The Impact of Amazon in Retail—A look back
2017-12-27
Anyone born in 21st-century America has likely experienced the Amazon Effect, a phenomenon that seems to ripple across industries and generations. The trailblazer of online shopping, disruptor of traditional retail, and now brick-and-mortar innovator, Amazon has certainly made its mark in history.
Millennial Marketing at FutureCast defines the Amazon Effect as “the impact the digital marketplace has on the traditional business model regarding consumer expectations and the new competitive landscape.” With consumer expectations continuing to alter the retail landscape, Amazon likewise continues to develop products and strategies to offer frictionless and immediate buyer experiences.
In the retail industry, in particular, Amazon has stunned the market most recently with its purchase of Whole Foods Market and launch of Amazon Go. As we enter into the New Year, let us look at the many ways Amazon has impacted retail.
Books redefined
Originally launched as “Earth’s Biggest Bookstore” in July 1994, Amazon quickly revolutionized the traditional book market with self-publishing, massive inventory, unmatched customer service, free delivery, and Amazon Kindle. Many traditional bookstores like Barnes & Noble have since restructured their business strategies while others were crushed under the pressure that Amazon brought to the book industry.
Shopping revolutionized
Amazon Prime helped pave the way for the revolution of shopping, not only for books but also for any kind of product imaginable. What used to involve a buyer journey of traveling to a physical store (coupons and competitors’ flyers in tow) to possibly make a purchase, has been transformed into a one-stop shopping experience taking minutes online to comparison shop, apply coupons, and checkout. The waiting a day or three for product delivery has been less of an obstacle than anyone could have guessed. As Amazon led with free shipping, fringe benefits including streaming music and movies online, so other retailers have since followed, that is, into the online shopping arena with value, perks, and discounts.
Loyalty repositioned
Another way that Amazon has impacted retail has been in customer loyalty and brand awareness. Its logo is unmistakable, and along the lines of Nike’s curved checkmark, can be easily identified, consistent in its branding efforts. However, loyalty goes beyond brand awareness. Forbes reported in June, 2017 that four out of every $10 spent online in the U.S. is with Amazon. In addition, approximately 80 million Americans are Amazon Prime Members, accounting for 64% of U.S. households.
The impact of Alexa/Echo may stand to be even greater than the impact of Amazon Prime. As a writer for Forbes explains, “The threat to other retailers is not necessarily that Alexa will become a mass shopping channel, but that its positioning will provide another reason for shoppers to lock in their allegiance to Amazon through Prime memberships and engender further shopper loyalty by providing even greater convenience.”
Groceries reconsidered
Earlier this year, Amazon took two major steps toward affecting the grocery industry. Amazon Fresh and Amazon Go are only beginning to disrupt brick-and-mortar grocers with fresh food delivered straight to your home and grab-and-go, no checkout lines shopping experiences. CNN reports that while only about 2% of annual grocery sales were made online in 2016, experts anticipate that grocery will go to about 20% online in the near future.
