How Has Amazon Changed the Prospect of Retailing?Thu Dec 10 2020. 3 min read
Back in the 1990s, Amazon was simply a website that had a better selection of books than most brick-and-mortar bookstores, which was awesome for those of us who wanted more esoteric titles that our local library didn’t carry. 25 years later, Amazon has become the biggest retailer in the world and is still growing. Just about anything you can think of can be found on their site.
In fact, they have taken over the retail game to such an extreme degree that Investopedia has a definition on their site for “The Amazon Effect” (www.investopedia.com/terms/amazon-effect.asp). The basics of this idea include a key takeaway: “The Amazon Effect is the disruption to conventional physical retail locations caused by the increase in online shopping.”
Originally, the Amazon Effect could be seen as a negative for physical retail locations that couldn’t match the global superstore’s prices or selection. And it’s clear that many retail operations have closed because of a huge decrease in foot traffic. Malls all over the country are slowly becoming collections of abandoned storefronts. Today’s teenagers aren’t going to know the fun of hanging out at “the mall” with their friends on a weekend morning.
But the Amazon Effect is not all negative. Why? One word: Coronavirus. The very fact that Amazon removes the ability to physically interact with something before you buy it is incredibly beneficial right now. With continuing lockdowns and business closures all over the world, being able to stay home and buy almost everything you need (except toilet paper and Lysol) from the comfort and safety of your couch is even more appealing than it was in the past. The instant gratification supplied by Amazon’s variety of streaming services can be addictive.
It’s probably safe to predict that Amazon will come out of the pandemic and be just fine. The Amazon Effect will continue. What remains to be seen is the long-term effect on other retailers of the combination of Amazon and Covid19. The next few years will be challenging for retail.