Recent developments tell us that Amazon, Inc. (AMZN) has no intention of stopping at traditional retail, be it everything they sell on their site, or groceries. The most recent of those investments is a homebuilding start-up- Plant Prefab.
According to a report from CNBC, "Amazon said its Alexa Fund invested in Plant Prefab, a Southern California company that says it uses sustainable construction processes and materials to build prefabricated custom and multi-family houses." The report also said that the start-up had plans to use automation to build units more quickly and cheaply.
When Amazon Gets Restless
Remember when Amazon bought Whole Foods, for like, $14bn last summer?
It was one of a number of moves made by the retail giant suggesting that the company had ambitions that extended beyond its existing business model. The company has a history of investing in and acquiring emerging ventures involved in everything from AI and machine learning, to clothing and accessories. From media and entertainment, to hardware and home services. This article from MarketWatch shows you all the companies in Bezos' empire, (as of January 2018, the list has certainly extended since then).
Around the time Amazon bought Whole Foods, a tweet started circulating:
AMAZON, 1998: hello we sell books but online
AMAZON, 2023: please return to your Primehouse for your nightly Primemeal, valued Primecitizen
— KT NELSON (@KrangTNelson) June 16, 2017
Of course, the tweet was made in jest, but it raises questions. Just how far will Amazon reach into our lives with its sleek design, undeniable convenience and excellent customer service (the bastards).
We've seen other (very successful) projects from Amazon. In July, Recode reported that Amazon's Q2 profits were made not on the back of its retail business, but instead on the backs of Amazon Web Services (AWS) (the company's cloud computing division), and Amazon's rapidly growing ad business. Amazon Web Services had grown 49% YoY at the time of reporting in Q2, Amazon's other businesses (primarily advertisting) had grown more than 120% over the same time period.
At the time, Recode wrote at the time that this growth allowed the company to plow its profits back into its retail and delivery, "widening its defensive moat in its main retail business." An article from the New York Times this week would suggest that this is the case, too. The company would seem to be using its home city, Seattle, as a test lab, looking for ways to make package returns and pickups more convenient, while cutting down on shipping costs.
However, while retail, web services and ads do seem to dominate the balance sheet for the time being, it's quite possible that this won't always be the case, or even be the case for very long. We should remember that Amazon is a massive corporation, with many interests, many arms, many competencies and many investments.
What's It Mean for Amazon?
This is a new move from Amazon. While the company has invested across a wide range of industries, it has never invested in home-building.
Amazon's Alexa Fund is described on its site as providing "up to $100 million in venture capital funding to fuel voice technology innovation."
Amazon believes that "experiences designed around the human voice will fundamentally improve the way people use technology." This much seems true - Amazon appears to have invested heavily in voice technology innovation.
Last week, Amazon's surprise hardware event saw the unveiling of a slew of Alexa-related products, many with local voice recognition and voice control. Some of those include a car input, an updated Fire TV media ecosystem (it has ABC, CBS, FOX and NBC now), a bunch of new and improved speaker options, a new home smart display, a wifi router, a wall clock, a smart microwave and a smart plug.
Perhaps most interestingly, Amazon also unveiled brand new home security options: a camera that can be linked to a home alarm system, and Alexa Guard, which "integrates Echo devices, smart lights, and security service providers," to help customers monitor their homes.
These moves, taken along with the company's latest investment in Plant Prefab suggest that Amazon will soon be a fixture not just delivering to the home, but inside the home, as well.
It's hard to know how Amazon's Alexa Fund invested in Plant Prefab under the pretense of fueling "voice technology innovation," but it's much easier to see the investment from the fund suggesting that Amazon has ambitions of building Amazon Primehomes, furnishing them with Amazon hardware, and delivering goods, services and food to them.
This has the potential to disrupt any number of industries, not least of all home-building, home hardware, speakers, and home security.
The tweet doesn't feel so in jest anymore, does it?