What is Amazon Effect?
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Amazon is one of the largest e-commerce companies with over 244 million active users and a valuation of over $430 billion. As Amazon has grown to dominate online sales, it has created significant disruption in the retail market as customers increasingly buy things online rather than in stores. This "Amazon Effect" has traditional retailers struggling with slipping sales as they try to compete with Amazon's quality, service and innovations like Prime Wardrobe. While large retailers fear the consequences of this new competitive landscape, the Amazon Effect also provides opportunities for small and medium enterprises to tap into worldwide sales channels.
What is Amazon Effect?
- 2. Amazon • Today, man can find the exact items he’s looking for without having to look very hard and can purchase them and arrange to have them delivered with just a few clicks. • We all know what Amazon is, and what it does. From books, appliances, apparels, furniture, to the latest gadgets, Amazon delivers almost everything at your doorstep. So, the question arises, how big Amazon actually is? • Well, it’s no surprise that Amazon is one of today's most respected e- commerce giants that has about 244 million active users and is valued at more than $430 billion.
- 3. The Amazon Effect • Since Amazon is so huge, it has an enormous effect in the marketplace. The name Amazon Effect is an acknowledgement of Amazon's early and continuing domination in online sales. • This domination has created a disruption in the retail market due to the huge shift of the customer to buy things online instead of going to the market. • Traditionally, clothing and fashion accessories have been complicated to purchase online. But now, Amazon’s latest move, Prime Wardrobe, lets shoppers try on clothes and return them for free. • These kinds of innovations are precisely why the online retailer continues to gain loyalty among digital consumers.
- 4. How is Amazon Effect affecting the global retail world? • Many long-standing retail companies, from departmental stores to brands fear the consequences of the new competitive landscape that Amazon has created in the field of retail. • Today, the retail marketplace is changing drastically and the brands will have to figure out a way to compete with Amazon’s quality and swift service. • The simple chart below explains what is taking place in retail today. Many traditional retailers report slipping sales because of the turbulence in the market created by Amazon.
- 5. Opportunities for Small and Medium enterprises • With the influence of the Amazon Effect, small or medium enterprises have the opportunity to tap into the worldwide sales channel more so than ever before. • Of course, there is a need to think about the ways of how to do the business, but e-retail can help an enterprise plan and market its product better. Also, e-retail gives the enterprises a wide reach to their products and the capability to reach to the masses. • Amazon can work as another channel for the enterprises to sell their product along with their presence over eBay or Facebook. • Having E-retail as a mode of product selling can give you better visibility of stock, along with inventory forecasting.
- 6. The future of Amazon Effect • E-commerce is a vast thing in today’s world and it is expected to get bigger with time. Amazon’s marketplace benefits smaller sellers and manufacturers by connecting them with an enormous customer base and fulfilment program and is expected to do the same in the future. The “Amazon effect” has already changed shipping, logistics, employment, and brick-and-mortar stores, and e-commerce shows no signs of slowing down. • Although the good or bad of Amazon effect remains debatable but it is surely giving many companies ways to plan their business strategy to take advantage of e-commerce’s significant impact and learn how to provide their customers a better service.
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