Amazon hits 30: the real news beyond prime day excitement

Once again, it's time to prepare for Amazon Prime Day as our newsfeeds begin to fill with publications publishing lists of must-buy gadgets with affiliate links to Echo Devices, robot vacuums, and even doorbells that require a subscription. Elsewhere, social engineering attacks take the stage rather than the bargains you were expecting.

By day two, the hype begins to fade, and shoppers' excitement usually turns to disappointment when they realize that only unpopular items get reduced. The store is full of stuff they might want but not necessarily need, and shoppers are left asking, do we need a second Prime Day?

The everything empire – Amazon's 30-year conquest

It will be three decades in July 2024 since Jeff Bezos started his online bookseller from his Seattle garage. Originally named Cadabra, a couple of incidents of mishearing over the phone as 'Cadaver' made Bezos settle for Amazon.com a few months later. The rest, as they say, is history.

Who could have contemplated this new online venture leaped from $20,000 a week in revenues to manifest its "Earth's biggest bookshop" label? Now, when it's about to reach the half-trillion-dollar-a-year mark in revenues, where should Amazon go next?

The end of Amazon Go stores marks a strategic pivot

The latest move by Amazon to wind down fresh grocery stores under the Amazon Go banner speaks of a dramatic change in its retail strategy, especially within San Francisco and Seattle. This cut joins a broader cost-cutting move that lays off 27,000 workers.

Initially celebrated for its "Just Walk Out" technology, Amazon Go aimed to redefine the shopping experience by eliminating checkout lines, allowing customers to pick up and leave. However, despite the technological innovation, the stores faced operational challenges and struggled to attract consistent foot traffic, exacerbated by the pandemic and changes in urban commercial dynamics.

Looking forward, Amazon continues to evolve its approach to retail technology. While scaling back on its own branded convenience stores, Amazon is expanding the deployment of its "Just Walk Out" technology through licensing agreements with third-party retailers and locations, such as stadiums and Hudson News at airports. This strategy suggests a shift in focus from direct retail management to becoming a provider of technological solutions for the retail industry.

Alexa enters a new era with subscription-based model

Amazon's Alexa, initially heralded as a revolutionary voice assistant technology inspired by science fiction movies has encountered significant financial difficulties. Despite being famous for basic tasks such as setting timers, checking the weather, and playing music, Alexa has struggled to generate profits and racked up debts of $10 billion.

When was the last time you purchased a digital assistant? If you answered never, you are not alone. One of the central problems dogging Amazon's Alexa has been that consumers remain very wary of voice commerce, preferring to see what they're buying.

Amazon is planning a major Alexa revamp, which includes transitioning from the free "Classic Alexa" to a more advanced AI-powered version that may come with a subscription fee ranging from $5 to $10 per month. This new version aims to offer enhanced capabilities, such as handling complex tasks and providing a more personalized experience without repeatedly saying the wake word "Alexa."

However, the profitability of this new subscription-based model is still being determined, as consumers are accustomed to the free service. The company faces the challenge of convincing users of the value of the paid tier, especially when Alexa's primary functions are already available without charge. This shift represents a crucial pivot point for Alexa, which Amazon hopes will transform its financial trajectory and solidify its standing in the competitive AI market.

Elsewhere, alongside the increasing prices of Amazon Prime membership, there is an additional subscription of $2.99 to remove ads. Meanwhile, if you pick up a bargain Amazon-owned Ring Doorbell in the Prime Day sale, you could find yourself with a $49.99 subscription. Throw in a Kindle Unlimited for your new Kindle or Audible package, and Prime Day quickly feels more about selling cheap devices to lock users into reoccurring revenue.

With many users suffering subscription fatigue and rising costs, another subscription service might be a tough sell for Amazon.

Amazon's reputational and regulatory challenges ahead

Amazon's future is more uncertain than you think. It's not just about going from one bad idea to another, such as the ill-fated business security robot or accusations that its "Just Walk Out" uses 1000 people in India rather than AI.

There are increasing questions in the UK about how little tax it pays on its astronomical profits. When combined with the infamous working conditions of its employees, Amazon is at risk of driving socially conscious consumers away. But to make matters worse, the "Everything Store" has regulatory challenges waiting on the horizon.

Amazon is also under legal pressure, with the FTC claiming it blocks competition, raises prices, degrades quality, and reduces innovation due to its monopolistic grasp on customers. To Jeff Bezos, this will not be a surprise at all – he warned early in 2018 about his vague notion of that uncertain future.

"Amazon is not too big to fail. I predict one day, Amazon will fail and go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years." – Jeff Bezos.

As Amazon turns 30, it finds itself at a multilateral crossroads where otherwise unparalleled growth in business meets with reputational and regulatory challenges. The next decade will likely be about pushing boundaries on the fronts of technology and innovation as much as about fathoming the intricacies of new enhanced scrutiny and ethical considerations. But it will certainly take much more than another range of subscriptions to see it survive another 30 years.