AMAZON TURNING TO HEALTHCARE?
Retailer announces tie-up with Buffett and JPMorgan Chase chief on medical system for employees
TRIUMPHANT in online retail, cloud computing, organic groceries, and streaming television, Amazon founder and chief disruptor Jeff Bezos is turning his seemingly limitless ambition to healthcare.
Amazon, launched as an Internet bookseller nearly 24 years ago, has branched into offerings including voice-commanded speakers infused with Alexa artificial intelligence and original television shows streamed online at its Prime subscription service.
Healthcare now appears ripe for Bezos, who has earned a reputation for attacking high costs and inefficiencies.
A possible step in that direction was taken last month, with Amazon announcing an alliance with billionaire Warren Buffett and JPMorgan Chase chief executive Jamie Dimon to provide a healthcare system for employees of the three companies.
According to the Wall Street Journal, Amazon would also like to become a supplier of medical equipment for hospitals.
“I think Bezos is methodical and thoughtful,” said eMarketer senior analyst Patricia Orsini.
“He has identified a market that is ready for disruption. The healthcare system in the United States is ripe for reform.”
Bezos faces the challenge of taming skyrocketing costs throughout US healthcare from insurance and medicine to supplies and therapy.
Barclays analysts said in a recent research note on Amazon’s potential in healthcare: “We are never dismissive of anything disruptive that Amazon is involved in. It arguable has the best technical abilities of any firm we cover.”
Amazon has been on a stunning growth streak of late, expanding its international retail operations as far as India and Australia, while devouring the US organic supermarket Whole Foods group.
With increased scale, it has been ramping up profits in recent quarters, helping Amazon leapfrog in market value to one of the top companies in the world and making Bezos the world’s richest individual with a net worth well over US$100 billion (RM389 billion).
Amazon has repeatedly shaken up sectors with technology and efficiency.
With success has come leverage to pressure suppliers and manufacturers for better deals it can use to be the preferred venue for online shopping.
Standard & Poor’s retail analyst Robert Shulz noted that Amazon has succeeded with a patient strategy of investing for the long term.
“Their approach is growing the business,” said Shulz, even if some of the efforts don’t yield a quick profit.
For years, Amazon invested heavily in distribution networks so it could get goods to buyers fast while controlling delivery costs.
A report surfaced this month that Amazon is preparing to test a delivery service that would compete directly with services like FedEx and UPS.
Amazon did not directly comment on the report but said: “We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices.”
Separately, Amazon this month unveiled plans to deliver groceries in a number of US cities for Prime subscribers using its recently acquired Whole Foods supermarket chain.
It is the first major effort to integrate Whole Foods — a chain of 460 stores — into Amazon’s ecommerce effort.
Amazon recently reported its profit had more than doubled in the past quarter to US$1.9 billion as revenue grew 38 per cent to US$60.5 billion.