Survival of the fittest: Amazon vs 15 companies

Amazon’s (AMZN) 36-hour Prime Day sales this week has turned the company into a cash cow as the stock is taking the ladder to the sky. Along with this, CEO Jeff Bezos was declared the richest man in the world on Monday. All these positive aspects have made Amazon to establish itself in the e-commerce space and have unknowingly led to the perishing of 15 companies across various domains. These companies are struggling hard to achieve growth in this quarter.

United Parcel Service (UPS) and FedEx (FDX) have been leading the delivery service industry for quite some time. But Amazon launched a local delivery partner program whereby it will help in setting up delivery business. This has made the e-commerce giant compete directly with UPS and FedEx. Also, after Amazon is fully into delivery business, UPS and FedEx are expected to face a decline or stop in the delivery packages coming from Amazon.

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Walgreens Boots Alliance (WBA), CVS Health (CVS), and Ride-Aid (RAD) have started taking the heat from Amazon’s venture into the healthcare space. During the end of June, Amazon has signed a pact to swallow online pharmacy PillPack and trying to disrupt the traditional distribution model. With both the online and the brick-and-mortar stores on its coats, Amazon is expected to give a tough fight for drugstore companies. Market analysts believe that drugstores are likely to face a decline in the upcoming quarters.

Related: Analysis: The ripple effect of Amazon popping up PillPack

Grocery and department stores, including Walmart (WMT), Kroger (KR), Target (TGT), Costco (COST), Macy’s (M), Nordstrom (JWN), and Kohl’s (KSS), are already facing intense competition from the online retail firm which purchased Whole Foods for $13.7 billion last year. Experts believe that Amazon is making consumers to enjoy shopping of products without leaving their house and get it delivered at the doorstep. The acquisition has hurt not just the sales of these companies, but also their stock movement.

Consumers shopping for sports shoes and apparel used to visit a Foot Locker (FL) store for fulfilling their needs but Amazon transformed that too. Since the first quarter of 2017, Foot Locker’s stock turned into negative territory after its earnings missed Street’s expectations. Nike’s (NKE) stealing of consumers from Foot Locker has been cited as the reason behind the plunge. Amazon has made its treasures full by keeping the Nike pact on its hands. After this, Foot Locker had no other option but to close down its stores. In May 2018, the company said it intended to close 110 stores this year.

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Meal kits are now made available in supermarkets and drugstores after remaining in the shelves of grocery stores. Amazon’s purchase of Whole Foods has inverted the meal kit delivery industry completely. Blue Apron (APRN), which delivers original recipes and fresh ingredients for making home cooking accessible, has been exploring other options after its IPO turned to the biggest flop of 2017. Blue Apron stock has been under-grounded since its IPO and Amazon’s intention to enter ready-to-eat business made it impossible for the stock to turn higher.

Barnes & Noble (BKS) has been the first to get impacted by Amazon, which started as an online bookstore in 1995. Along with the Kindle device, books sales have risen considerably for Amazon. For the last several years, Barnes & Noble has witnessed several store closures, failure of Nook e-reader, declining revenues, and job cuts. For the current year, Barnes & Noble expects comparable store sales to decline in the mid-single digits.

At the moment, Amazon has been the undisputed champion in the e-commerce industry. Market analysts believe that Amazon has a solid background to venture into any industry and establish itself in it. Meanwhile, President Donald Trump has tweeted that Amazon is putting thousands of retailers out of business.

I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!

— Donald J. Trump (@realDonaldTrump) March 29, 2018

In reply, during the mid-afternoon in the second Prime Day, Amazon said small and medium-sized businesses worldwide have exceeded more than $1 billion in sales since July 16.

GBH analyst Daniel Ives believes that increases in Prime membership and cloud services would remain the key drivers of the company. In April this year, the company crossed the 100 million user mark for its Prime program and Amazon is expected to improve the top line with the growth in Prime user base. It is still not known how many companies are going to face the Amazon effect and perish in the future.