The United States of Amazon
In the period when classic brick and mortar stores are closing or limiting their capabilities due to the ongoing Coronavirus pandemic and lack of people going to store physically, Amazon continues to boom.
Shopping behaviour is changing — every store, whether it’s a small family-owned business or a big retailer, is trying to build its online presence and take its slice of the cake in the online world. Here we are talking about e-commerce specifically. Fast deliveries, easy shopping and a simple return process are pushing customers into an ever-growing e-commerce playfield.
But is e-commerce space in the world's first countries changing in the right direction?
It’s not surprising to read that Amazon is the leader of e-commerce and, its dominance is huge. We don’t usually have a feeling of how huge it is. Compared to its competitors, Amazon has the biggest market share in the industry. Per 2020 statistics, its share of e-commerce sales is nearly 50%. That means this mega-giant is taking almost $0.50 of each dollar spent online.
Why? No competition can be compared to Amazon or compete with it today. The pie chart below shows that Amazon has enormous power over the online shopping world.
Comparing the top 10 retailers in the U.S. including Walmart, Target, Best Buy, and other well-known names, Amazon has a first place on the list. Other top 9 competitors together are not stronger than Amazon. Even Walmart, with its 4756 super spacious stores, is having about 18 times less annual revenue.
Amazon is in every industry
We always think about Amazon as an online store having everything from A to Z. Some people still perceive Amazon as a book retailer primarily. It’s no wonder as it took only a few years since Amazon was a book dealer to become one of the biggest companies in the world. But its power goes a lot deeper than that. With its rapidly growing Prime logistics, Amazon is disrupting the logistics industry as well and confronting big buys like FedEx, UPS, and DHL that were extremely established companies since decades ago. But now their ground is shaking too. Once a small company that was their reliable partner is having its distribution across the world and is confronting them now by heavily undercutting prices and providing a better experience to the customers.
Diving into the logistics world was an obvious step that would Amazon take with its millions of shipments every day. But it’s not the only industry that is being disrupted. With its AWS services that is a very stable player in the SaaS providers world, pharmacy retailers are also put in a bad position as more and more (especially elderly) people are buying drugs and pills online. The demand for that kind of service is so high that Amazon released its own “Amazon pills” brand — Amazon Pharmacy. Additionally, the ground is shaking for food companies as well. After acquiring Whole Foods that is popular for its fast one-hour delivery and fresh and healthy food in the fast-growing organic food market segment, Whole Foods destroyed and suppresses small family-owned businesses across the country.
People love the convenience that Whole Foods are offering, but is it always the best choice for our community? Probably not.
The way for small businesses
Small stores, both online and physical stores are ofter left without a choice. Entrepreneurs realize it’s becoming very unrealistic to enter into many markets under Amazon’s dominance and that’s not good for anyone except them. But Amazon is always giving a “choice” for small ones to work with them.
Their great concept of working with small independent businesses to “building the most customer-centric company in the world” only sounds great in theory. In reality, small ones are pushed to play on the market by their rules that are being simplified and ofter very ethically questionable and harmful for regular people. People in the business understand that situations need to change as soon as possible. If we leave this super powerful giant to enter into every aspect of our life, we would be left without REAL choices soon.
Conclusion (solution)
The current laws and regulatory bodies are very slow-moving when it comes to the regulation of markets that Amazon is already dominating. We need big companies, like Amazon, that are supporting small ones. But at the same time, we need an existing competition that is on their level.
The next time you are thinking about buying something on Amazon, try to think if there is another way. Can you buy food in your local store where you potentially know the owner? Or you can buy your phone charger in a small street shop to help someone live of you. You are not required to think where you left your money off, but we are all witnesses of extremely big companies (even more powerful than many countries) and we are together responsible for that.
Big companies will always have a significant role in our economies, but we need to cut the line somewhere and let the other players come. We need to start changing some aspects of our buying process if we want the best for ourselves and our community.
