Will Amazon Continue its Dominance in Retail?
Amazon is continuing its dominance in the retail market whereas competitors and other retailers are constantly trying to survive in the market.
The world’s largest retail store Amazon has managed to surpass its retail giant competitor Wal-Mart Stores, Inc.The company has been known as the largest brick and mortar retailer, but it has been constantly battling its online shopping giant Amazon.com to retain its retail supremacy.
According to former SAKS chief executive officer and Chairman Steve Sadove, Amazon.com is starting up distribution centers everywhere. Basically what they are trying to do is, along with providing the internet shopping experience to its customers, Amazon is opening up distribution centers all around the country as well. So it will not only be an internet experience but also a brick and mortar experience.
This is called an ‘Omni-Channel’ as stated by Steve Sadove and it’s going to be a major win for the company. He added that we will be seeing in the future that a lot of C&D models will be going away.
According to him, winners are the ones who are running the stores and are also doing the internet. Other retailers in the market are trying to battle Amazon, such as J.C. Penny’s, Michael Kors or Macy’s. They have differentiated exclusive products because Sadove says that you cannot take price as the only factor while competing especially when you have the internet, the stores and the capex requirements.
Similarly Wal-Mart is trying a new bricks and clicks approach, whose aim is to attract people from the online store to the shops. But a number of people doubt that this will be able to overcome Amazon’s delivery strategy. Along with this, there’s Jet.com that was launched last month in competition with Amazon Prime. Jet.com is a service designed by Marc Lore, for which they are charging an annual fee of $49.99 and free shipping for orders over $35. If your order is under $35 you are required to pay delivery charges of $5.99.
On the other hand, Amazon Prime charges a $99 annual subscription fee with free of cost 2-day shipping other perks include unlimited photo storage, prime music streaming service, and early access to deal. The biggest negative of this service is that it makes one a lazy customer, they don’t compare prices anymore, they don’t haggle with prices, they don’t bother to avail coupons. Customers simply click on Amazon and make their purchases now.
That being said, Sadove believes same-day delivery or one-hour delivery policy that Amazon is providing is just increasing their cost. They are spending too much money on it whereas other retailers like Wal-Mart are saving service costs by not doing this. He adds that quick shipping is very important but for some on a day or hourly basis delivery is not that important.