Here’s How, Inc. Will Become The First $1 Trillion Company

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January 17, 2017 9:15am NASDAQ:AMZN

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From Jon Markman: Amazon (NASDAQ:AMZN) set out to change the world in 1994. Three years later, its IPO valued the company at just $461 million. Today it’s worth $360 billion, a gain of roughly 50,375%.

Is it possible, though, that the company is just getting started? That’s the surprise prognosis of Scott Galloway, a New York University business professor, and founder of the legendary marketing firm L2.

Galloway believes the Seattle retailer is on the verge of explosive growth as it transforms its fast-growing Prime subscription service into the perfect, frictionless omni-channel retail experience. As investors realize the potential scale, Galloway expects Amazon shareholders will be rewarded with the first $1 trillion market valuation.

“They might be able to take Prime households from $1,300 per year to $10,000 by basically saying we’re going to fulfill everything you need,” said Galloway in a recent YouTube interview with L2 co-founder Maureen Mullen.

The idea is Amazon would use artificial intelligence, purchase history, its reputation for value and its web of warehouses – extending within 20 miles of 45% of the U.S. population – to create a zero-click retail experience. In effect, Amazon would just start sending stuff to its more than 63 million Prime customers without being explicitly asked. It will know what you want before you do.

And that lends itself to a bunch of very lucrative opportunities with private-label branding. When your customer trusts your brand, you get to control the entire value chain. Just ask Apple, a company that coincidentally could be irreparably harmed by this development.

For example, Mullen cites a 1010 Data report that shows Amazon’s Basics brand commands 31% of battery sales online. Its Elements brand has 17% of the online baby wipes market. That puts it just behind household name brands such as Huggies and Pampers.

“The scariest thing about Amazon is they’re not afraid to act like a startup, and get product into market fast,” said Mullen. “But their investment threshold is incredibly long. … They have the capital that allows them to lose money for years and years in different businesses until they pay off.”

That type of longer-term planning allowed Amazon’s secretive Lab 126 to spend years developing Alexa. The open-source, artificially intelligent digital assistant first appeared as the voice of its popular Echo-connected speaker. However, Alexa has been showing-up in flat-screen TVs and the assistant will soon debut as the heart of an open-source, connected-car platform.

Adoption is very valuable because Alexa is essentially a voice-activated search algorithm built by the world’s largest retail warehouse operation. If you simply asked Alexa for batteries, you would expect its Basics brand to show up on your doorstep at the exclusion of all other brands.

That type of power and Amazon’s massive scale really do change the world. In fact, Galloway is succinct: “This is a zero-sum game and Amazon is taking all of the chips off the table.”, Inc. (NASDAQ:AMZN) fell $1.64 (-0.2%) in premarket trading Tuesday. Year-to-date, AMZN has gained 8.79%, versus a 1.33% rise in the benchmark S&P 500 index during the same period.

This article is brought to you courtesy of Money And Markets.

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