: Make it clear which employee is responsible for what. Do not pass the buck.
“Embrace external trends”: Keep on top of industrial and technological developments, such as artificial intelligence.
“High-velocity decision making”: Don’t hesitate too much, and take risks — many decisions are reversible if they fail. As a manager, be willing to go with other people’s ideas even if you disagree with them.
Clearly, this approach is working. Amazon has enjoyed constant growth since its birth in 1994. As well as retail, it publishes books, finances films, designs clothing, rents out computing power, and more. Some predict that it will be the world’s first trillion-dollar company.
Meanwhile, as it grows, its competitors shrink: on Friday, supermarket giant Walmart’s stock fell by 5%. Amazon has a reputation for putting companies out of business. Its shareholders are happy. But should we be?
Of course, say some. A business this big brings us all kinds of advantages. Prices stay low. Things become convenient — imagine simply ordering all your groceries through your Amazon Prime account. And the company can afford to experiment and come up with interesting new products, as the “Bezos way” states. We win.
As consumers, maybe, reply others. But a company this powerful is bad news for society at large. It stifles start-ups. It collects a scary amount of data on our personal habits. As other businesses die out, it could start increasing its prices. Our economic system is based on competition. No one company should be allowed to become “The Everything Store”.
- Do you shop regularly on Amazon? Why (not)?
- Is Amazon’s planned purchase of Whole Foods good news?
- Read Jeff Bezos’s tweet in Become An Expert (and some of the responses, for inspiration). Then write him a letter outlining how you think his money should be spent.
- Class debate: “This house believes that ‘The Everything Store’ is a dangerous idea.”
Some People Say...
“Life’s too short to hang out with people who aren’t resourceful.”— Jeff Bezos
What do you think?
Q & A
- What do we know?
- Whole Foods is an upmarket chain specialising in organic groceries. It has 431 stores across the USA, mostly in affluent areas (where there happen to be more Amazon customers), as well as nine in the UK. Amazon’s acquisition is its first major investment in “bricks-and-mortar” (physical) stores. The deal is expected to go through later this year.
- What do we not know?
- Exactly what Amazon plans to do with the stores. It already has an online grocery delivery service, AmazonFresh, which hasn’t really taken off yet. This acquisition could change that. It could improve Amazon’s delivery system in general: as well as a grocery business, the company will be acquiring several new properties, which it could use to store products and launch its shipment drones.
- Taken off
- For instance, the company’s Fire Phone smartphone just did not sell — even when it was priced at $0.99.
- Breaking all laws
- Normally, when a company announces an acquisition, its share price falls. There are various reasons for this, such as the high cost of acquisition and the uncertainty it creates.
- Bill Gates
- The computer entrepreneur and Microsoft cofounder is valued at $89.7 billion by Bloomberg. Bezos comes in at $84.6 billion.
- Never knew they wanted
- Bezos gives Amazon Prime as an example.
- Artificial intelligence
- AI helps order search rankings and personalise recommendations. It powers Alexa, Amazon’s personal assistant. It is used in the company’s delivery drones.
- Trillion-dollar company
- Investors and analysts love to predict which company will reach this milestone first. Apple, which is currently valued at around $730 billion, is seen as the favourite.
- With its thousands of stores across the USA, the world’s biggest retailer has long dominated the discount market. Amazon has recently been targeting its customer base by offering discounts to people on welfare.