Amazon (AMZN) is one of the biggest companies in the world, and its founder, Jeff Bezos, is among the richest people in the world. The company is famous for its innovation and wide-reaching appeal. Amazon is available in countries across the globe and is best known as an online retailer. This is just the tip of the iceberg of what Amazon does. Despite humble beginnings selling books out of his garage, Jeff Bezos’s Amazon has branched out into tech, cloud computing, audio, and video streaming, and much more. The article aims to look at the biggest Amazon competitors across the many fields that the company operates in.
You might be surprised to know that it’s actually it’s cloud computing business that drives more than half of the company’s operating profit, despite not being well-known among the general population who may only know Amazon as an online retail store.
Amazon’s biggest competitors are those companies that are diverse and operate in the online space. Companies that Amazon keeps an eye on are likely to be Microsoft, Apple, and Google. The company may also be wary of companies such as Walmart, Alibaba, and Rakuten. Together these 6 companies are some of Amazon’s biggest competitors, although Amazon is probably not worried about any of them, and you’ll find out why below.
What Are the Biggest Amazon Competitors?
Since Amazon’s business spans so many industries, we’ve categorized their main competitors into their respective brackets.
Amazon Competitors: Retail and eCommerce
Amazon emerged as the leading online retailer and lays claim to around half of all online sales. It’s once-competitor eBay (EBAY) is trailing behind with approximately 6.6% of all sales processed through their site. Amazon acquired Whole Foods Market in 2017, solidifying its position as the top retailer. Its biggest competitor is Walmart (WMT) who runs a successful online store alongside its significant brick and mortar portfolio. Walmart also has a global reach that rivals Amazon more than most other competitors.
Although Amazon has dwarfed most of its competition over the years, new challengers have appeared. Alibaba (BABA), a Chinese online retailer has closed the gap on Amazon through its direct to consumer business model. Alibaba provides customers the opportunity to order directly from the manufacturers, which brings their costs down. They also sell products also found on Amazon for a significant cost reduction.
Amazon Competitors: Cloud Computing
Cloud computing is a fast-growing industry as more businesses move online. Amazon Web Services is the name for the part of Amazon that operates in this arena. The benefits of cloud computing are the increased security, less need for physical infrastructure, and scalability. AWS is the most-used cloud computing solution but its competitors are close on their heels.
The competitors in this industry are two more titans of industry: Microsoft (MSFT) and Google (GOOGL). Microsoft Azure is the #2 cloud computing solution, followed closely by Google Cloud Platform, which reports an annual revenue of $11. All three companies are successful in this industry with some smaller companies involved as well.
Amazon Competitors: Streaming
Amazon competes with multiple different streaming companies for a piece of the market. They hold both a video streaming service and two music streaming services. The way that Amazon has designed its Prime Video service means it doesn’t need to compete with Netflix (NFLX) head-on. Netflix is the leading streaming service around the world, but people might opt to have a Prime Video account as well. Prime Video is part of Amazon Prime, a package of benefits that lets customers access free delivery, the Amazon video library, 2 million songs, ebooks, photo storage, and much more.
Amazon invests a lot less money into original programming compared to Netflix. As such, Prime likely does not see itself as competing with any other video streaming service. Alongside its offer of 2 million free songs, the company launched a Spotify (SPOT) competitor known as Amazon Music Unlimited. This service directly competes for the customer share in the music streaming arena. Prime subscribers get Music Unlimited at a discounted rate, making it the most competitive service on the market. However, its market share is smaller than that of both Spotify and Apple Music.
Amazon Competitors: Technology
Amazon also invests heavily in new technology and emerging markets. They have brought out their own line of e-readers to compete against bookstores like Barnes and Noble. Their direct competitor for e-readers is the Rakuten (RKUNY) owned Kobo reader, although Kindle sales far outstretch that of the Kobo.
Amazon brought out its own personal assistant called Alexa that competes with Apple’s (AAPL) Siri, Microsoft’s Cortana, and Google Assistant. Although these voice assistants don’t make money, the voice assistant products, like the Echo Dot, do. Amazon has a range of products under its Amazon Echo brand that uses Alexa technology. Echo is Amazon’s foray into the internet of things, or technology connected to the internet. Its competitors in this arena are Google with Google Home and Sonos (SONO).
The company also developed its own tablets called Amazon Fire to compete with the market dominator Apple. While the iPad has the highest market share in the industry, there are other competitors too. Apple and the iPad are responsible for over 50% of all tablets with Samsung (SSNLF) taking around 25%. Amazon trails behind with their Fire tablets accounting for only around 5% of the market. This hasn’t proven to be as successful as their e-reader business.
The Future of Amazon
Amazon is an aggressive company that has its sights on entering new markets. With its acquisition of Whole Foods, Amazon began competing in the supermarket arena. The company began opening its own cashier-free convenience stores called Amazon Go, which will see it compete with stores like 7-Eleven. This is still a developing part of the business, but its threat to brick-and-mortar is obvious.
The biggest area Amazon is looking to enter is healthcare. The company launched a nonprofit with the aim of slowing down the growth of healthcare costs. Amazon teamed up with Berkshire Hathaway and JPMorgan Chase and will directly compete with the wider health insurance industry. The company also purchased the online pharmacy Pillpack for $1 billion, now making Amazon a competitor in the $3 trillion healthcare industry.
Amazon is a hugely successful company that dominates most of the industries it operates in. While some competitors outpace it, Amazon’s unique business model means it can still generate profit. The company is a disruptor to the old ways, so its foray into healthcare can shake things up. Amazon’s growth shows no signs of slowing down . . . this is one hungry company.