Amazonโ€™s Most Notable Acquisitions That Made It a Giant Global Conglomerate

Kinnary Nensee Kinnary Nensee
Dec 1, 2022 4 min read
Amazonโ€™s Most Notable Acquisitions That Made It a  Giant Global Conglomerate

Amazon is one of the most influential economic and cultural forces in the world, as well as one of the most valuable brands. It focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. Beyond that, it has permeated our lives deeply, especially in the last couple of years. It is the American multinational technology company, Amazon.com, Inc. Amazon founder Jeff Bezos is, currently, one of the most recognizable names on the planet.

He founded the company on 5th July 1994 from his garage in Bellevue, Washington. It was, initially, an online marketplace for books. Amazon quickly expanded into a multitude of product categories earning the moniker โ€˜The Everything Store. Initially named Cadabra, Inc. Bezos renamed it to Amazon as he wanted the company to be as โ€˜exotic and differentโ€™. In his initial days, Bezos reportedly told a journalist - "There's nothing about our model that can't be copied over time. But you know, McDonald's got copied. And it's still built a huge, multibillion-dollar company. A lot of it comes down to the brand name. Brand names are more important online than they are in the physical world.โ€

The Journey
Amazon Acquisitions
Reasons for Acquisitions

The Journey

As a new start-up Amazon only sold books online because of its worldwide demand, low unit price, and large number of titles available in print. Within the first couple of months, the business grew to sell its books to all 50 states and over 45 countries. In October 1995, the company announced its intention to issue an Initial Public Offering (IPO). Within the next three years, Amazon was sued first by Barnes & Nobles in 1997 for claiming itself as the worldโ€™s largest bookstore and then by Walmart in 1998 for allegedly stealing trade secrets by hiring Walmart executives. Eventually, both lawsuits were settled out of court and Amazon implemented stricter internal policies and restrictions.

Initially, Amazonโ€™s growth and profit were nominal leaving stockholders wary of investing or even the companyโ€™s survival prospects. When the dot-com bubble burst in 2001, Amazon not only survived the bloodbath but went on to post a modest profit in the fourth quarter of that year. This was a boost of confidence that eased the investors. From that point on, the unconventional business model of Jeff Bezos has not stopped growing till today. In 2020, Amazon generated sales worth USD 386 billion which were 38% higher than its sales in 2019 in the US alone. ย Amazon's Marketplace sales represent an increasingly dominant portion of its e-commerce business.

Amazon Acquisitions

Within the time span of the last two decades, the tech behemoth has acquired or invested in at least 128 companies across the world. These companies belong to a wide plethora of industries from healthcare to entertainment, helping diversify their core revenue. It has also provided Amazon with inroads into better understanding their customer's likes, dislikes, and preferences. The top ten Amazon Acquisitions by value are โ€“

Company Name Acquired On Acquired For
Whole Foods Market Jun 16, 2017 $13.7 billion
Metro-Goldwyn-Mayer May 26, 2021 $8.5 billion
Zoox Jun 26, 2020 $1.2 billion
Zappos Jul 22, 2009 $1.2 billion
Ring Feb 27, 2018 $970 million
PillPack Jun 28, 2018 $839 million
Twitch Aug 25, 2014 $775 million
Kiva Systems Mar 19, 2012 $753 million
Souq Mar 27, 2017 $580 million
Quidsi Nov 8, 2010 $545 million

Other notable Amazon acquisitions since 1998 include IMDb, Alexa Internet, Twitch Interactive, etc. Some of the companies that Amazon has acquired over the years are now defunct.

Very recently, Amazon acquired iRobot for approximately USD 1.7 billion. iRobot is the company that makes Roomba vacuums. With this acquisition, Amazon has increased its footprint in individual households and deepened its penetration in the market.

Reasons for Acquisitions

Over the years, Amazon has grown from strength to strength and now is a global presence with deep market penetration. Its popularity has grown during the pandemic and the name has become synonymous with retail shopping.

There are various reasons why a company like Amazon acquires or invests in different companies.

Economies of Scale

โ€˜Bigger is better is the ideology behind an acquisition for economies of scale. Larger companies enjoy better cost savings and competitive advantages than their smaller counterparts.

Market Share

This is the most common motive for an acquisition. Apart from reducing the competition, it also gives the company an immediate increase in market share and also a boost to its sales.

Acquire New Expertise / Technology

Over time, newer technologies get introduced introducing newer ways to work. Therefore, it becomes necessary for companies to also evolve and embrace the changes. One way to do it is to acquire companies that provide this technology and expertise.

Similar Synergies โ€“ Creating Value

Many times, the logic of acquiring a new company makes more sense than the numbers. This is clearly visible in Amazon acquiring Whole foods and trying to bring the power of ecommerce to traditional food retail.

Geographical Diversification

This is a huge value driver in acquisitions. Acquisitions are the much-preferred way to expand geographically as the company can acquire a ready cash-generating entity with a ready business platform. It is also financially beneficial to the higher costs of setting up a new operation from scratch.

Vertical Integration

This type of acquisition creates a new addition to the value chain of a company. It reduces dependency on third party suppliers and vendors.

Conclusion

Over the years, Amazon has successfully integrated various products into its portfolio by acquiring several companies for one or more reasons as mentioned above. Amazonโ€™s sprawling eCommerce empire is a result of far-sightedness, a futuristic approach, and an adaptable business model.

With the world shifting to the online retail platform, Amazon shows no signs of slowing down. It has, in fact, expanded its operations and offers a wide network of services.

FAQs

What is Amazon's largest acquisition?

The acquisition of Whole Foods Market by Amazon in 2017 is the biggest company take-over by Bezos's corporation to date, with a whopping tag price of 13.7 billion U.S. dollars.

Among its 12 subsidiaries, Amazon has AbeBooks.com, Audible, CamiXology, Fabric.com, IMDb, PillPack, Shopbop, Souq.com, Twitch, Whole Foods Market, Woot!, and Zappos.

Did Amazon have any mergers?

Amazon has made 98 acquisitions and 95 investments. The company has spent over $ 46.19B on the acquisitions.

Who is Amazon's biggest competition?

Its biggest retail competitors are Alibaba, eBay, Walmart, JD, Flipkart, and Rakuten.

What is Amazon's net worth in 2022?

Amazon's net worth as of November 25, 2022, is $952.94B.

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