Since Amazon was founded in 1994, they have revolutionized the way people purchase products. Consumers have moved from having to go to traditional retail stores to now having the power to purchase anything and everything right from their mobile device. Not only can you purchase anything, but you can also have it delivered in several hours. Many traditional retailers have suffered from the Amazon Effect, but it has also opened the door for many others.
Amazon accounted for $0.51 of every $1 of growth in U.S. ecommerce during 2015. Moreover, it grabbed 24% of total retail growth in the United States. In 2016 Q1, total online sales was $92.8 billion, an increase of 3.7%, while total retail sales was down 0.2%.
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Amazon has made purchasing products online easier and over the years, more consumers are shopping online. This has been a huge benefit for many smaller ecommerce retailers. No longer are consumers afraid to make purchases online, give out credit card information or worry as much about fraudulent website/activity.
Better Customer Service
Amazon has always pushed the bar on customer service with faster delivery times and easier returns, just to name a few. This has forced all online retailers to improve the customer experience. No longer can you ship orders once a week and deliver them in 10 days. Not all online retailers can keep up with what Amazon is doing, but retailers are now forced to push the boundaries of their capabilities. This in turn results in improved customer service and increased sales.
New Niche Markets
10 years ago, who would have thought to ship ice cream, patio furniture or even toilet paper direct to consumer? Amazon has continued to push the limits of what we are able to sell online and ship to consumers. This has opened up new niche markets for online retailers to be able to sell similar products. Now in 2016, I think it is safe to say that there is nothing that you can’t sell online and ship direct to consumer.
Supplier Innovation
Over the years, Amazon has not only pushed the boundaries of what they can do, but also what they expect out of their suppliers. There are significant amounts of new automation, UPS and FedEx now offer SurePost and SmartPost products and corrugated suppliers are everywhere creating more competition and lower prices. These are just a few of the suppliers that have been forced to innovate, drive costs down and provide better service because of Amazon. Now, all ecommerce retailers can benefit.
The ‘Amazon Effect’ has had a negative impact on many retailers and especially those who were late to the ecommerce game. But it has also had a positive effect for many others. It does not appear that Amazon is going to lose their stronghold on the ecommerce market any time soon. Trying to compete can seem impossible for many smaller retailers. Carving out your own niche and your own brand can help you create an extremely successful business.
Mike DeFabis is vice president of fulfillment/.warehousing sales at Integrated Distribution Services Inc. (IDS)