by Robert Wharton
This is the first in our three part series about the dominance of Amazon in online retail. You can find the second, Amazon’s War for Online Shoppers, here, and the third, Amazon Rex, here.
Between the return of high waisted jeans and Power Rangers to millennials debating if Ross and Rachel were on a break, there’s a lot of 90’s nostalgia going around. You remember the 90’s, right? You know, back when Amazon was just casually selling books online and you could still stroll into one of Border’s thousand plus locations if you didn’t want to wait on Amazon’s slow shipping time.
And now here you sit reading a blog on the internet whose physical infrastructure is mostly controlled by Amazon gratus their early entry into cloud computing with Amazon AWS. And you’re most definitely not sitting in a Border’s reading this blog. Because when Amazon enters a market, it looks to completely dominate the entire space, not just a niche of it.
In 2017, Amazon racked up a total 44% of all U.S. e-commerce sales, according to One Click Retail. That’s a big chunk of a fast growing pie as e-commerce sales grew 16% in 2017 compared to 2016, according to a report released by the U.S. Commerce Department. Amazon claimed that kingly portion in large part due to their big four money makers: electronics, books, home and kitchen, and sports and outdoors.
Now you may be sitting there, sipping on a delicious mocha latte, and thinking, “good thing I sell furniture and Amazon doesn’t compete with me.” I’ve had multiple prospects from that exact market tell me that exact thing. And they were all wrong, though I did inform them of their error in a more politic way. Because Amazon isn’t happy with just dominating one market, they want to dominate all markets.
In that same review of Amazon by One Click Retail, they found that the fastest growing product groups on Amazon.com in 2017 were luxury beauty (up 47% from a year ago), pantry items (38%), grocery (33%), and… duh, duh, duuh!… furniture at 33% growth over last year!
This is a somewhat elaborate way of saying that if you think your market is safe from Amazon, you’re kidding yourself. In July of last year Sears announced that they would start selling their Kenmore appliances on Amazon.com with a new “Kenmore Smart” feature that integrates with Alexa so you never have to leave your couch again. Tack on the free two-day shipping for Amazon Prime members and you’re looking at a major future hit to appliance sales for big stores like Lowe’s and Home Depot.
Amazon has been capable of this year-over-year growth due in large part to its innovative attitude towards being an early adopter of new technologies. Companies that take this same approach and actively seek out the new solutions being created are more capable of positioning themselves against the threat Amazon poses to their bottom line. Companies that stagnate and think “it’s been working for us so why change?” will find themselves wistfully nostalgic of the time before the rise of Amazon in their market.
