The Amazon Effect

There is a thing happening across the retail industry called, "The Amazon Effect". If you are not in the business of retail, you likely don't care, but maybe you should. You are a consumer, right? This impacts you. Here's why:

The Amazon Effect

Amazon.com has become an important part of the American economy, and the lives of people globally.  But, far too few people still understand the repercussions of Amazon's success on retailers, consumer goods manufacturers, real estate - and ultimately everyone's lives!

Amazon is getting closer and closer to pushing out its competitors and gaining the ability to charge you whatever it wants. Amazon’s dominance forces us to evaluate how comfortable we are with more and more of our commerce going through a single company. Alas, not all hope is lost, because old-world brands and retailers are keen to keep up.

According to analysts, retailers are figuring out how to manage inventory and market to consumers in the digital era. This is a critical turning point because this means that Amazon finally has some competition. Retailers are adopting diverse business strategies to try and reach a broader audience like investing in subscription models, direct sales and pop-up markets. Plus, many brands, like Birchbox, ASOS, Overstock and Zappos have scrapped the whole idea of a store front and are functioning solely online which is changing consumer behavior and preferences. 

Pop Up Markets

Many businesses are countering Amazon’s plot for world domination by simply not being Amazon (i.e. carrying everything). Because when you sell everything (and I mean everything), there is no way to ensure that all products are top quality. Consumers still turn to small businesses when they are looking for niche, quality products and not just convenience and efficiency. The good news is small businesses and retailers are learning to be both convenient and efficient which means that Amazon’s threat should continue to decrease over the next few years as small businesses get savvier.

Quality Checks

 

Finally, let's be honest. Amazon will never be able to meaningfully connect with people in the real world like smaller or old-world retailers would. For example, my grandmother used to go to her favorite department store (Dillards) and shop with the same sales lady (Ingrid) every single time she wanted to purchase something. I was usually with her in these excursions so I too got to experience the connections and relationships cultivated over the years of her retail therapy. This made such an impact on me that even after my grandmother passed, I would go into that department store when I was home just to say hi to Ingrid, smell my grandmother's perfume and make a few purchases for myself. In my opinion, that can't be replaced by any algorithm or 24hour delivery service. 

Grandmother

So while the landscape of retail is changing along with the digital era, it doesn’t have to be a scary thing. If old-world retailers and small businesses continue to adapt to this new norm, then corporate giants such as Amazon will lose some of their leverage. The only remaining question is whether your business, your government leaders and you are planning and preparing for the inevitable changes which will continue coming.