As eCommerce becomes the norm, how we shop has shifted. Amazon has been sweeping the headlines in regards to it's large online sales, openings of new fulfillment stores, and the recent acquisition of the grocery store chain Whole Foods. Nearly every student on campus is a member of Amazon Prime and is drawn in by it's convenience, breadth of product lines, affordable price points, and fast two-day shipping. I know I am. The shifting way that people think about shopping is impacting not only the legacy brick-and-mortar stores but nearly every industry.
In 2017, Amazon was responsible for 44% of all U.S. e-Commerce sales. The fact that Amazon has captured nearly half of all domestic online sales is a bit scary to me, and Amazon is only on the rise. Do you think there'll be a point where Amazon will reach the upper 75 percentiles of online sales running nearly all other competition out? Over 50% of product searches begin on Amazon – and only Amazon has the ability to convert click-through to sales, One Click Retail CEO Spencer Millerberg wrote.
Because of this, many businesses have taken their search engine and advertisement budgets out of Google Ads and Facebook Ads, and investing it to be fulfilled by Amazon. By allowing businesses to sell on Amazon, Amazon is also benefiting greatly from this. It draws online shoppers to their website giving them the ability to sell their own products. They have established their own brand, AmazonBasics, which consists of quality common household items at a more affordable price point and have seen a combined estimated sales of $150M in their two largest categories, home and electronics.
To most, Amazon has been a blessing by providing quality products at an unmatched convenience. I am interested in Amazon's rapid growth because at what point do we start to worry? We are constantly hearing about these brick-and-mortar stores, mom and pop shops, and small online retailers shutting down because they simply cannot compete. Toy "R" Us, a 70 year old worldwide chain has filed for bankruptcy, Whole Foods has been acquired, and now there is talks of Amazon seeking to acquire another brick-and-mortar fleet, Target. With this acquisition, it would put Amazon into the brick-and-mortar business giving them a double advantage against one of their biggest competitors, Walmart. There has to come a point where we ask ourselves, can Amazon be stopped? Will there ever be a point in the far future where Amazon becomes the only option for affordable products among all industries? I'd love to hear what you think about this.
Questions:
- Do you think Amazon will aquire Target in the near future?
- At what point do we start to worry Amazon will become a monopoly?
- What do you predict to be Amazon's percentage of U.S. e-Commerce sales next year?
Sources:
Amazon captured 44% of US online sales last year, Retail Dive, Jan. 4, 2018.
Could Amazon really acquire Target?, Retail Dive, Jan. 3, 2018.
Brayden I loved this post. Reading through it, there is a lot of aspects of Amazon's business model that I have never really evaluated as an avid user myself. Having interned at Target before, I can say that brick-and-mortar in general are obviously struggling to compete with strong and affordable fulfillment services like Amazon - but I think that the tech-focused generation that will hold most of the world's wealth in the near future can't just order everything online. We seek experiences, trials, and easy ways to exchange something when we don't get what we were looking for. I think I would be disappointed if Amazon acquires Target for two reasons - 1 being that I love what Target and Amazon stand for separately, I would hate to see the value of a brand almost disappear and become part of another organization's identity simply because they are in the process of monopolizing the retail industry. I would also be fairly disappointed to see that Amazon is in fact taking over retail. It signifies a huge shift (larger than we can currently imagine, I think) in the future of our digital, connected world. Where will we be when instead of running into an old friend ad Target or Whole Foods, that we're ordering our weekly groceries from the comfort of our homes - what comes in between?
ReplyDeleteBrayden,
ReplyDeleteI do not think Amazon would acquire Target in the near future, because Amazon's financial situation is not very good. To satisfy Amazon members two-day free delivery, they have to pay a lot on their delivery system. Also, it would not monopoly in the near future because although they had a variety of goods, there still be fake goods. Many high-class people tend to buy goods on official websites. I guess the percentages would be about 50%, because Amazon has been a mature company for many years.