Amazon’s next conquest?

This spring Amazon (AMZN) celebrated its 20th anniversary as a publicly traded company. In that time, the Internet retailer has continually grown, now with the fourth highest market capitalization of all public companies at $487 billion. Only Apple (AAPL), Alphabet (GOOGL) and Microsoft (MSFT) come in higher. What started as a business looking to disrupt the bookstore industry has disrupted multiple additional sectors with their own inefficiency vulnerabilities.

The Amazon everyone knows best is the online retailer. The core e-commerce business continues to grow thanks to the strength of Amazon Prime. Amazon’s ecosystem includes exclusive products, such as Amazon’s Kindle and Echo, which require access to Prime. During the past year, Amazon Prime memberships have nearly doubled, now estimated at 80 million with almost half of all U.S. adults having Prime subscriptions.

In fact, the company’s third annual Prime Day, held in July, was the largest ever global shopping event for Amazon, selling more than 40 million items. More individuals signed up for Prime than any other day in the company’s history.

Given Amazon’s dominant market share, the company still maintains modest margins from its global scale and footprint. Amazon’s focus on superior customer service helps drive higher purchase frequencies, larger order sizes and an overall better customer experience.

But Amazon isn’t just about retail anymore. Amazon Web Services (AWS) is one of the company’s most profitable divisions and is often thought of as a key engine of growth. AWS currently leads the cloud infrastructure industry, representing about 30% of the market. The company has seen AWS revenues grow by double digits year-over-year for the last 10 quarters (see “AWS growth path”).

In recent years, large enterprises such as Netflix (NFLX) have migrated to AWS to be its platform provider, which validates its credibility and reliability. In addition, this year Amazon has begun expanding its web services in five new regions, including China, India and the UK. Heavy investments in global expansion on top of Google (GOOG) and Microsoft’s ascension in cloud computing will put pressure on Amazon’s margins. On the bright side, the expected growth in cloud computing and the Internet of Things should support an optimistic outlook as Amazon continues to expand its web services.

The latest industry Jeff Bezos has decided to take on is grocery stores. Amazon is trying to disrupt this space using a two-pronged method that invests in both online grocery delivery and brick and mortar locations. Amazon Fresh rolled out its invitation-only beta test grocery delivery service in the Seattle area in 2007, and currently owns a very small slice of the online food delivery market. In aggregate, online grocery orders account for 2% of all grocery shopping. The main reason for this is that many consumers want the ability to pick out their own produce and proteins, and Amazon realizes that there will always be a market for these people.

As such, they began experimenting with Amazon Go earlier in the year in Seattle, a brick and mortar model that charges customers for the products they buy through an app on their phone, reducing the need to wait in a checkout line. The company made further moves into the physical grocer space in June when they purchased Whole Foods (WFM) for $13.7 billion. While it may seem like an odd choice for a retailer known for value pricing to buy a high-end grocer, it’s their customer loyalty and favorable employee policies that make them a desirable purchase. Also, with 450 stores, Amazon can get closer to their customer.

There are endless debates on which, if any, retailers can catch up to Amazon. Typically Wal-Mart (WMT) is the only name mentioned with any confidence. Not only does it have the capital to even the playing field, but it also has the real-estate to establish the necessary warehouses. Their purchase of Jet.com in 2016, and of Bonobos on the same day of the Whole Foods acquisition, shows just how serious they are to re-establish themselves as the world’s largest retailer, and could potentially be a concern for Amazon going forward.