Amazon (Nasdaq:AMZN), it seems, is going to take over the world. It started out selling books and has expanded to selling just about everything, from electronics to homewares, prime memberships and streaming video, cloud computing services, a sales platform, and now Whole Foods. Have we reached peak Amazon?

This week we have an incisive piece from Meridian Macro that look at the impact of declining disposable income for the American consumer. Many market pundits see the demise of ‘brick and mortar’ retail as a structural story about the rise in online sales that has driven Amazon shares to $1,000.

‘Let’s think about this for a moment: Amazon sales account for about 40% of US online sales, and online sales account for about 11% of total Retail Sales, thus Amazon accounts for less than 5% of total Retail Sales. Is Amazon gaining market share? Yes, no doubt about it. And, yes, Amazon’s share of retail sales is higher if we strip out Auto & Gas, Restaurant & Drinking Places from total retail sales. However, the idea that Amazon is single-handedly wreaking havoc on the entire brick-and-mortar space to the point Retail Employment is nearly negative y/y (which would be a first since the recession) and is laying waste to shopping malls across America is quite a stretch.’

The Amazon of Everything

It is obvious that Amazon would be gaining market share, because consumers are competing on price. Amazon essentially competes for market share by means of negligible margins. They could raise prices and margins anytime, but instead they choose to grow in all directions – as with most disruptive business models, the first thing is to disrupt. Once you have a monopoly, then you can raise prices.

This is not so different from one of the biggest monopoly stories in US history: Standard Oil. Get a whole nation addicted to using oil and then control the supply. We could see sentiment building against Big Tech if they start to make more decisions consumers don’t like.

From benevolence to behemoth

There are risks to becoming as massive a business as Amazon has. The social perspective may change as consumers start a counter trend towards small retail, physical experiences, and novelty. Remember, though Standard Oil brought oil to the masses, stripping the giant of its monopoly was a popular cause. To read more, check out The Weekly Hack.