Amazon leads $575M investment in Deliveroo

Amazon wants to own the “channel” in more ways than one. With its core retail business settling down, it’s pushing into new investments that build on its pillars of E-commerce, Cloud and smart home technologies.

Amazon has been investing heavily over the past year in areas such as transportation and logistics. Especially logistics that I think many analysts believe one day Amazon will dominate.

Amazon is taking a slice of Europe’s food delivery market after the U.S. e-commerce giant led a $575 million investment in Deliveroo. This could set it up nicely to acquire Deliveroo one day, meaning it will likely disrupt part of Uber’s business. Uber thought it could be like Amazon, but while the two both deal with slim margin industries like E-commerce and Transportation, that’s pretty much where the similarities end.

We know that in the age of automation, technology empowers a robotic logistics and transportation system governed by machine intelligence. There’s no way around that, the AI of the smart city especially means that.

Amazon even just revealed it will expand its Delivery Service Partner program in the U.S., paying eligible employees $10,000 to start their own delivery businesses.

As it begins to automate the E-commerce warehouse further with packing robots, for instance, some of those employees who will be let go could get into delivery, at least until that and logistics is more automated by drones, robots and AI as well, roughly around 2030.

Amazon wants to own the “channel” in more ways than one. With its core retail business settling down, it’s pushing into new investments that build on its pillars of E-commerce, Cloud and smart home technologies.

The Next Stage of Amazon

Amazon seems to be preparing for the future of its business as revenue growth is slowing.

What does this mean? It means:

  • Advertising
  • Healthcare and healthcare technology
  • Owning more of the logistics market
  • Upgrading its AI-consumer relationship with Alexa
  • Gaining traction in grocery and investing in self-driving truck technology

I agree with CNBC, essentially Amazon has been gradually racking up investments to position itself for the future as its core business slows. Amazon is diversifying its business model and will continue to do so in the 2020s, where its prime as a business will likely be in the 2035–2045 period.

Within the past year alone, Amazon has announced more than half a dozen major investments representing billions of dollars. The investments primarily focus on new delivery businesses and logistics, but also include other areas, such as its investment in a new headquarters.

Amazon is positioning itself also to grow up in advertising which will be a great cash cow necessary for its expansion into Healthcare services, to help an aging population with their healthcare needs.

However, as impressive as Amazon’s foray into healthcare, advertising and AI seem to be, they are the likely candidate to evolve into the next logistics monopoly.

Amazon’s growth has been largely buoyed by its cloud business, Amazon Web Services, which has become a major profit driver for the company. However, as it gains in advertising stealing search share especially from Google, it will disrupt the advertising duopoly. At this point it could acquire Snapchat or Pinterest, or likely both.

While Facebook is trying to innovate in a pivot to privacy and Alphabet has its “other bets” Amazon’s R&D is at a whole other scale. It’s becoming a bit like Softbank’s Vision Fund or what Tencent & Alibaba have done in China.

In the logistics chain, Amazon has made several moves recently that bode well for its expansion in these multiple areas. For instance, Amazon took a major step into the medicinal space in June 2018 when it announced it was buying online pharmacy PillPack in what was later revealed to be a $753 million purchase.

By owning the smart home Amazon has cornered the essential segment of the market. Because Google is primarily a data company its efforts in the smart home are mostly just about information, not products or the go-to channel. Unless you consider YouTube a great play here?

Amazon getting the Pentagon’s $10 Billion contract is likely a reason for its choice of Northern Virginia. Amazon pledged a $5 billion economic investment for its second headquarters, which it ultimately split between two locations, in Northern Virginia and New York. It backed out of New York due to resistance there however settled on a new Operations Center of Excellence in Nashville, where it pledged a $230 million investment.

Amazon hasn’t even reached its prime as a company, even as Facebook and Google appear to flounder, and Apple and Facebook especially need to pivot. Amazon can also continue to disrupt even more industries as it is the most impressive Cloud and AI hybrid company right now in the world. This is not to mention Amazon’s foray into entertainment, streaming and increasing the value of its ecosystem.

Aurora — Yes Amazon is also into Autonomous Driving Tech

Amazon invested an undisclosed amount in self-driving car start-up Aurora earlier this year. Sequoia Capital and Shell’s investment arm were also among the investors in the $530 million funding round announced in February. This is a major move for Amazon that signals it’s ready to gear up to dominate the future of logistics.

While we think of flashy names like Waymo One, Tesla, Baidu and others, there’s still incredible self-driving car startups and partnerships occurring. As strong as Amazon could be in advertising, it could become a significant player in logistics which arguably adds even more value to its core businesses. This is because Amazon’s rivals like Alibaba, Walmart, and others are really investing in a brick-and-mortar presence.

Although Amazon has not publicly disclosed plans for the investment, it’s not hard to imagine the company’s interest in self-driving technology. Amazon spent more than $27 billion on delivery costs in 2018. If robot cars and robot delivery is the future, you can be sure Amazon will be a big player in that future. Logistics of everything is actually the key in the future of an internet of things 4th industrial revolution of 5G convenience for consumers.

Logistics, like the Cloud, connects the dots. Amazon doesn’t just want to dominate, it wants to own the foundations of the age of automation. While Walmart is investing to become a technology company, and Alibaba is following Amazon into the Cloud, smart home and entertainment, Amazon needs to disrupt companies like Uber, Meituan and others in logistics eventually to realize its full potential.

Amazon needs to beat out Google and Huawei in AI to reach its full potential. Many things need to happen for Amazon to rule logistics and the machine intelligence era of the future of convenience, but it already has a head start in most key fields. While Baidu and Google take a tumble, other companies will take their place. We won’t be searching on a personal computer like we do today, forever.

Amazon’s logistics play may also be the key part of making its E-commerce and retail venture more profitable as it continues to acquire more paying prime members. AWS could be spun off as a separate company it’s so advanced. But the online to offline process is key to Amazon’s future.

Published at Mon, 20 May 2019 15:59:15 +0000