We're in the business of knowing Amazon. With the world’s most comprehensive digital retail performance tools and intelligence at our disposal, understanding the past, present and future of ecommerce is one of our most important assets.

Now in the first days of the new year, we can't help but look ahead. And we must admit (whether it fills you with hope or with dread) that Amazon will be a big part of all of our lives in 2019. The question is: what does the retail and technology juggernaut have planned? What has Amazon been up to at the turn of the year and how will those plans come to fruition in 2019 and beyond?

Here at Edge, predicting Amazon's next moves is a big part of our job. But the complex and subtle forces applied by competing channels, supply chains, regulations and consumer interests – each of these factors subject to rapid and surprising changes – makes prediction a broad and long-term game. So to inform brand manufacturers and other stakeholders, we're not going to limit ourselves to Amazon's short term goals. Instead, we're going to break our predictions out by distance: what's a hand's breadth away, what's 10k feet away and what's 40k feet away.

 

Part 3 – The Long Term

We've already treated you to our short term and medium term predictions, and now we're going to go out on a limb and make some big prediction about what's waiting for us in the 2020s. These are unlikely to have an imminent impact on brands' bottom lines, but may be worth keeping in mind as distinct possibilities in the coming years.

1. Monetizing the Last Mile

There's no doubt in our mind that Amazon will monetize its supply chain within the next five years.

We’ve already predicted that one of the retailer's next acquisitions is likely to be a logistics company, but even if that proves false we still expect them to begin using solely their own last mile capabilities in all metro areas in the US within the next few years. In light of the rising costs of third-party delivery, Amazon will keep building out internal distribution capabilities, from delivery vans to cargo jets to drones (maybe).

Once Amazon's last mile capabilities are fully established, they will not shy away from competing for business with legacy distribution players. Much like how the AWS infrastructure was originally built to support Amazon's digital ecosystem and later monetized as a cloud computing platform, Amazon's physical infrastructure, built to support its supply chain and fulfillment, will eventually be sold to brands and retailers as a logistics solution.

Brand implications: The more fulfillment moves in-house, the more value Amazon will place on products that are 'Prime Pickable.' Brands should use location based analytics to ensure their products are moving though the supply chain to the end consumer as efficiently as possible – more efficiency means less cost to both Amazon and their suppliers.

2. 'Go' Anywhere

One of Amazon's most impressive inventions is the technology underlying its Amazon Go stores. With a combination of, according to Amazon, 'computer vision, deep learning algorithms and sensor fusion,' this technology is able to automate the customer's entire checkout process – all they have to do is walk in to the store, pick up what they want to buy and walk out. The scanning of and payment for any items purchased is all handled behind the scenes, invisible to the shopper.

There are nine Amazon Go stores so far and Amazon has suggested they'd like to have 3,000 open by 2021. Research suggests that this would be a wise move: in their short lifespan, these 9 Go stores have generated 50% more revenue than the average convenience store of the same size. Taking the convenience store model and pumping in even more convenience has clearly paid off, but that's not the only advantage of Amazon's impressive 'just walk out' technology.

Arguably, revenue is secondary to data collection. The real competitive advantage of these stores is their ability to collect unprecedented amounts of data about shopping behavior. From how long it takes you to decide what to buy, to which products caught your eye as you passed them, to what path you take through the store, Go data could revolutionize store design.

With this in mind, we predict that Amazon will begin to white label the Go technology to other retailers, especially in international markets where they are unlikely to open their own stores. Amazon may charge an upfront fixed cost for the infrastructure or may collect a share of sales, but the revenue stream will not be the first priority. The main aspiration will be to use these third party retailers to gather even more behavioral data from shoppers around the world.

Brand implications: The data generated by Amazon Go stores could revolutionize in-store marketing, uncovering new insights about how and why shoppers notice (and purchase) the items they do – and forever changing the way brands market their products.

3. Disrupting Air Travel

Among those 3,000 Amazon Go stores planned for between now and 2021, several are set to appear in the top US airports. Hundreds of millions of people passed through the top 12 airports alone last year, so if each of those airports has a checkout-free Amazon Go store in it, that would bring the retailer a level of ubiquity that even now it can't claim. Additionally, Amazon Air continues to grow. Amazon has operated its own fleet of cargo planes since 2016 and recently leased 10 new aircraft which will bring their fleet size to 50 within the next two years.

But we believe that Amazon is planning a more direct disruption of air travel. In March, Morgan Stanley predicted that Amazon would reenter the travel industry after the shuttering of Amazon Destinations in 2015. It's likely that the retailer will introduce an airline travel site modeled after the .com marketplace, if not integrated directly with Amazon's main property, with the next two or three years.

Brand implications: Amazon's disruption of air travel will attract more business and corporate customers to the platform. B2B brands should stop shrugging off Amazon as a consumer-focused marketplace and start reevaluating the role it can play in helping them expand their business audience.

4. First Sweden, then the World

Our final prediction is a safe one. Within the next five years, Amazon will launch in new markets around the world. After a three year gap, Amazon began introducing new localized sites in 2017, starting with Singapore in July followed by Australia in November. In September 2018, they opened their latest localized site in Turkey.

Southeast Asia is still likely to be a focus going forward, but the top contender for the next localized site is Sweden. Rumors early last year predicted a Q2 2018 launch, which obviously were not accurate, but Amazon is currently on a hiring spree in Stockholm, so we're confident that Amazon Sweden will be in operation before the end of the year.

Brand implications: Every time Amazon opens a new localized site, it opens up a whole new audience. International expansion could never be easier, so brands that have the resources to do so should seriously consider following the ecommerce giant into these new markets.

This is the last in a three-part series on Amazon's plans for 2019 and beyond. Click here to read Part One – The Short Term and Part Two – The Medium Term. To learn how your brand stacks up to the competition on Amazon and what you can do to refine your strategy, boost performance and drive sales, visit www.ascentialedge.com.

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