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To date, Amazon has amassed approximately 80 acquisitions. Amazon founder, chairman, and CEO Jeff Bezos is a strategic wunderkind who has changed the face of the M&A game. So, what’s the secret and how will it affect us going forwards? 

For one thing, it is no secret; it’s strategy. Part of what Amazon has been able to do is to take over the world by hitting it on all fronts: music, AI, cloud storage, footwear, movies, and groceries. From online bookseller to largest U.S. internet retailer, it wouldn’t be surprising if Amazon’s foothold in nearly every industry was a vision Bezos had from the start. 

Because most of these companies, regardless of industry, are similar in one way: they provide an emotional and physical need rather than a want. In other words, in today’s society, we often swap out basic needs for luxury wants. Bezos understands that, and has leveraged it to tap into users experiences via their emotions. And the best proof of that is to examine just some of the companies Amazon’s acquired. 

PetNet

The way to a person’s heart isn’t through their stomachs; it’s through their pets. Targeted investments in IoT products--like PetNet pet auto-feeder--are a smart means to attract an immense, already existing market of pet lovers. 

With the product of its private label Wag brand, Amazon has set itself up to become a major player in the ‘dog eat dog’ world of pet retailing. 

Another ingenious way Amazon has expanded its reach is through its integration of its acquired brands, services, and products. PetNet, for instance is compatible with Alexa, and Wag is only available to Amazon Prime subscribers.

IMDB 

29 million viewers watched the Prince Harry and Meghan Markle Royal Wedding in the U.S. alone and 18 million in the UK. People have always been obsessed with the inner workings of a movie production, the biographies of celebrity figures, etc.--and they always will be. People are innate information-gatherers, and by acquiring this database company for $55 million, Amazon saw an opportunity to ‘feed’ people the information they crave.

Orbeus

Orbeus is a top innovator in AI automated facial, object, and scene recognition. As mentioned earlier, Amazon is brilliant at not just acquisitions; it is the IoE (Internet of Everything). Orbeus is the company behind ReKognition, which is a tool that software developers use to add facial recognition to their products. 
Introduced in 2016, it is already being used by Pinterest and C-SPAN for analytics, and law enforcement is already using it in Orlando, Florida and Washington County, Oregon. 

Regardless of the current controversy surrounding its use in law enforcement, there is no doubt that having access to this powerful tool puts Amazon firmly into the future--where it practically stands alone. 

In the same way that television 1950s and 60s depictions of the future captivated audiences with wonder and curiosity, Amazon generates the same internal buzzing inquisitiveness.

Whole Foods

As a reputable brand that offers organic foods and ease-of-mind to conscientious shoppers, Whole Foods isn’t a small mom and pop store; and therefore, its acquisition was a massive coup. In fact, after acquiring Whole Foods, Amazon saw an initial 34 percent rise in revenue. 

Adding a brick and mortar service to its ecommerce-heavy portfolio gives Amazon an opportunity for even more growth in the grocery store industry--which includes Amazon Fresh. It also presents an opportunity to insert some unique innovations to the future of grocery shopping. 

With its access to pretty much everything, Amazon can sell and provide services and products (like Echos and pop-up events) beyond what you’d generally find in the produce section. 

By using a brick and mortar forum to attract groceries shoppers, who Amazon Fresh may not reach, the company has just obtained a way to change the definition of what it means to feed oneself. 

Slack 

The prediction is that Slack is a twinkle in Amazon’s acquiring eyes, which will fill Amazon’s messaging platform void since it doesn’t currently have one. If Amazon is successful at buying or merging with Slack, it will position itself, in a sense, as a catalyst to work bonding.

Even though it’s lauded as a super efficient cloud-based collaboration tool for teams to send files, DM, and create private groups, many ‘hip’ companies use the service as a watercooler--to bond and send gifs. Not only is Slack nearly taking the place of emails, it’s a staple within the startup infrastructure. 
 
What does all this mean to the rest of us in M&A? That there is no secret sauce. Granted, not everyone can strike the right cord in every acquisition, though Jeff Bezos has come close. What we can do is become psychic. It’s not enough to strategize within one or even a handful of industries. 
To pull off what Amazon did: collect services and products in as many industries as possible, integrate them all with the product or service you already own, and never forget that how people define a human need today, is no longer enough to sustain them. Ultimately, the most impressive thing Amazon did to change the M&A game is to redefine what those basic human needs are. 

About the Author(s)

Robert Koven Leonis Partners

Robert Koven is the Managing Director of Leonis Partners, one of New York City’s top financial firms with a focus on Mergers & Acquisitions and equity capital transactions.

Managing Director, Leonis Partners
Robert Koven Amazon mergers and acquisitions