Amazon has completely transformed the traditional brick-and-mortar business model. From changing shopping behavior to exceeding customer expectations, the competitive landscape of the industry is continually changing.
As online shopping and eCommerce become more popular, it has hurt many traditional businesses that only have a physical location and have to compete with the online market.
KEY POINTS:
- Since Amazon is the biggest online store, this change is often called the “Amazon Effect.”
- Online shopping is easy, has a lot of choices, and is often a good deal. But the customer can’t see or touch the product before buying it.
How to Make Sense of the Amazon Effect
As the number of people who shop online grows, brick-and-mortar stores lose business and e-commerce businesses gain. More and more people are shopping online instead of in stores.
According to the U.S. Census Bureau, online sales made up 13.6% of retail sales in the U.S. in 2020, up from 10.7% the year before.
Amazon.com Inc. (AMZN), which has been around since 1994, is still the leader in online sales worldwide. It has become the symbol of this transformation, hence the Amazon effect moniker.
People often say that the Amazon effect is the main reason sales at brick-and-mortar stores are going down, which is a sign that the stores will eventually close. In 2017, more than 5,300 stores closed, which is a 218% increase from 2016. If you also want your product on Amazon, you easily find professional amazon marketing services expert.
The Amazon effect has not only hurt the sales of traditional stores, but it has also changed the way people shop in big ways.
For example, because online shopping portals are so easy to use, shoppers today expect a lot more variety even when they go to a store.
In a store, you might not be able to read the list of contents or specifications on a small package of electronics or cashew nuts, but the same information is easy to find in large text on online shopping sites.
People’s behavior has also changed because of how easy it is to shop online. They now expect the same smoothness, quick responses, and convenience even for services that can’t be done online, like going to a salon.
In addition, online comments immediately let shoppers know how other people feel about a product.
Online shopping has both good and bad points.
With online shopping, you don’t have to drive to a store, pick out different things, and wait in line to buy them. It may even be cheaper to buy something online than in a store (although this is not always the case).
Customers can also get better use out of shopping portals powered by technology, like making it easy to reorder their usual groceries every month. Using big data and artificial intelligence (A.I.) to better track a customer’s shopping habits and behavior through online portals is a win-win situation for both the customer and the shopping portal.
Customers receive custom offers and promotions. The shopping portal gets to promote products that are more likely to be bought. These features are either not available at regular stores or cost a lot. High rents are another thing that hurts retail stores.
Large online retailers are starting to work on ways to include brick-and-mortar stores in their supply chains.
This is because brick-and-mortar stores are getting more and more upset about it. For example, many online shopping sites let you order items and pick them up at a nearby store.
As a result, store owners benefit because they get a cut for their service, some of the products ordered come from their stores, and more people come into them.
When people buy something online, they don’t get to touch, see, hear, smell, or taste it first. In this way, shopping in person and shopping online go well together. In addition, customers can try out a product in person and order it online at their own pace, possibly, for less money.
Even though this is good for the customer, it hurts the brick-and-mortar stores. They pay for employees, rent or lease, inventory, and utilities so that customers can shop, but they buy the product online.
This is also a problem for many customers because when stores close, they can’t try out the products they want to buy before they buy them.
The Future of Stores with Real Walls
The 2020 global crisis, in which many people were quarantined, told to stay at home, or banned from traveling.
This showed how important online shopping is. It stopped being a luxury for many people and turned into a need. So online shopping isn’t likely to go away as long as the Internet is around.
More and more people are shopping online, which puts brick-and-mortar stores in a tough spot. People will go to a store if it has something that can’t be done online.
This could be something that people do or feel when they visit the place. Some malls have theme parks, movie theaters, or a variety of restaurants to attract customers in the afternoon and evening.
Even though more people shop online, some stores are still doing well. To attract customers, some malls have theme parks, movie theaters, or a variety of restaurants.
In addition, other retail chains have made a culture around their products and stores, where people like to go and be seen going there. As online shopping continues to grow, more brick-and-mortar stores will likely need to use these strategies to stay in business.
Conclusion
Amazon has demonstrated its influence on every type of business. It has been beneficial for some businesses and detrimental for others. As a business, you should never be afraid of other businesses. You must ensure that your business is immune to Amazon’s influence. You only need to turn the disadvantages into advantages.
