Is It Time to Break Up Amazon?

Is It Time to Break Up Amazon?

The main advantages of breaking up companies are two-fold 1) You create more value for each of the segments because they can grow faster and 2),customers are less confused.

Let’s look at some of the parts of Amazon and what would make sense to separate and why:

1.  Amazon Web Services (AWS).  AWS is the cloud computing segment of Amazon. (AWS) is a comprehensive, evolving cloud computing platform provided by Amazon. AWS is a mix of several businesses:  Infrastructure as a service, Platform as a service and Pre-packaged software as a service. It is now a huge business and just like eBay selling PayPal, maybe it’s time to unlock the billion in dollars of value selling AWS would bring.

AWS now has over 500,000 servers around the world, and although Amazon will not release exact figures, several Wall Street analysts estimate that AWS alone is worth over $22 Billion.

2.  Amazon book Selling Business.  Amazon got its start with books, but of course now sells thousands of different products.  Amazon now lists over 3 million book titles on its site and annual book sales (including Kindle) are probably in excess of $5 Billion –easily a large enough business to stand on its own.

3.  Amazon Private Label –  Amazon has had its own PL business for several tears now, Products include jewelry (fine & fashion), sporting goods, clothing, fashion accessories and food and new categories are being added all the time.  It is impossible to say which new products Amazon will be adding to their PL collection –but you bet there will be more to come.  Here are just a few of current Amazon PL Brands:

List of Amazon Private Label Brands
  • Arabella (lingerie)
  • Buttoned Down (men’s dress shirts)
  • Amazon Basics (Fashion and accessories)
  • Amazon Essentials (Jewelry & casual clothing)
  • Coastal Blue (women’s swimwear)
  • Ella Moon (global women’s wear)
  • Find (fashion basics)
  • Franklin & Freeman (men’s shoes)
  • Franklin Tailored (men’s suits)

4. Whole Foods and Amazon Food Products.  When you consider Prime Pantry – this is already acting like a separate division of Amazon.  Given the nature, special marketing and handling required, setting up a site such as www.AmazonFoods.com makes a lot of sense and would become a competitive destination for buyers who want home delivery.

makes a lot of sense.  Whether we independent sellers would sell under that banner is an open question.

5.  Amazon Independent 3rd-party Sellers (That’s us).  Independent 3rd-party sellers now make up almost 50% of all the sales that take place on Amazon.  One problem Amazon has is setting rules, policies and standards that make everything on Amazon look identical.  Every time they do this it males us sellers jump through unnecessary hoops.  It would make it easier on both Amazon and us sellers if they just split this business up.

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4 Comments

  1. In the second to last sentence, you have a typo! (males vs. makes)

    The major problem with Amazon as it relates to third party sellers is that there is nothing resembling a level playing field.

    Amazon knows exactly what sells, when it sells and what it sells for. Except for products sold by the manufacturer on Amazon, Amazon can buy anything for less than the reseller, undercut the reseller and still make a decent profit.

    Remember that Amazon doesn’t have to charge them the very high fees they charge the resellers.

    What they do is unreasonable and unfair Frankly, I don’t think there is anything that can be done about it, other than sell on your own storefront or Ebay.

    Their original business plan got Amazon where they are today. So sad.

  2. Mr. McGrath,

    I am just starting out to sell online and was interested in doing sales on eBay.

    I noticed that you have decided to leave eBay and it does not sound like a pleasant split.

    Could you please write a post as to why you left and would you recommend a newbie like myself to even invest any time learning and trying to make money on eBay?

    Aside: do you think that another start up can compete with eBay and Amazon?

    Thank You Sir…

  3. I agree on most of this Amazon should be broken up.

  4. If Amazon is as powerful and as strong as they are they don’t need the resellers. Perhaps it is time we indeed look at other platforms and leave Amazon to “swell” in the happy world in which they exist. Absolute power corrupts absolutely…

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