Why Experts Think Amazon Is Losing Its Competitive Edge
Retail giant Amazon has dominated the e-commerce industry likely before you got your first credit card.
As other retailers step up their shipping games, find out why industry experts think the company may finally be losing its competitive edge.
Indeed, Amazon – is the largest e-commerce marketplace and cloud computing platform in the world – has seen better days. Tragically, last week an Amazon Prime cargo plane crashed en route from Miami to Houston, killing all three people on board. The crash came at the same time that analysts expressed concerns about the financial fate of the company. While Amazon is still increasing revenue in its American e-commerce unit, in its international markets, and in its web service unit – with its overall revenue increasing by 20 per cent in the fourth quarter – things aren’t as rosy in its bricks-and-mortar retail stores, which have experienced a year-over-year revenue decline.
Back in November, Amazon CEO Jeff Bezos told employees at an all-hands meeting that the company would fail one day.
“Amazon is not too big to fail,” Bezos said at the time. “In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.” (What is that they say about manifesting your reality?) Some think Amazon’s downturn could happen sooner than later; as author Tom Armstrong highlights in a recent Forbes piece, the company has a target on its back politically and economically.
It may be the changing shipping game that’s the biggest cause for concern for Amazon.
When it comes to speedy shipping – something loyal customers cite as a major perk to making Amazon Prime purchases – other companies can now move almost as quickly in terms of click-to-arrival times. Recognizing this possibility back in 2015, Amazon began introducing one-day delivery on certain items for Prime members in certain regions of the U.S.
On February 11th in a press release, the company said that its Prime members would now enjoy free one-day shipping to 13 new cities and towns across Canada, increasing the total number of spots in our home and native land to 19. Prime members in select locations can now shop over one million eligible items that will arrive the next day.
Now, however, especially south of the border, companies like eBay, Target, and Walmart offer free two-day delivery on many items.
Most recently, in the U.S., The Home Depot has invested in Atlanta-based startup Roadie to help accelerate deliveries. Roadie is essentially an online platform that matches drivers with items in need of hauling based on real-time supply and demand, tapping into the unused potential of vehicles already on the road. The company says it has delivered to more than American 11,000 cities and towns, apparently creating a larger footprint than Amazon Prime.
In response to increasing competition, Amazon Prime has fought to keep members with perks like Prime Video streaming and discounts at Whole Foods, which Amazon acquired in August 2017. While an Amazon Prime subscription will set you back $119 per year, a membership fee is absent from the equation at Walmart on its (admittedly much smaller) selection of items available for free two-day shipping. To quality the order must cost at least $35.
The reason Amazon has been able to offer such speedy shipping is that the company has massive warehouses throughout North America – something many retail companies are obviously not able to offer.
Taking advantage of this void, however, there are companies emerging like Deliverr, which offers leased warehouse spaces throughout the U.S. to help partners like Walmart ramp up their delivery speed. While Walmart’s free two-day shipping has yet to make its way to Canada, the company does have quite a few different pick-up shipping options avail for Canadians, like Penguin pickup and Canada Post pickup.
The unreliability of quality and products could also be a contributing factor in Amazon’s potential loss of competitive edge.
In a piece in The Atlantic, author Ian Bogost calls out Amazon for confusing customers in its vague descriptions of product offerings, with the chance of something showing up at your doorstep different than you thought you noticed high. He also highlights that, because Amazon amasses products from various sources, counterfeiting can be more common. Other less-than-ideal Amazon qualities he highlights include changing prices, inconsistent availability, and unreliable arrival times. Another element that may hinder Amazon’s success – especially at a time when specialized retailers have also amped up their online retail and shipping games – is that Amazon specializes in pretty much everything, creating what Bogost calls a “giant digital flea market” that’s “saturated with uncertainty.”
On the positive, in response to scrutiny regarding environmental issues, earlier this month, Amazon announced plans to make all of its shipments net zero carbon, with a goal of making 50 per cent of all shipments net zero by 2030.
In terms if the future, one thing is certain: as long as online shopping continues to increase in popularity, retailers of all varieties will inevitable adopt quicker and more efficient ways to get their goods into your hands.
Featured Image: Pxhere
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