NEW YORK, Nov 15 (Reuters Breakingviews) – Jeff Bezos, the man who sells everything, is telling shoppers to stop buying everything. The Amazon.com (AMZN.O) founder warned consumers in an interview with CNN to put the brakes on large expensive purchases like TVs and cars and save some “dry powder” for a prolonged economic slump. It may seem odd that Bezos, who built a $1 trillion company on ease and convenience, is doling out financial advice that cuts against his business interests. After all, the upcoming holiday season is the most important for retailers, making up 30% or more of revenue at companies like Target (TGT.N) and Macy’s (MN).
Bezos’ advice might be less self-defeating than it sounds. Amazon’s game isn’t necessarily getting consumers to spend more of what they earn, but getting them to spend more of it with Amazon. E-commerce is only 14.5% of overall retail sales of some $1.8 trillion, according to the US Census Bureau. Meanwhile pure-play e-commerce companies that don’t have their roots in real-world stores represented 8% of retail sales in the second quarter compared to 5.7% in the second quarter in 2019, reckon UBS. In short, Amazon can grow even when retail doesn’t, meaning Bezos the billionaire can afford to be the unlikely voice of parsimony. (By Jennifer Saba)
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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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