Prices and Cost of Offering Breadth and Depth of Merchandise and Services
2.1 RETAILING VIEW Amazon: Retailing in Every Category
When it started out in 1994, Amazon simply promised more books than anyone else. It took a few years for the online retailer to grow large enough to threaten the big names—Borders, Barnes & Noble, and so on. But today, Borders has disappeared, and Amazon’s competitive threat spreads far beyond bookstores: When it comes to competition among retailers, pretty much everyone in the United States competes with Amazon. From small sellers of personalized gifts to service retailers to massive consumer-goods providers, the retail market recognizes Amazon as a dominant actor, specialized in getting the products that customers want to them quickly, efficiently, and exactly when and where they want those items.
The reason has a lot to do with three key benefits that Amazon offers all retail customers. First, it is incredibly convenient, available to meet shoppers’ every product need, at any time. Not only is Amazon’s inventory unsurpassed, but it makes ordering easy with checkout tools such as one-click and automatic deliveries of repeated purchases on frequently bought items. With its Echo service, Amazon customers who pay for Prime Now service can place orders by calling out their grocery list to an artificial intelligence device installed in their homes. With records of prior purchases, Echo can also suggest alternative options and apply previously set shipping preferences. Then it gets these ordered products to customers quickly and conveniently. By paying a fee, many customers get the products on the same day, but even Amazon’s free, standard shipping service is pretty fast.
Second, just in case people want to interact personally, Amazon is gaining steam as a brick-and-mortar retailer as well. Why does it need physical stores? It recognizes that some customers like to shop in an actual environment, rather than a virtual one.
Accordingly, Amazon plans to apply its remarkable facility with
integrating and leveraging customer data to make recommendations to its brick-and-mortar stores. In so doing, it appears poised to make a successful transition from a mainly online presence to a truly omnichannel source.
Third, retail isn’t simply about physical goods. It also includes services, and on that front, Amazon is increasing its remarkable availability even further by expanding into new service offerings. It offers textbook rentals through its Kindle products to college students. It provides authors an easy route to self-publishing their work. Its cloud computing services are free for the first year—and its cloud offers enough storage for every person on the planet to store 82 books. It also has a roster of providers offering about 700 types of services to customers, from the conventional to the obscure (just what does a “silk aerialist” do?). Just as it has with products, it seeks to offer the widest selection of services possible, ensure speedy delivery, and provide highly competitive prices.
Amazon even functions as some users’ primary search engine.
Among 2,000 respondents, 44 percent indicated that when they began a product search, they started on Amazon rather than on traditional search engines such as Google or on specific retailers’
own websites. When asked why they chose Amazon, most of these respondents noted that the retailer offered great personalization.
When they enter a search term, Amazon knows how to suggest related and pertinent products that help them make good purchase decisions.
But its influence is not all threat. For small-business owners, the opportunity to sell through Amazon provides unparalleled exposure.
Amazon actively seeks small retailers with interesting products but insufficient resources to distribute those offerings widely. To them, Amazon is less a threat and more a golden opportunity. Still, as consumers invite Amazon in and solicit further services from it, the effect the retail giant has on the market appears destined to increase. For retailers seeking to compete with it—and by definition, that means pretty much every retailer in the world—paying attention to what Amazon is doing now is a necessary task. That is, because Amazon competes with literally every retailer, every retailer needs
to understand what makes Amazon work so well if they are going to remain competitive and hold on to at least some of their market share.
Amazon offers the largest variety and assortment of any retailer in the United States.
© franky242/Alamy Stock Photo
Sources: Chantal Tode, “Amazon Makes Play for Greater Influence over In-Store
Shoppers,” Mobile Commerce Daily, July 3, 2012; Greg Bensinger, “Amazon’s Tough Call,”
The Wall Street Journal, July 11, 2012; Molly McHugh, “Saving Cash on College
Textbooks,” Digital Trends, July 18, 2011; James Kendrick, “Amazon Debits Kindle Owner Lending Library,” ZDNet, November 3, 2011; Vanchi Govind, “Amazon.com Offers Cloud Computing Services for Free,” InfoTech, November 3, 2010; Jeffrey A. Trachtenberg,
“Secret of Self-Publishing: Success,” The Wall Street Journal, October 31, 2011; Zoe Fox,
“How Amazon Became the World’s Largest Retailer,” Mashable, November 17, 2011;
Hilary Stout, “Amazon, Google, and More Are Drawn to Home Services Market,” The New
York Times, April 12, 2015; Laura Lorenzetti, “Amazon’s Handyman Service Is Expanding to 15 Cities,” Fortune, July 22, 2015; Harriet Taylor, “Amazon, Google Move into On- Demand Home Services,” CNBC, October 1, 2015; Taylor Soper, “Amazon’s Dominance of Online Shopping Starts with Product Searches, Study Shows,” GeekWire, October 6, 2015.