Defining ‘the Amazon Effect’ for Modern Businesses
By Kelsea Mann
In our last blog post, we discussed the effects of COVID-19 on the last mile delivery market. In this week’s post, we’ll dive deeper into how retail giant Amazon is shaping the market, and permanently changing how customers shop. According to an investopedia.com article, the Amazon Effect is defined as “the impact created by the online, eCommerce, or digital marketplace on the traditional brick and mortar business model that is the result of the change in shopping patterns, customers expectations, and the industry’s competitive landscape”. What does this complicated definition mean for different types of businesses? And, how should your business adapt?
A Threat to Brick and Mortar Stores?
Amazon’s threat to brick and mortar stores has been obvious since before 2017, when a WWD report cited more than 9,400 store closings, a number 53% higher than the amount that closed in the wake of the 2008 Recession. What’s threatening these businesses the most isn’t Amazon’s selection of product, or value of the company- in fact, searches for ‘Amazon sucks’ are at about 1,450 per month- it’s the way that Amazon’s services have changed customers’ shopping behavior for good. Studies have shown that due to the perception of the product they are used to in an online retailer, the average customer today expects more variety when visiting a retail store. Shoppers also have an expectation of the seamless shopping experience they get when browsing on Amazon. Minimal disruptions like needing to read details on a small package in the store aren’t experienced on Amazon. Customer’s can’t read reviews on a product, so buying a retail item might seem like more of a gamble than in years past. Shoppers are expecting a higher level of servicing than they ever have from a traditional online store, all from the optimized experience of Amazon.
Weighing the Online Shopping Experience
There are plenty of pros and cons when it comes to online shopping, that brick and mortar stores can take advantage of to remain competitive. A report from herrickdl.org breaks down the advantages and disadvantages into the following categories:
Convenience — The ability to buy a nearly infinite selection of products without needing to leave your house.
Lack of Hands-On Inspection — Online stores can only replicate through reviews how it feels to see and touch the product. You won’t know if you like everything about the product, or even if it fits you correctly, until it arrives in the mail.
Selection — Online stores have restrictions when it comes to inventory stock, like the shelves of brick and mortar stores. They also have no quantity limits, and can simply order more from a supplier upon customer request.
Shipping — When online shopping, you can expect to pay extra on top of the price for shipping. If you don’t like a product after it arrives, you might also have to pay for return postage.
Information — Product information online is derived from a variety of experts, such as the manufacturer of the product, or reviews from a magazine.
Wait Time — The pleasure of instant gratification is lost when online shopping. The “see it, touch it, take it home!” the slogan of brick and mortar stores doesn’t hold true in the online world.
Price — Discounts online can total 25–50% off the suggested retail price, because online stores don’t need to pay rent for a storefront.
Privacy — One great advantage of shopping online comes with increasingly personalized product suggestions. However, in order for this to happen companies like Amazon must have permission to track your data, which can come with a great deal of privacy loss.
How Can Traditional Stores Compete?
The best way traditional stores can evolve their business to compete with rising customer expectations is to map out a way to capitalize on the advantages they already present, and introduce some of the advantages of online shopping into their experience. It isn’t just retailers that need to compete- anyone who ships products, whether the business is a plumbing supplier or a pizza restaurant, is going to see the effect of these increased shopping patterns on their customer. For instance, consider offering price match as a feature for your product. Customers will see the advantages of instant gratification and not needing to pay for shipping, taking away that discounted price advantage from online retailers.
Something any business can introduce is faster shipping, made possible by tech-logistics companies like PartRunner. Using this delivery service with a wide range of vehicles has significant advantages over hiring a fleet or renting out trucks, because PartRunner’s app and website track your deliveries and eliminate the need to plan out vehicle routes and shipment times. Your customers will be happier with the faster shipping times they’re used to from an online retailer, whether you’re sending product to a hospital, or a construction site.
Check out PartRunner’s Website, or any of our social media accounts including LinkedIn and Instagram for more information.