[vc_row row_height_percent=”0″ overlay_alpha=”50″ gutter_size=”3″ shift_y=”0″][vc_column][vc_column_text]Kroger recently announced it would sell its operating division and exit the convenience store business entirely. The move was viewed by many as an effort to focus on its core business. Three years ago, the narrative would have been that Kroger was under attack by Walmart and Costco. How very 2014.

Kroger is currently up against online retailers- most notably Amazon. Amazon’s purchase of Whole Foods sent shockwaves throughout the food business. Amazon is scaring the competition one market at a time. Earlier this year, the company announced an online shop dedicated to basketball star Dwyane Wade, an indication of its shift from apparel to fashion. Yet the more striking trend is its emergence as the purveyor of proprietary products, instead of the company that just ships them.

The company will disrupt much more than brick and mortar. Amazon’s technologies, from Alexa to web hosting and new television content, represent a fundamental shift. And that is where Amazon is really flexing its muscles- by developing an unmatched platform for product development, online services, delivery and big data.

With market power can come abuse, and that is why competitors, including many of our clients, are afraid. While Amazon appears to offer a competitive marketplace, some maintain that it lists its own products first, even if they are not the best-selling or most searched (this is an opinion of some, and not offered as a fact we have validated).

Ecommerce companies who partner with Amazon see it as a two-edged sword. Amazon offers the opportunity to build volume, really fast. Partnering with Amazon is like making a deal with the devil for many companies trying to protect their brands, and especially their minimum acceptable pricing (MAP). For many brands, Amazon represents an online free-for-all, diminishing market power for those to offer their goods on its platform.

So, we should be afraid of Amazon. With its prominence will come even greater influence on markets, and the data it needs to be the true category killer. Even Walmart is afraid, given its alliance with Google, which feels like a battle line between two industry heavyweights that understand the ramifications of being left behind.

With all this said, Amazon’s promise is to drastically improve our quality of life, with smart technologies that combine shopping with artificial intelligence, machine learning and the like. Amazon has already introduced several improvements at Whole Foods, in an industry where innovation is desperately needed. Forbes ranks Amazon as the world’s seventh most valuable company. One might wonder if it will end up number one.

For more on creating value in a competitive market, see our Framework for Driving Competitive Advantage white paper.[/vc_column_text][/vc_column][/vc_row]