Sleepless in Seattle—and everywhere else—which is what Amazon does to the rest of the retail world. As the following article reports, Amazon now accounts for about half of all e-commerce sales growth. Additionally, Amazon enables other e-commerce merchants to grow through its payments and logistics services.
If one thing is clear at this gathering of the retail industry’s top brass, it is that pretty much everyone in the sector is figuring out how to beat, collaborate with or be the next Amazon.com.
At seemingly every panel at Shoptalk, as the e-commerce conference here this week is known, moderators queried speakers on how to deal with this or that aspect of the Seattle juggernaut’s business — from its encroachment in the field of fashion to its strengths in fulfillment and delivery.
“You’re crazy if you compete against Amazon and you don’t recognize they are bigger, stronger, faster,” said Scott Thompson, the CEO at online shopping service ShopRunner and former head of Yahoo. “They’re playing their sport on their field with their referees and their fans.”
The comments came at the heels of a tough week for department stores and other traditional retailers, which posted surprisingly disappointing earnings, even as Amazon shares broke record levels, buoyed by unexpectedly good results.
Amazon has been a key enabler of that fragmentation. A growing part of its revenue comes from allowing other merchants to sell on its website. Through a business known as Fulfillment by Amazon, it even handles those merchants’ logistics. It offers them an online checkout solution if they operate their own websites, and through the Amazon Web Services cloud-computing unit, it also hosts its competitors’ websites.
Although Amazon has disrupted the likes of traditional department store merchants and others that did not pivot rapidly enough to e-commerce, there are still brick and mortar stores that are more than holding their own. Recent results from home improvement retailers Home Depot and Lowe’s, as well as apparel discounting favorite TJX, have demonstrated that they can successfully compete against Amazon. Consumers still want personal attention and service as well as the social aspects of the shopping experience—something that the online shopping merchants still cannot match.
Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group
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