In a recent interview on CNBC Aswath Damodaran, a professor of corporate finance and valuation at the Stern School of Business at New York University, reflected on Amazon’s business model, stating:
“I’m not even sure what business the company is in anymore. It’s a platform that can be used pretty much to disrupt any business.” See full interview here
While we understand Professor Damodaran’s predicament, for us, his statement reflected exactly what we see Amazon as when we assess it through our thematic investing lens — a Disruptive Innovator investment theme company that is disrupting each and every corner of the economy seemingly whenever it wants. Recent news of Amazon’s jump into the online pharmacy category with its acquisition of PillPack put retailers such as CVS and Walgreens squarely in its crosshairs — at least in terms of the “back of the store” business. But a recent article by eMarketer showed Amazon is cutting into the front of the store sales at those health retailers, as well as those at Sephora and Ulta Beauty:
With the June acquisition of PillPack and quieter forays into beauty, Amazon has demonstrated its intent to move into the online pharmacy business as well as the space dominated by Sephora and Ulta Beauty.
We estimate Amazon’s US sales of health, personal care and beauty products will total $16.00 billion this year, a 37.9% increase over 2017, making it the third fastest growing category after food and beverage and apparel and accessories. While that’s only 6.2% of Amazon’s total retail ecommerce sales, it represents 44.3% of total retail ecommerce sales of health, personal care and beauty products in the US.
The subhead of this article from eMarketer asks the question, “Should traditional pharmacies and beauty retailers be concerned?” A better question would be, which retailer or segment should NOT be concerned when it comes to Amazon?