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Bloomberg has a story about how it appears that Amazon’s focus moving into the future is “the turf of other tech companies,” and not the turf of traditional retailers.

It makes sense, Bloomberg writes, “that when Amazon thinks about where to allocate its dollars to grow, it would focus more on its under-penetrated, higher-margin digital-services business lines rather than its more-mature, lower-margin e-commerce operations.”

The story suggests that “perhaps Amazon’s dominance of all e-commerce and physical retail isn’t as inevitable as some think, and there comes a point where shipping low-cost goods isn’t economical, particularly for middle-class consumers for whom price can matter more than convenience. Barring big acquisitions like Whole Foods, maybe the competitive position of Walmart, grocery stores, and 21st-century shopping malls and mixed-use developments is pretty good.

“On the other hand, it’s tech companies that have to watch their backs when it comes to Amazon. If Amazon grows its advertising business from $10 billion to $50 billion over the next several years, it’s likely that some of that growth will come at the expense of the current digital advertising duopoly of Google and Facebook. And the continued rapid growth of Amazon Web Services is probably bad news for other large companies in the enterprise technology market.

“This may turn out to be a welcome development for Main Street, USA, which may no longer bear the brunt of job losses as Amazon shifts its growth focus elsewhere. But for tech companies and local economies in the San Francisco Bay Area, the Amazon disruption may be just beginning.”
KC's View:
I think it would be an enormous mistake for retailers to ever think that Amazon ever is going to step away from retail in any sort of meaningful way. Its business model may evolve, moving toward a greater focus on its Marketplace, but that day-to-day retail connection to consumers is a critical part of Amazon’s ecosystem.

But Amazon is capable of walking and chewing gum at the same time … while simultaneously doing complicated mathematical computations, calculating space flight investments, making journalism profitable, and doing about a thousand other things. Including, as it happens, investing in the film business - Amazon went to the Sundance Film Festival and spent an unprecedented $45 million to acquire distribution rights for a number of films that it obviously hopes will continue to drive people to become Prime members.

Amazon has lots of dollars and isn’t afraid to use them.