I’m pretty sure I’m an
introvert, but after a glass of wine or two I can play a convincing extrovert.
I’m generally referred to as being left handed since that’s the hand I write
with, but nearly every other active effort I engage
in is decidedly right handed. So which is it, right brain, left brain,
does it matter? What matters to me is it has invited into my thinking a
distinct skepticism of self-generated ideas, extending beyond what a financial
model does and exploring why it does it. Simply put if the media suggests a
financial crisis is on the way, who am I to doubt their belief in what they’re
saying. The what, is they sell a narrative to consumers, but the why tells the
other story that marries the event with the narrative, and in my opinion, a
better snapshot to analyze. Amazon is a good example.
Hasta La
Vista, Baby
There are undeniable challenges
in the world when it comes to finance and the markets, most of which are poorly
understood by many who too easily agree or disagree. With
regard to economics there are any number of metrics that can put an idea into
perspective. But sometimes that which is unexpected, such as yesterday’s
announcement that Amazon (AMZN), through the purchase of an online
pharmaceutical distributor has begun the deconstruction of the industry as we
know it. Is the news true? That it’s happened in many industries AMZN has
entered is true. And street pharmacy stocks are precipitously declining, with
the help of the pundits using the story as click bait? So that’s the what, but
where’s the why.
Look at Amazons recent purchase of Wholefoods. Prior to
that acquisition the company using its hold on the trucking industry was
competing with Fresh Direct and Instacart, under the name Amazon Fresh.
Beginning with prepared food delivery, the demand for groceries over the past
few years has been no less than overwhelming*. But the structure of these
perceived game changing companies is firmly anchored in the 20th century.
Trucks (gasoline), Warehouses (utilities) and lots of Workers. Over time one
could easily argue that Drones and Robots could replace the former and the
latter, but central to the delivery of food, is the food.
So when Amazon entered the fresh delivery business it
was, of course, wildly assumed the destruction of the industry was eminent.
Asking why, made for an interesting perspective given the few, including
myself, knowing that Amazon was more familiar with warehousing in general
and therefore when they bought Wholefoods, it wasn’t a supermarket they bought,
it was a national grocery warehouse chain that fit both the narrative and the
event, namely most existing warehouses do business with everyone.
Regarding yesterday’s announcement, the pharmacy industry
is in a different space than AMZN. That space, in partnership with the
insurance industry, is about health services. That’s the what. The why, has
lead me to analyze the recent attention on consumers seeking common heath
issuers and showing preference for the cost of Urgent Care centers to the
general cost of a visit to a doctor’s office. So in my opinion the impending
destruction of any competitor in its way could very well lead Amazon entering
the fray, if for no other reason since all the companies currently involved are
after the same end. And as that group is currently active in mergers and
acquisitions, the current why, could include the potential of one or more
events and a reason to look beyond the what.
When you look at your cell phone don’t just concentrate
on what it does, maybe not even how does it, but why it does it is a questions
one needn’t possess artificial intelligence to answer, but it may require
questioning the most rational answer that comes to us first.
I’ll Be Back
