Amazon Wants to Conquer Space and Traditional RetailBy Daniel González | Fri, 05/29/2020 - 13:56
In April 2019, NASA presented its ambitious Artemis mission, through which the US space agency wants to send humans to the moon by 2024. For the first time, three private companies in addition to NASA itself, will participate in a US space project: Space X, Dynetics and Blue Origin, the latter owned by Jeff Bezos. With this announcement, Amazon was entering the space race. A year later, Amazon is a bigger company that is more valuable and influential, partly thanks to the crisis caused by COVID-19. Despite its ambitious technology plans, the company has not lost sight of its origins and objectives. According to WWD, Amazon is looking to invest and purchase JC Penney, the retail giant that recently filed for bankruptcy.
If Bezos’ plans come true, Amazon would reinforce its leadership position worldwide, especially in North America where it leads in both number of users and sales volume. According to Euromonitor International, Amazon’s market share in the Mexican market is 13.4 percent, with Mercado Libre in second place with 11 percent. However, in 2011 Mercado Libre accounted for 21.4 percent of the market share, while Amazon did not even exist in the country. In other words, its growth has been unstoppable since 2012 and it could be reinforced if it adds JC Penney to its sales catalog in the country.
There are several reasons behind Amazon’s possible JC Penney purchase. The most important one seems to be the reinforcement of clothing sales on its platform, one great niche to be conquered in times of COVID-19. Another reason is to use JC Penney’s stores as distribution centers or to support its distribution network in cities where they are located. The most strategic reason, however, has to do with Amazon’s long-term plans.
The ‘new normal’ brought about by COVID-19 will have a significant impact on traditional retail companies that survive a crisis that may change forever the way people shop. The closure of shopping centers, the reduction of customers and staff, extreme health measures and the avoidance of physical contact as much as possible, have become the ideal scenario for Bezos and Amazon to develop their ‘Just Walk Out’ technology, which eliminates the presence of checkout counters in supermarkets and convenience stores. ‘Just Walk Out’ technology was successfully tested at Amazon Go stores in the US and is already a reality at Amazon Go Grocery stores in Seattle. The addition of JC Penney stores to Amazon's properties could mean a big boost for this technology.