Amazon is a giant in the e-commerce space, with billions of dollars in revenue and millions of loyal customers. But there are signs the company may be in decline, including slowing revenue growth and declining stock market shares.
Additionally, many big brands are starting to ditch Amazon in favor of other platforms.
It’s not just a myth – there are many examples of fast-growing online businesses that then collapse just as quickly, leaving investors and customers disillusioned.
The possibility that Amazon may face the same fate shouldn’t be ignored. While the company still shows strong revenue growth and customer loyalty, these gains may be unsustainable in the long run. Given its current trajectory, it seems likely that Amazon’s downfall is just around the corner.
SLOWING AMAZON’S GROWTH
In recent years, revenues have steadily increased – but there are signs that this trend may be coming to an end.
For example, in early 2018, Amazon reported quarterly profits of $2.24 billion, a significant increase over the same period last year.
However, revenue growth has slowed significantly – compared to Q1 2017, it only increased by 20%. This slowdown in growth appears to be a trend for Amazon’s business rather than a one-time blip.
Some people believe that Amazon sets itself apart from other mega-corporations and that its ability to create new things makes it immortal.
Amazon’s online sales growth had begun to slow before the outbreak, going from nearly 30% per year to less than 20%.
Amazon’s online sales increased 16% in the second quarter of 2021, below analysts’ expectations.
THE STOCK MARKET SPEAKS CLEARLY
From 2017 to the summer of 2020, Amazon’s shares rose continuously, and then reach a maximum of 3,500 dollars.
Today the value has dropped to nearly a thousand dollars below, and it has not been able to make new all-time highs for over a year now.
This decline in stock value seems to indicate that investors are no longer confident in the company’s future prospects – or perhaps they are simply concerned about the long-term sustainability of its current growth.
AND while many analysts believe that Amazon will rebound from this slump and grow, even more, others argue that its current trajectory could lead to a period of stagnation or decline.
BRANDS ABANDONING AMAZON
Perhaps one of the biggest red flags for Amazon is the fact that some major brands are starting to abandon it in favor of other e-commerce platforms.
For example, Nike recently announced that it will no longer sell its products on Amazon. The company also canceled a distribution deal and moved several of its online accounts to Walmart.
Other big brands are following suit, with Adidas and Under Armor rumored to be planning to ditch Amazonas well.
They feel that the platform does not provide the competitive advantages it used to – or perhaps there is simply more profit to be made elsewhere.
Perhaps Amazon tends to monopolize the market without giving due weight to individual brands, which in that e-commerce risk getting lost in the thousands of products that are found in that sort of online market.
They, therefore, lose their peculiarity.
They also prefer to drive traffic directly to their websites for a number of other benefits as well. Therefore it no longer becomes so essential to be present on the most famous eCommerce platform.
And here, however, for Amazon it is another hard blow.
THE CASE OF ZERO DISTANCE PRODUCTS
Some believe that the rise of zero-distance products could mark the beginning of Amazon’s decline.
These products are sold directly by the manufacturers rather than through third parties, which means they don’t need an intermediary like Amazon to reach customers.
Currently, Amazon dominates the e-commerce market for these third-party sellers, but as more and more brands move towards zero-distance products, this may change.
Moreover, even if a company uses Amazon to sell its products, it can, however, bypass the platform entirely using Amazon Web Services (AWS).
This way, they can avoid giving Amazon a portion of their profits.
In other words, as brands move away from selling on Amazon and into direct selling to consumers, the platform will become less and less essential and this could ultimately lead to a decline in both sales and the company’s share value.
While it’s impossible to say for sure whether Amazon is doomed or not, the current signs certainly don’t look good. Only time will tell if the company can turn around or is headed for a fall.
In any case, it is certain that Jeff Bezos’ giant is no longer as unassailable as it was a while ago.
Competition has increased a lot and there are now many e-commerce platforms that can boast similar numbers to Amazon’s.
What’s more, other giants like Google and Facebook are also attacking its core business: online advertising.
We’ll see what the future holds for Amazon, but for now, it seems clear that its days of domination are about to end.
OTHER E-COMMERCE PLATFORMS THAT WORK WELL
One of the best alternatives is Alibaba, which has grown to be one of China’s largest tech companies and a major player in global markets as well.
Alibaba has leveraged its massive ecosystem to attract customers and drive business sales. Unlike Amazon, its growth doesn’t seem to be slowing anytime soon.
There are also smaller e-commerce platforms that have carved out their niche in the market. For example, Etsy focuses on handmade products from independent sellers around the world, while ThredUP allows users to sell used clothing online.
These platforms have created highly successful business models by meeting the specific needs and preferences of consumers. This shows there is room in the market for Amazon’s competitors to thrive.
So here’s my analysis of Amazon’s black future.
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