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Why Amazon has to do everything



It just seems natural that the Everything Store does it all. It is also a necessity.

Amazon.com


AMZN -0.10%

has just reminded the world of its ambitions. On Thursday, the company announced a new effort to strengthen its own parcel delivery network by recruiting small business owners to run fleets of Amazon-branded vehicles. On the same day, Amazon announced the acquisition of the online pharmacy PillPack for $ 1

billion.

The latter initiative will bring Amazon directly to the US prescription drug market with a volume of $ 400 billion. That's probably just part of the company's health goals. Amazon is also working with

Berkshire Hathaway

and

JPMorgan Chase

in a new company that aims to rethink health care for its own employees, which now has nearly 1.2 million members.

These latest efforts come barely a year after Amazon hit the food market with $ 13.7 billion worth of Whole Foods Market. For years, the online retailer has focused exclusively on online trading. Amazon is now also a consumer electronics designer, Hollywood studio and advertising company, just to name a few. And do not forget the cloud computing business, which today accounts for 10% of the company's revenue and 96% of operating revenue.

All of these efforts lead to a growth machine unmatched by any Amazon company. It now generates nearly $ 200 billion in annual revenue. Analysts are projected to exceed $ 350 billion by the end of 2020 and exceed $ 500 billion by 2023. To achieve this, Amazon has to achieve an average annual revenue growth of over 20 percent – not an easy task. The six US-based companies, with more than $ 200 billion in revenue over the past year, reported revenue growth of less than 8% over the past 12 months, according to S & P Capital IQ.

If Amazon achieves these ambitious goals, this will not be the case just from selling goods over the Internet. The company already accounts for about 44% of online retail sales in the US, according to eMarketer. As online sales continue to grow, their advance will slow.

Amazon's share of the total retail market is much smaller. Amazon sales in North America accounted for approximately 3% of total US retail sales in the first quarter. In order to achieve more, Amazon must at least be turbulent with its Whole Foods grocery business, but other companies will have to step in as well.

Amazon's share price has risen 45% this year, adding just 2% to recent announcements. This has made the company the second most valuable company on the planet, which is a considerable bet by investors that Amazon will indeed soon be everywhere and not in a small way.

Write to Dan Gallagher at dan.gallagher@wsj.com


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