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FOREIGN REPORTFOREIGN REPORT
AmazonizationWho Is Next in Line?
Kim Yeojeong  |  letrajet18@korea.ac.kr
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승인 2018.10.04  00:30:54
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Amazon does and sells everything. It is almost safe to say that the world’s largest electronic commerce (e-commerce) retailer has a hold on nearly every facet of people’s lives. Amazon is now the most sprawling and terrifying company to a growing sea of competitors. Besides, Amazon kept showing its unstoppable ambition, leaving a newly-coined word “Amazonization” With Amazon extending its businesses, such pervasiveness may also threaten some industries in Korea.
 
When Amazon was first launched in 1995 as a website that only sold books, it promised to live up to its mission to be the most customer- centric company in the world. Jeff Bezos, the founder of Amazon, had a vision for the company's explosive growth and e-commerce domination and it has now grown to involve millions of consumers and to include many enterprises. The company always works to meet diverse needs, coming up with new solutions to help customers find and choose products more efficiently. After all, what made Amazon stay unshaken is its firm principle and management strategies to further empower its position as a leader of the industry.
 
The Growing Appetite
 
Behind the current scale of the company, there are two core corporate strategies that have aided Amazon’s explosive growth. Through a strategy to use the exploding volume of data collected via e-commerce, Amazon could maximize the efficiency of advertising by analyzing its consumers’ purchasing behavior. As a leader in cloud computing—a computing platform for the delivery of on-demand resources over the internet—Amazon Web Service (AWS) helps its business grow by working with a massive database.
 
   
▲ One of the banners on Amazon.com, Provided by Amazon
 
Meanwhile, a merger and acquisition (M&A) strategy contributes to the increase in the size of the company and this alludes to the growing appetite of Amazon. Amazon continues to take over enterprises in a broad range of industries. A recent liquidation of Toys “R” Us, an international toy retailer, demonstrates the influence of this strategy. After years of struggle, Toys “R” Us filed for bankruptcy protection in late 2017, but failed to recover and began liquidation sales across its stores. Toys “R” Us shuttered the doors at more than 800 stores across the United States (U.S.) last August, with an outpouring nostalgia for toy shopping.
 
Some experts say that the fall of Toys “R” Us derives in part from a 10-year contract to be the exclusive vendor of toys on Amazon in 2000. However, Amazon began to allow other toy vendors to sell products on its site despite the deal. Consequently, Toys “R” Us sued Amazon to end the agreement in 2004. As a result, the contract was nullified but it was too late for Toys “R” Us to further develop its own e-commerce platform with Amazon monopolizing the toy industry.
 
Born in cyberspace, the scope of Amazon’s influence reaches out to every corner of its consumers’ lives. It is also wielding its power against an unprecedented range of other businesses and the fear of being Amazoned has become a defining feature of current commerce; for instance, Amazon bought Ring, a maker of home security cameras, which shook the rest of the industry. It is tricky to conclude which industry the company might torch next and Amazon has been creating an economic ripple effect that impacts economic activities around the world.
 
Korea is No Longer Safe
 
The expansion of Amazon has already reached Korea. On August 20, Hyundai Department Store said that it will be launching a futuristic self-service store with AWS. The plan is to open a Korean version of Amazon Go, the world’s first unmanned store that uses drones for delivery, by 2020. Amazon Go’s "Just Walk Out" technology, which does not require customers to wait in line for their purchase, will be implemented in the store. Hyundai also plans to set up a cloud-based membership platform by the end of this year based on AWS's cloud service that analyzes the purchasing patterns of customers. This tie-up is important in that it is Amazon's first step taken in the Korean retail industry.
 
In fact, there have been a few collaborations between local companies and AWS. Although Amazon has yet to establish a branch in Korea, AWS has launched a Korean branch in 2012 and has begun making its way to domestic markets. For instance, Shinhan Financial Group signed an agreement with AWS last June to cooperate on digital financial services. The two companies are said to be working on a roadmap for the application of artificial intelligence (AI), blockchain and cloud computing. In this regard, one could easily notice that database and network connection are important nowadays and according to representative Kim Hyeong Hwan (China Strategic Management Academy), data is the asset of the company.
 
   
▲ Representative Kim Hyeong Hwan, Photographed by Lee Jae Eun
 
Yet, Amazon is only one of many foreign enterprises currently active in Korea. Many overseas companies, such as China’s biggest investment corporation Tencent, have already brought in their capital to South Korea. Kim says, “To focus on marketing, to implement an online marketplace and to bridge technology domains with the network are the key problems for Korean companies to solve.” However, on average, the managers in Korea are in their sixties and the number of start- ups is less than 200. while China records more than 10,000; and all of these dim the chances for a change in the Korean industry. Kim believes that a new Amazon-like company created by the young can shoulder the future of Korea.
 
Today, one company has ballooned into an empire, selling everything from online video streaming services and groceries to nearly any retail product which one could think of. However, behind the success of Amazon, there are thousands of companies out there who are falling behind or shutting down altogether. Amazon has shown a relentless commitment to maintain its place as the leader of numerous online retailers. Nobody can accurately predict what the future holds, but all signs point to an even brighter future for Amazon in the coming years. So, is any industry safe from Amazon?
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