The geopolitics of Amazon

The weather’s getting unbearably hot, and we’re getting targeted with ads urging us to seize a limited 345% discount to nab that rubber chicken handbag and pack of bacon bandages you’ve always wanted. It can only mean one thing: Amazon Prime Day is here. 

For those unfamiliar, it’s like Black Friday for the world’s biggest e-commerce platform. But this year it’s running for four days and is expected to make Amazon $13B in the US.

So where’s the Intrigue? All the war and rumours of war gazumped our tell-all piece on the Bezos-Sanchez nuptials last week, so we’re now playing catch up. And… whatever happens with one of America’s ‘Magnificent 7’ tech giants has instant global relevance. 

But why Amazon?

• It’s doing ~$650B in sales, making it bigger than Sweden, Singapore, or the UAE

• It operates and delivers in more than 70 countries, making it bigger than the International Committee of the Red Cross, and

• It’s enriched founder Jeff Bezos so much, he not only had (say) the Queen of Jordan at his wedding, but also got to develop some of the world’s most ripped biceps, offering hope for bespectacled and malnourished nerds everywhere.

So yeah, we’ve got our reasons. But let’s quickly cannonball into three of them: 

1. The canary in the e-coal mine

We keep getting mixed data around what’s happening in the US economy: the S&P500 has now recovered from its Liberation Day crashes, hitting record new highs. And while consumer sentiment dropped in May, it duly bounced back in June. But other data sources suggest most US consumers still say tariffs are shaping their shopping habits.

And it’s not just consumers: some US businesses relying on manufacturing in (say) China and Vietnam are scaling back their Prime Day discounts as tariffs eat their margins, whether on tote bags, ice trays, or skateboards. So the world will be watching Amazon’s Prime Day data for a feel of what’s really going on.

2. 4D supply chains

Amazon has never been shy about its global ambitions: with an internal motto of “make history”, it’s long hustled to embed itself into global supply chains. And sure, that goes to its whole schtick: promising third-party sellers (60% of its sales) access to a global market, while promising customers the absolute best darn Nicholas Cage pillowcases money can buy. It’s a network effect you get via scale.

But you get that scale via some big investments: for example, Amazon gets you that sweet sweet same-day delivery on lobster flip-flops thanks in part to its own internal cargo airline operating 95 jets, making it bigger than JetBlue. Ditto, as governments pull up their drawbridges, Amazon is building more local warehouses to minimise its tariffs.

And that’s all made the US giant both less exposed to global shocks (redundancy), but somehow also kinda more exposed (the e-canary above), with any downturn quickly entering its vast global e-commerce arteries, offering a critical heads-up to everyone else. Which leads us to…

3. Local pushback

It’s not all rainbow tortilla blankets and butterfly pet costumes for Amazon: just about anywhere this giant treads, it faces claims it’s undercutting local retailers, not paying enough tax, or only able to keep prices on its keyboard waffle irons so low because factory and warehouse workers are getting screwed along the way.

So its sheer ubiquity and profile means other boardrooms are (or should be) watching how governments around the world grapple with Amazon, as that tends to be a reliable straw in the wind for how our world is going about balancing everything else.