Amazon is poised to add banking, pharmaceutical supplies and even healthcare provision to its roster of services – taking the marketplace into a position of potential multi-market dominance. And that is going to make Amazon even more compelling for retailers and brands than it is right now.
This makes perfect sense. There are a lot of young, unbanked people out there that already use Amazon and who want to do things differently. In fact, many of Amazon’s regular customers seem to agree: global research from Accenture reveals half of all Amazon users would consider a savings account with Amazon, and 45% are open to the idea of it being their primary bank account.
Amazon already loans money to retailers – currently totalling well over $1.5bn to merchants in the US, UK, Europe and Japan. And it also already has its own UK credit card: the Amazon Platinum Mastercard, which gives reward points whenever users shop on it.
Behind the scenes it’s actually run by NewDay: but were Amazon to run its own banking services, access to full credit card information would give it even more vital data about its customers’ shopping behaviour.
Industry analysts are already getting excited about the prospects for an Amazon bank. Amazon could become the third-biggest US bank if it wants to, according to a Bain & Company report. I certainly wouldn’t bank on Amazon not having a significant online banking presence in the next five years.
On the pharmaceutical front, Amazon has long been rumoured to be entering the pharma distribution business, but it now seems that it is actually on the cards. The company has a pharmacy wholesaler licence in the US and likes to disrupt markets. This would set up Amazon not to necessarily be a drugs retailer, but more to leverage its logistics might and become a distributor of wholesale pharmaceuticals to pharmacies in several states in the US. This would see it take on some of the largest drug suppliers in the US and, who knows, may yet see it sell medicines to the public.
However, the move into pharma-distribution looks even more likely in light of those talks between JP Morgan and Amazon. While the banking side of things has been set in motion – as an internal study at least – the talks also involved Warren Buffet and it seems that it also looked at how to manage and deliver a healthcare programme along the lines of Obamacare. Between them, Buffet, Amazon and JP Morgan understand insurance, logistics and money: the ingredients for creating a healthcare insurance system. Wholesale pharmaceuticals distribution would also help.
Why does any of this matter? Well, adding banking to its services as we have seen adds more customers as it banks the unbanked and puts all the spending data directly into the hands of Amazon. This will then feed into how it can better serve its merchants, giving them a richer and deeper understanding of their customers.
Similarly, a healthcare programme, while dressed up in altruism, will also give Amazon unprecedented levels of personal data about people, which again will feed the customer-understanding engine.
And this is something that retailers and brands would, metaphorically, kill for. If Amazon has that level of knowledge about people – data that any retailer or brand can only dream of getting hold of itself – it makes the idea of selling through the marketplace a no-brainer.
Of course, much of this is at the very early stages of discussion and may yet never come to fruition, but these markets have the hallmarks of something Amazon would want to get into. It feeds off disruption and US healthcare, pharma-distribution and banking are all ‘old industries ripe for a shake up.