Amazon is the world’s largest retailer and a current force in the global retail industry. Created by CEO Jeff Bezos, Amazon has risen to unprecedented levels of fame and consumer awareness and loyalty. With e-commerce making up nearly 70 percent of its revenue and more than $90 billion in sales, Amazon has been said by many that it will “take over the world.” As it begins to disrupt several sectors of retail from grocery shopping (and delivery) to home furniture assembly, Amazon is poised to top its other world-renowned competitor, Wal-Mart, Inc. Although it began as an online bookstore 1995, the company has grown in revenues, size and in importance. Amazon has unmatched value as a radical new retailer and revolutionary in the consumer shopping experience. Through offering unique value for consumers, Amazon has changed—and is changing—the world like no other retailer has before.
The path to Amazon’s global domination must first be understood in the context of where it operates. Amazon is a United States based retailer. As one of the most developed countries in the world, the United States is a breeding ground for diversity of races, nationalities, ethnicities, religions and more. To author William R. Kerr, globalization is a new strategy that most businesses are building its operations upon instead of the traditional manner, which meant taking its home-based products and services and then putting them in other countries worldwide. Businesses that do this are, in his words, “harnessing the best that the world has to offer” (Kerr, 2016, p. 60). The increasingly globalized world and digital economy have created these new avenues for business that allow for expansion and delivery into other countries at the click of the button, a development that is also attributable to the rise of e-commerce, a phenomenon only rivaled by the Internet Revolution itself. However, the real approach to globalization and subsequent success lies in managerial objectives, actions and differences between companies and industry.
Despite having an enormous presence and its entire showroom online, Amazon invests billions of dollars in its brick and mortar warehouses and facilities. In an article titled “Why Amazon Is on a Warehouse Building Spree,” author Danielle Kucera notes its recent spree that has amounted to nearly $14 billion, creating and signaling “the urgency of getting products to customers more quickly.” Gaining more and more competitive edge over its competitors like other online retailer and bidding site eBay and big box retailers like Walmart, Amazon is creating discussion around whether or not online retailers will eventually replace brick and mortar stores entirely. As the world becomes increasingly metropolitan, lives get busier and consumers remain reliant upon the ease and convenience of online shopping, there is certainly a case for complete online overhaul of the retail industry. However, it must also be noted that some products require in-person interaction and different levels of involvement than things can be bought online.
For example, the personal interaction required in purchasing an automobile or a home is unmatched and cannot be duplicated online, despite the fact that there are many sites that allow people to purchase both. These are high-level involvement purchasing decisions and cannot bring the same consumer experience through same-day delivery or two-day shipping like Amazon offers. Customers gain the convenience of never having to leave home as they shop, but they also lose transaction value and acquisition value, like when a customer has a perceived worth about a car’s value or the feeling of accomplishment when they close a deal on a car, or even better, negotiate with the dealer. What the customer gains from an online shopping experience, they lose the human and real-life elements that have driven the market for centuries.
Technological innovation is to blame—or to thank—for the rise of e-commerce and Amazon’s growth. The retail industry is at a crossroads as physical stores close, consumers demand more and more convenience, and other retailers scramble to create as big of a presence as Amazon has. Amazon is chasing the “last mile,” as Megan Schmidt describes, by changing and owning the entire value chain through its proposed use of a private fleet of delivery trucks for its own shipping service, like UPS and FedEx, as well as the use of drones to fly packages to customers’ front doors within a half hour of placing an order. Whether or not these and other schemes come to fruition, its recent moves give it control over consumer experience (Schmidt, 2014, p. 10).
Amazon’s impact on the retail industry have already changed the game, making consumers expect accelerated delivery options without accelerated costs that come with it. Customer satisfaction requirements are being set, essentially, by Amazon and despite the retailer’s use of traditional chains of distribution and delivery, the world is watching to see what it does next. In its own words on its website, “Amazon is growing at a faster speed than UPS and FedEx,” delivery companies that are responsible for shipping the majority of the United States’ packages and at this rate, Amazon’s ambitions are newsworthy enough. The retailer is attempting to be a part of consumers’ lives at every point of purchase, especially the delivery step. While there have been snafus in the process, like in a customer anecdote in Schmidt’s article who had Amazon miss two of its delivery windows, Amazon is going to have to continually change and make those errors in order to achieve short-term and long-term success and eventually world domination.