After Amazon’s Smallest Acquisition Year Since 2007, Will It Gobble Up Competitors in 2014?
When it comes to acquisitions, Amazon has become known for the most part as a build it-versus-buy-it company. But even considering that reputation, the total price tag for Amazon acquisitions in 2013 — $195 million — was tiny, and the lowest total for Jeff Bezos’s company since 2007, according to recent regulatory filings.
The company’s biggest purchase last year was Goodreads, the book recommendation service Amazon acquired for around $150 million. In 2012, Amazon paid $678 million alone for warehouse robotics company Kiva Systems. And the Seattle-based e-commerce company dropped $771 million on acquisitions in 2011, $540 million of which was used to buy Diapers.com parent company Quidsi.
You have to go back to 2007, when Amazon spent just $33 million on acquisitions, to find an output lower than last year’s.
So will 2014 be a year in which Amazon returns to making one big M&A splash? Perhaps one to jump ahead in a new area of focus or to put a stake in the ground in an emerging category it hasn’t yet addressed?
Amazon certainly is serious about its grocery delivery business, launching its AmazonFresh service six months apart in Los Angeles and San Francisco, after waiting more than five years to expand out of Seattle. But it hasn’t yet brought the service to the east coast, perhaps in part because of popular services there: FreshDirect and Peapod. Either one, if acquired, would give Amazon a strong presence along the Atlantic overnight.
As I reported yesterday, Amazon is going to make a play in brick-and-mortar stores, rolling out a checkout and payments system and potentially a whole suite of tools for small and mid-size retail businesses. Its Amazon Local deals business is expected to play a role, though it still lags behind Groupon in market share. That’s why I wouldn’t be surprised if Amazon ended up buying Groupon. Though it wouldn’t be cheap, it has stabilized itself under CEO Eric Lefkofsky. It is investing in new opportunities such as goods, travel and fashion, and has an executive team filled with Amazon veterans. (Amazon’s investment in LivingSocial could be problematic, though I could see Groupon eventually acquiring its No. 2 competitor.)
Then there’s Amazon Fashion, the company’s attempt to lure higher-end fashion brands to sell on its platform. Industry observers say Amazon is intent on doing whatever it takes to make it succeed, but pairing its own efforts with Gilt’s, for example, could be interesting. The flash-sales company is said to be performing well under new CEO Michelle Peluso and is eyeing a possible IPO as early as the fourth quarter of this year.
Here are some others — not all big ones — that could make sense: The startup Deliv, for same-day delivery; Wayfair, which is nearing $1 billion in annual sales, for a strong position in furniture and home decor; or Wanelo or Polyvore, if Amazon becomes convinced that these more social shopping sites are becoming a threat in younger demographics.