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Advantages of Online Shopping

The internet has revolutionized the way we shop. Because of the numerous advantages and benefits, more and more people these days prefer buying things online over the conventional method of going into stores.

What are some reasons many people love online shopping, and why is it so popular? Below are my top ten reasons for shopping online.

Pros and Cons of Shopping Online

Advantages of Shopping Online

Disadvantages of Shopping Online

10 Benefits of Shopping Online

Shopping online has many benefits. Here are ten of the most important advantages.

1. Convenience

Convenience is the biggest perk. Where else can you comfortably shop at midnight while in your pajamas? There are no lines to wait in or cashiers to track down to help you with your purchases, and you can do your shopping in minutes.

Online shops give us the opportunity to shop 24/7 and also reward us with a 'no pollution' shopping experience. There is no better place to buy informational products like e-books, which are available to you instantly as soon as the payment goes through. Downloadable items purchased online eliminate the need for any kind of physical material at all, as well, which helps the environment!

2. Better Prices

Cheap deals and better prices are available online, because products come to you direct from the manufacturer or seller without involving middlemen. Plus, it's easier to compare prices and find a better deal. Many online sites offer discount coupons and rebates, as well.

Not only are prices better, but you can save on tax as well since online shops are only required to collect a sales tax if they have a physical location in your state. Factor in the saved expense of gas and parking, and you have saved yourself a lot of money!

3. More Variety

The choices online are amazing. You can find almost any brand or item you're looking for. You can get in on the latest international trends without spending money on airfare. You can shop from retailers in other parts of the state, country, or even the world instead of being limited to your own geography. A far greater selection of colors and sizes than you will find locally are at your disposal.

Plus, the stock is much more plentiful, so you'll always be able to find your size and color. Some online shops even accept orders for out-of-stock items and ship when they come in.

4. You Can Send Gifts More Easily

Sending gifts to relatives and friends is easy, no matter where they are. All the packaging and shipping are done for you. Oftentimes, they'll even gift wrap it for you! Now, there is no need to make distance an excuse for not sending a gift on occasions like birthdays, weddings, anniversaries, Valentine's Day, Mother's Day, Father's Day, and so forth.

5. More Control

Many times, when we opt for conventional shopping, we tend to spend a lot more than planned and end up buying items that aren't exactly what we wanted (but we can't find anything better in the store). Online, you don't have to let the store's inventory dictate what you buy, and you can get exactly what you want and need.

6. Easy Price Comparisons

Comparing and researching products and their prices is so much easier online. If you're shopping for appliances, for example, you can find consumer reviews and product comparisons for all the options on the market, with links to the best prices. We can research firsthand experience, ratings, and reviews for most products and retailers.

7. No Crowds

If you are like me, you hate crowds when you're shopping. Especially during holidays, festivals, or on weekends, they can be such a huge headache. Also, being crushed in the crowds of shoppers sometimes makes us feel rushed or hurried. You don't have to battle for a parking place. All of these problems can be avoided when you shop online.

8. No Pressure

Oftentimes when we're out shopping, we end up buying things that we don't really need, all because shopkeepers pressure us or use their selling skills to compel us to make these purchases.

9. You Can Buy Used or Damaged Items at Lower Prices

The marketplace on the internet gives us access to listings of old or damaged items at rock-bottom prices. Also, if we want to buy antiques, there's no better place to find great ones.

10. Discreet Purchases Are Easier

Some things are better done in the privacy of your home. Online shops are best for discreet purchases of things like adult toys, sexy lingerie, and so on. This enables me to purchase undergarments and lingerie without embarrassment or any paranoia that there are people watching or judging me.

Additional Benefits of Shopping Online

You get an electronic record of the receipt of your purchase, which makes record-keeping much easier.

You get to try things on in the comfort of your own home.

Sometimes, returns are easy.

It saves time!

10 Disadvantages of Online Shopping

Online shopping comes with disadvantages; here are ten of the most problematic elements of shopping on the internet.

1. Negative Environmental Impact of Packaging and Gas

Having your purchase packed in several layers of plastic and cardboard packaging and delivered right to your front door is good for you but not so great for the environment. Even if you try to recycle the cardboard, you're creating unnecessary waste by shopping online.

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Top 10 Benefits and Disadvantages of Online Shopping

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The internet has revolutionized the way we shop. Because of the numerous advantages and benefits, more and more people these days prefer buying things online over the conventional method of going into stores. What are some reasons many people love online shopping, and why is it so popular?

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A traditional economy is defined as an economic system where customs, traditions, and believes that helped to shape the culture also help to shape the products and services that are offered. These traditions and beliefs also become the foundation of rules that are used for the distribution of goods and services and the manner of their distribution.

Most countries that follow a traditional economy design are rural, feature agricultural products, and exchange goods and services through barter or trade rather than financial transactions.Pure traditional economies experience no change in how they operate. They are often stigmatized as being part of the developing world and primitive. Examples from the Inuit people, however, or the tea plantations found in Southern India disprove this stigmatization.

Here are the pros and cons of a traditional economy when compared to other economy formats that are employed by governments around the world today.

List of the Advantages of a Traditional Economy

1. The traditional economy centers around the family.

Because traditional economies tend to be rurally-based, the needed skills to produce goods or services are handed down to each new generation. That means the skills and traditions gained by the elders within each family group become the expressions of how the economy operates in the future. That process helps to keep family units together, keeping the economy centered around meeting the needs of one another.

2. It is an economy which allows for movement and freedom.

The traditional economy is based on the concept that you go where you must to obtain the resources you require to survive. Traditional economies are often nomadic by design as that allows each family group to follow migration or seasonal patterns of food growth. Groups that are following the concepts of a traditional economy rarely need to trade with the outside world because they are able to produce everything they need on their own.

3. Traditional economies only produce what they require.

Within the traditional economy, there is rarely any waste created when developing goods or services. Surplus is a rarity within this economy type as well. Most traditional economies will produce what they need and nothing more. That is because there is no value to this type of economy in the action of trading with someone else. Once needs are met, there is no need to continue producing.

4. It heavily relies on the bartering system.

Traditional economies rarely have a need for currency. That means when they do trade with other groups, the goal of the bartering is to obtain items that are required for survival. One group might be excellent farmers. Another group might be excellent hunters. By trading corn for venison, both groups can serve their individual needs better without the requirement of money changing hands to complete the transaction.

5. Traditional economies usually evolve into a different type over time.

Once a traditional economy can settle into a routine which involves farming, a surplus will eventually develop through improve growing methods. Instead of wasting that surplus, the economy will look to barter it with neighboring groups. If enough surplus becomes available, the traditional economy will develop some type of currency. With currency, long-distance trades become possible to relieve the pressures of surplus products.

6. Friction is a rarity within a traditional economy.

Because the groups in a traditional economy are family-based, the amount of friction that is present within the economy is minimal. That is because everyone is following the traditions and customs that are set forth by the elder. Each person knows their role within the economy and what is expected of them. That allows production levels to remain stable, no matter what the role of the individual may be. Members also know what they will receive for their work, which makes it possible for all basic needs to be met.

7. Traditional economies can be very friendly to the environment.

A traditional economy does not operate on a mass scale. These economies are small. Some may involve just one tribe or household. That means they are less destructive to the environment without sacrificing the needs of members. Although they may have limited production capabilities, the outcomes of these economies are predictable, which makes planning for future needs easier compared to other economy types.

8. It isolates population groups from the outside world.

Before the colonization of North America, a disease like smallpox was out of the question for the nomadic population groups in the area. Small communities naturally insulate themselves from infectious diseases and other health issues. That means each traditional economy tends to form its own natural defenses, leading to stronger immune systems and a better overall quality of life.

9. Traditional economies focus on the skills of the individual.

Although there are limited opportunities for job changes within a traditional economy, there is much less job dissatisfaction found within this economy type. People in a traditional economy are matched to jobs that make the best use of their natural talents and skills. That makes it easier for people to take pride in their work and love what they do since they are good at it. With the supports of a family or tribe available each day as well, work becomes part of life in the traditional economy instead of life being defined by a job.

List of the Disadvantages of a Traditional Economy

1. There are high levels of competition in traditional economies.

Because traditional economies focus on meeting internal needs above any other need, there can be high competition levels for available resources. Groups that are closely positioned to one another may find themselves fighting often to command limited natural resources in their region. That competition can take on many forms, including war, which may further limit the availability of resources to all affected groups.

2. Traditional economies can be devastated by natural events.

Weather plays a big role in determining the size and scope of success that a traditional economy receives. One bad growing season can be enough to stop farming altogether. If the migratory herds avoid an area because of bad weather, it may be difficult for those in the traditional economy to find their new location. To limit the negative impacts that unexpected changes in weather may cause, families within this economy type tend to limit their overall population growth.

3. People starve if a harvest or hunting is poor.

The traditional economy relies upon the efforts of farmers, hunters, and gatherers to provide food supports for the entire population. If there isn't enough food that can be located, then there is a good chance that the people living within that economy will starve. Unlike other economy types, there is a very limited amount of food storage available. What is needed is what is grown or gathered, then used, right away. And, because bartering is a common practice, there is no way to obtain needed goods because there is nothing available for trade.

4. Traditional economies are vulnerable to other economy types.

Other economy types, such as command economies or market economies, often consume the natural resources that the traditional economy uses to support themselves. Because the other economy types are usually more advanced technologically, they can decide to come in and take what they need or want to meet their own needs. When Russia moved into the Siberia region, their quest for crude oil reduced reindeer herding, fishing, and farming in the traditional economies because they damaged the environment.

5. This economy type places populations at-risk for infectious diseases.

Once the Europeans began moving into the Americas, the diseases they brought with them devastated family groups. The traditional economies had never been exposed to smallpox, which meant that their immune systems struggled to adapt to the disease. Poaching and warfare helped to place many traditional economies at-risk for extinction. Those who could adapt started using the weapons and tools that the other economy types brought to them. Over time, a traditional economy cannot compete with the technological advantages other economy types offer.

6. There are few options to expand personal horizons.

Within the traditional economy, each person tends to know what their role will be in the production cycle. That becomes their responsibility. The only way they can move into a new responsibility is if someone dies or becomes disabled and are unable to continue working. For someone who wants to explore new options or try something different, the options available are few and far between. Many people within a traditional economy work the same job or fill the same role for most of their lives.

7. It can devastate the environment.

There have been numerous incidents where traditional economies harmed the environment instead of helping it. The Dust Bowl is one of the biggest examples, where farms in Kansas, Oklahoma, and Northern Texas were forced into closure because of poor growing practices. Once a drought hit, the land was no longer usable. In Haiti, forests are in decline because wood is being used as a fuel source. Rainforests in South America are being destroyed to promote traditional economy growth. When the production of a traditional economy is not reflective of the needs of the environment, then it will eventually fail.

8. Traditional economies can limit medical access.

Traditional economies often face high infant mortality rates because there is a lack of access to modern medical care. Children under the age of 5 are the most vulnerable population demographic within this economy type. All it takes is one poor season that reduces food access to promote malnutrition. From a young age, many children contribute to household production as means of self-survival, which is not always the healthiest way to live.

9. There are fewer choices available in a traditional economy.

Because traditional economies only create what is needed, there are few consumer choices available for community members. You're not going to get to go to a grocery store within a traditional economy and shop through tens of thousands of different brand options. You're going to eat what you gather, hunt, and grow. During a tough year, that might mean you're limited to one food choice every day.

10. This type of economy limits genetic variability.

Because traditional economies tend to remain isolated, family groups keep new couplings within the family. Close family relationships that produce offspring increase the chance for genetic disease concerns for future generations. That is because both parents come from the same genetic contribution pool which has already been exposed to potentially defective genes. Over time, even if marriages occur between cousins, the quality of the genetic pool declines, eventually causing the traditional economy to eliminate itself unless new genetics are introduced into the group.

The advantages and disadvantages of the traditional economy are quite unique. There is little waste produced within this economy type because people work to produce what they need. That is also a disadvantage, because if there is no way to fulfill production needs, the population group may starve. Good practices can create a healthy traditional economy. In recent years, however, we have also seen how quickly poor practices can devastate people, like the Dust Bowl in the early 1930s.

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19 Advantages and Disadvantages of a Traditional Economy - BrandonGaille.com

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A traditional economy is defined as an economic system where customs, traditions, and believes that helped to shape the culture also help to shape the products and services that are offered. These traditions and beliefs also become the foundation of rules that are used for the distribution of goods and services and the manner of their distribution.

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Talking about retail and not mention Amazon these days is a difficult thing to do. Amazon seems to pop up in almost any conversation touching the topic.

As such, it should come as no surprise that there may not be a single day in the past few years without mention of Amazon in some capacity. The eCommerce company has grown significantly in the past few decades, and we've started to see the physical impacts of its innovative force on other retailers. To what level Amazon has impacted others may be up for debate. We've just passed the midway point of the year, and Amazon has made big strides in 2017 towards what some may call its strategic path to global retail domination.

Out of its 120 news announcements this year, here's a breakdown of the more interesting numbers:

2 | Acquisitions: Whole Foods and Souq.com

19 | Fulfillment centers opened up across the U.S.

27,700 | Jobs created from fulfillment centers

13 | Number of new products / services announced

25 | Number of video-related announcements

1 million+ | Number of business customers Amazon serves

$3 billion | Amount loaned to 20,000 small businesses
85 million | Number of Americans that use Amazon Prime
And these are just the numbers Amazon itself chooses to put out into the retail sphere. This doesn't encapsulate all other Amazon-related news announcements from other companies' corporate sites. According to crunchbase, Amazon has acquired a total of five companies this year.

The impact of Amazon's activities on retail are seeping through the industry's cracks. As eCommerce sales become a seemingly more pervasive force than brick-and-mortar, it's apparent that Amazon is showing no signs of slowing down in terms of its innovation and expansion efforts. This year's Prime Day saw a 60 percent increase over last year's event, and the company used Amazon branded cargo planes for the first time to make deliveries.

Just a week ago, we shared the news of Amazon buying up U.S. marketplaces to help with their global delivery efforts.

The eCommerce giant has entered a myriad of markets this year, helping to up their retail game considerably. From going back to its start with opening up physical bookstores to the wine business, real estate, instant messengers, a social media related effort, and yes, even the auto industry, Amazon's growth seems to know no bounds.

It's getting so deep in the retail industry that investors are starting to keep an eye out. As we reported earlier this month, investors are specifically looking to invest clients' money in stocks that won't be impacted by Amazon. This may be a result of its Whole Foods acquisition sending grocery stocks into a downward spiral.

Perhaps Amazon's dip into the grocery market is what compelled Tesco to launch a one-hour delivery service in London.
How are all of Amazon's actions having an effect on the retail industry?
In the overseas arena, Amazon has focused its efforts heavily in India, investing another $260 million into its India-based operations and launching the country's first Prime Day.

Considering Amazon sales accounted for 53 percent of all U.S. eCommerce growth in 2016, and 55 percent of all consumer product searches start on the eCommerce giant (over Google), it's hard to not delve into its impact on retail as a whole.

A majority of retailers surveyed by Total Retail and IBM in its research whitepaper, The Amazon Effect: How Retailers Are Adapting Their Businesses to Better Compete With The Industry Leader, were split with 38 percent thinking it's a direct competitor and 38 percent believing Amazon is a partner. Interestingly, 31 percent of retailers do not have brick-and-mortar locations while 17 percent of those that do shared that their in-store sales have decreased by over five percent in the last few years. On the up side, 27 percent of retailers have said their in-store sales have increased in the past two years.

Nearly 77 percent of retailers see Amazon as having a direct impact on their customers' online experiences.

As Amazon enters the physical world with its own brick-and-mortar locations, many retailers are unsure of what's next for the industry. Effectively, Amazon is causing a ripple effect in the industry, and retail is as a result undergoing an evolution.

A number of big retailers like Macy's, Sears, and J.C. Penney's are either closing down several stores and/or filing for bankruptcy. Others are working tirelessly to integrate more technology experiences into the brick-and-mortar experience, while many are also optimizing for mobile transactions.

It may be safe to say that Amazon has rocked the retail industry, and the future for today remains unknown.

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The Amazon Effect: How Retailers Are Impacted | PYMNTS.com

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Talking about retail and not mention Amazon these days is a difficult thing to do. Amazon seems to pop up in almost any conversation touching the topic. As such, it should come as no surprise that there may not be a single day in the past few years without mention of Amazon in some capacity.

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Image credit: Ali Balikci | Anadolu Agency | Getty Images

5 min read

Opinions expressed by Entrepreneur contributors are their own.

For better or worse, the U.S. economy and the global economy are in the throes of the "Amazon Effect," a term used to describe Amazon.com's success, which has upended retail practice and customer expectations, both online and off. By mid-2018, Amazon was already responsible for roughly 50 percent of the nation's ecommerce sales and 5 percent of all combined offline and online sales.
Related: Small Businesses Should Be Thankful for Amazon.com
Boasting 11 straight quarters of profits, a record $1.9 in sales for the just-ended holiday season, and the richest man in the world as its CEO, Amazon certainly saw its way of doing things work out for the company.

What the Amazon Effect Is

So, what is the Amazon Effect? The meaning of the phrase can vary depending on the industry being cited, but it generally refers to the difficulty many stores -- particularly brick-and-mortar outlets -- face when they compete with Amazon. The online retailer's vast selection, fast shipping, free returns, low prices and "Prime" subscription service all serve to create high customer expectations for any retailer hoping to compete.

Does that mean Amazon is obliterating the competition? Studies show that Amazon's success has led to some business closures, but many companies, in fact, have tackled the Amazon effect creatively and effectively to compete for customers and hold their ground. In short, the Amazon Effect is just another reason the retail environment is always in flux.

Certainly this phenomenon doesn't affect ecommerce providers solely; however, it's these providers that are most on the front lines and need to stay agile lest their behemoth competitor, Amazon, swipe in and take their customers. With that in mind, here are my predictions for how the ecommerce scene will evolve in 2019:

The "last mile" logistics race will grow more competitive.

Amazon's delivery network is a logistics phenomenon that allows for the delivery of virtually any consumer good to a shopper's doorstep in a matter of days or even hours. Ecommerce providers have been under ever-increasing pressure to match Amazon's speed and efficiency, and there is no evidence consumer expectations are easing; a 2018 study found that 43 percent of consumers surveyed expected "much faster" delivery times that same year, a sharp increase from 2017.

To meet this consumer expectation, expect more ecommerce companies to turn to courier software to match or exceed Amazon's delivery performance in 2019.
Related: Are Amazon and Walmart Killing Costco?
The "mobile-first" switch will finally happen.

Ecommerce providers have had to think about mobile-users for a while now, but 2019 may be the year mobile applications become a priority over desktop-user interfaces. A late 2017 report from Criteo showed that at that time ecommerce stores with successful shopping apps were making the majority of their sales through mobile.

Salesforce predicted that mobile would drive 68 percent of ecommerce visits and 46 percent of orders for the just-ended holiday season. Mobile was already a high priority, but by this year's holiday season 11 months hence, we could see it becoming priority number one, as the share of ecommerce visits commanded by desktop sites continues to shrink.

AI and ecommerce will grow even closer.

Amazon has never been one to rest on its laurels, so one of the significant avenues of expansion it's explored over the past few years has been artificial intelligence and its application, machine learning. Machine learning notably drives Amazon's Alexa smart speaker, and its immensely profitable Amazon Web Services division provides AI cloud computing for paying customers.

But AI has played a growing role in Amazon's direct ecommerce activities, as well; here, Sunny Singh from GoBeyond.ai lists some of Amazon's AI ecommerce tools, such as algorithms for detecting marketplace trends, upselling via custom recommendations and the testing of copy.

Fortunately, other ecommerce retailers can also unlock AI tools; Towards Data Science lists "shoestring" AI options such as simple chatbots to provide customer support and AI-based marketing strategies. In 2019, expect to see even more AI deployment at Amazon and other companies.

The online grocery battle will continue.

One of the biggest ecommerce stories of 2017 had a lot to do with brick-and-mortar locations -- namely, Amazon's $13.7 billion purchase of Whole Foods. A year later, pundits are wondering if Amazon's move into groceries was a misstep; the number of Amazon Prime members who used the service to shop for groceries at least once a month dropped between 2017 and 2018.

One study showed that households which used online grocery delivery based on a nearby physical location spent about $200 per month, while the average Amazon grocery shopper spent $74 per month. That was certainly disheartening news for Amazon, but for the rest of the grocery and ecommerce world, the takeaway is clear: The war for the immensely valuable online grocery market continues.
Related: The Impact Amazon Has (or Soon Will Have) on Your Brand: Do You Have a Plan?
Overall, online grocery spending is increasing -- a mid-2018 report concluded that online orders take up about 5.5 percent of total U.S. sales. This indicates that 2019 could be a prime time for other ecommerce providers to get into the online groceries game.

Overall, the Amazon Effect is real, but it doesn't mean that Amazon is the only ecommerce player that will matter in 2019. The competition will remain fierce through 2019 as the current various trends play out and as the ecommerce world continues to shift.

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The 'Amazon Effect': How Ecommerce Will Change in 2019 and Beyond

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5 min read Opinions expressed by Entrepreneur contributors are their own. For better or worse, the U.S. economy and the global economy are in the throes of the "Amazon Effect," a term used to describe Amazon.com's success, which has upended retail practice and customer expectations, both online and off.

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The "Amazon Effect" has conditioned convenience-hungry consumers to become accustomed to doorstep delivery for everything from eggs to electronics - and its upending business models for traditional pay-at-the-counter retailers.

The strongest growth in retail is coming from digital channels. Retail ecommerce sales in 2019 are expected to climb 15.1 percent for the year to $605.3 billion, according research firm eMarketer. Not surprising, Amazon is dominating the market. In 2017, Amazon sales jumped nearly 31 percent to $177.87 billion. The online shopping juggernaut accounts for nearly half of the U.S. ecommerce market, according to eMarketer.

"Amazon is leaving the competition in the dust," eMarketer stated in a mid-2018 report.

Walmart and Target, the darlings of in-store shopping for decades, are scrambling to adjust and adapt to the changing landscape with a host of tech solutions designed to satiate fickle and flighty consumers.

Target's new small-format stores are dominated by self-serve checkout lanes. Walmart is also adding more self-serve lanes to its cadre of big box stores. The retailers are also meeting delivery demands by offering two-, one- and same-day delivery in certain markets.

Walmart has rolled out 2,100 grocery pickup locations and 700 merchandise pickup kiosks at domestic stores for on-the-go consumers. The retail giant has even experimented with employees delivering online orders on their way home from work.

The efforts are working. Walmart's e-commerce sales grew 43 percent in its latest quarter. Walmart has also created an incubator hub dubbed Store No. 8 for inventing - and investing in - ideas that will disrupt future e-commerce much like Amazon does today.

"Our company is moving faster and we're accelerating innovation," Walmart CEO and president Doug McMillon said in a third quarter 2019 statement.

Amazon has forced traditional brick-and-mortar stores to come up with innovative ways to get goods to customers who don't want to leave the house.

San Diego-based GoShare, billed as "the Uber for trucks," makes last-mile deliveries of large items for retailers like Big Lots, Marshalls and Sears. Postmates offers a courier-like service that delivers everything from alcohol to medical prescriptions to virtually anything else you might need.

Traditional supermarkets are taking a different approach when it comes to digital solutions.

Ralphs, Albertsons and Aldi are partnering with third-party delivery companies like Instacart to avoid the costly hassle of building a complicated system from scratch. Target is using Shipt for same-day delivery in select markets.

Looking beyond delivery, Amazon is disrupting retail in other ways.

Amazon Go stores that use sensors to automatically ring up purchases have popped up in Seattle, Chicago and San Francisco with the online retailer preparing to ramp up the autonomous checkout concept to as many as 3,000 locations by 2021.

Retailers are desperately trying to keep pace.

King Soopers, the sister grocery chain to Kroger-owned Ralphs, recently launched a pilot program that arms shoppers with barcode-scanning wands that allow them to scan as they shop and breeze through self-checkout stands.

Walmart tried a copycat version of Amazon Go called "Scan & Go," a test rolled out at 120 stores, but the company quietly shelved the project without citing reasons in April.

Amazon has also begun testing self-driving delivery robots on the streets and sidewalks of a Seattle suburb that deliver packages to customers' doorsteps. The e-commerce giant has received a patent for blimp-borne warehouses that will serve as "aerial fulfilment centers" for its envisioned fleet of delivery drones.

But Amazon has plenty of competition from ambitious start-ups eager to carve out their own niche. In December, Nuro began a pilot program that uses self-driving unmanned robot vehicles to deliver groceries from a Fry's Food store in Scottsdale, Ariz., to customers living nearby.

Looking ahead, eMarketer says long-term tech innovations for online and mobile shopping will involve voice commerce (think Amazon Alexa ordering), social commerce (buying goods via Snapchat and Instagram) and use of augmented reality (remember the Pokémon Go mobile game) to create in-store shopping experiences without ever leaving your home.

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'Amazon Effect' forces traditional stores to find ways to get products straight to customers' doors

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The "Amazon Effect" has conditioned convenience-hungry consumers to become accustomed to doorstep delivery for everything from eggs to electronics - and its upending business models for traditional pay-at-the-counter retailers. The strongest growth in retail is coming from digital channels. Retail ecommerce sales in 2019 are expected to climb 15.1 percent for the year to $605.3 billion, according research firm eMarketer.

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There are times of the year when people around the world start thinking about spending some extra money in retail stores. It can be the holiday season, or it can be such days as Black Friday or Cyber Monday. Or simply birthdays or the desire of wanting to reward oneself.

However, when the shopping bug demands some action, rather than heading to the streets and shopping malls as people used to do some decades ago they grab a cup of coffee and login into their computers for a session of e-commerce shopping.

This reality where more shoppers head to screens rather than to brick-and-mortar stores means that retailers in the physical world need to offer a better customer experience, perhaps a more personalized one, if they are to have a future.

But perhaps not even personalization can stop retailers from going through a massive change. Or perhaps even extinction, if they are not fast enough to respond to the digital change and transformation that is evident in the retail industry.

In 2016, $1.26 trillion of retail sales were influenced by digital media, according to a report by industry analyst company Forrester Research. The firm projects that mobile devices alone are going to influence $1.4 trillion in local sales increase by 2021. And so, experts began to talk about the Amazon Effect.

The Amazon Effect

Since Amazon debuted back in 1994, the company has changed the way we shop and bring goods home. Since the beginning, Amazon has had some kind of impact on traditional forms of retail. The introduction of a simpler, faster online shopping process which saves time and requires no extra effort in mobility won consumers over almost immediately. This quickly became a global trend.

The added benefit of having the products delivered right to the front door became one of the best selling points. The technology driven way of shopping offered by Amazon prompted comsumers to demand the same from traditional retailers. However, retailers didn't count with the technology Amazon had at hand.

What is the Amazon Effect and what it means for retailers?

This increased e-commerce and the manifestation of the ongoing consumer shift to online shopping resulted in the evolution and consequent disruption of the retail industry. This evolution and the changes that have been affecting the retail market is called the Amazon Effect. It affects the retail industry as a whole and it affects the consumer economy.

For decades, Amazon has been expanding into new types of businesses disrupting and shaking the world of its competitors. Food and grocery delivery companies know the Amazon Effect has impacted their business, especially those who don't count with the technology that is characteristic in any Amazon new line of business.

Grocery stores and fast-food restaurant chains are now also seeing the Amazon Effect quickly approaching their doorstep. The Amazon Go stores were born.

The future of retail

The physical stores that wish to remain competitive in the digital future will have to offer something special to consumers, something that they can't get from online stores. Offering drone delivery could be a way to attract consumers. However, despite there are some ongoing trials with products delivered by drones, regulations are not there yet.

So, Amazon has gone a step forward with its Amazon Go cashier-less, automated stores. Something much less complicated to implement since it doesn't need to wait for new regulations as delivery by drone has.

By 2021, it's perfectly possible that other retailers are going to jump into the Amazon Effect wagon bringing global consumers to a new way of shopping. This is going to the change the future of retail at a global level. Changing the landscape of grocery shopping and of course changing jobs as we know them.

Amazon Go: Cashier-less store: How does it work?

Amazon, always a step forward in innovation, has been adopting new technologies in retail for years. This has created the Amazon Effect. Now the company's Go cashier-less stores are quickly expanding. After opening the first cashier-less convenience store for Amazon's employees, the company opened the Go stores to the public in January 2018.

There are currently six cashier-less store locations in the United States: Three in Seattle, Washington, two in Chicago, Illinois, and the latest which opened in October in San Francisco, California.

The Go stores feature the world's most advanced shopping technology such as artificial intelligence (AI), multi-sensors, and hundreds of state-of-the-art CCTV cameras. Amazon plans on expanding its cashier-less stores rather quickly. The company has announced that it will be opening 3,000 Go stores by 2021.

Amazon Go is now called the future of shopping. Going to an Amazon Go store involves customers entering to the Go store using the Amazon Go application previously downloaded on their smartphone.

After the QR code on the phone is scanned at the entrance point and the customer's Amazon account identified, customers are ready to browse the store and take the products they want. Sensors signal the movement of the product, which is added into the customer's virtual shopping cart.

When done shopping, with no cashiers or self check-out stations, the customer simply leaves the store. At home, customers can check the list of products they purchased and the total the spent on their Amazon account. Amazon sends a receipt and charges the purchase to the customer's Amazon account directly, which is linked to the major banks, credit and debit cards.

The technology behind Amazon Go: Just walk out technology

Amazon Go stores use the same type of technology used in self-driving cars. Amazon calls it 'just-walk-out' technology. Computer vision algorithms help Amazon understand why people choose certain products over others. Sensor fusion, and deep learning algorithms .

All the products have camera recognizable codes in the form of dots. Hundreds of cameras and electronic sensors keep track of every person who enters the store; they also track every product on the shelves, and how they move.

Sensors detect when a product is taken from the shelf and place it in the customer's virtual cart, or if the product is returned to the shelf.

Sensors also detect where people put the products when they change their mind, if they place them where they found them or on a different shelf. The system is also powered by artificial intelligence.

The success in the future of Amazon Go: Where is retail going?

Experts say the success of Amazon is in the vast amount of data the company has and the knowledge in consumer behavior the company has achieved thanks to the advanced machine learning technology.

According to Professor Daniel Raff from Wharton Management, Amazon is going to make a big improvement in the retail industry, ending up being a much more powerful enterprise than it is now. For retailers, it's difficult to know what to sell in a particular place at a particular time, especially when it comes to perecibles.

Using machine learning to make an improvement in the efficiency of the whole foods retail business is going to have a paramount impact in the future of the industry.

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what the amazon effect means for retailers

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amazon effect impact on shipping and retail

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The Amazon Effect: Amazon Go Stores and The Future of Retail

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There are times of the year when people around the world start thinking about spending some extra money in retail stores. It can be the holiday season, or it can be such days as Black Friday or Cyber Monday. Or simply birthdays or the desire of wanting to reward oneself.

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The "Amazon effect" refers to the impact created by the online, e-commerce or digital marketplace on the traditional brick and mortar business model due to the change in shopping patterns, customer expectations and a new competitive landscape.

As more and more people across the globe are turning to online shopping, the retail landscape continues to change rapidly. The gains for e-commerce businesses are coming at the expense of brick-and-mortar retail stores, as an increasing number of shoppers are heading for their screens instead of for stores. Amazon.com Inc. ( AMZN), which debuted in 1994, has maintained its lead in global online selling, and has become the poster boy for this change, giving the "Amazon Effect" its name.

Among other factors, the Amazon effect is cited as the primary reason street-based stores' declining sales, which have often foreshadowed the stores' eventual closure. A WWD report cited more than 9,400 store closings in 2017, up 53% from the number that shut in the wake of the Great Recession in 2008.

Beyond hitting the revenue of traditional retail stores, the Amazon effect has also led to significant changes in consumer shopping patterns. For instance, based on the convenience they experience on online shopping portals, today's shopper expects a lot more variety even while visiting a retail store. While it may not be possible to clearly read the contents or specifications mentioned on a small-sized pack containing an electronic gadget or cashew nuts in a retail store, the same product details can be easily accessed in large text on the online shopping sites. The seamless online shopping experience has also impacted the behavioral expectations of shoppers, as they now expect the same smoothness, timely response and convenience even for services (like at a salon) that generally cannot be offered online. (See also, Amazon to Sell Real Christmas Trees.)

The need to drive to a store, pick and choose items, and the impatient wait to pay is eliminated by online shopping, even if it comes at a slight premium. Technology-powered shopping portals also allow comparatively better utility to customers, like easy repeat of standard monthly grocery orders. Use of big data and artificial intelligence (AI)-powered systems that better monitor a customer's shopping pattern and behavior on online portals are a win-win - the consumers receive customized offers and promotions, and shopping portals benefit by pitching products with a high liklihood of being purchased. These features are not available to traditional retailers, or are costly. High real estate costs also put the retail stores at a disadvantage.

Amid rising protests from brick-and-mortar retailers across the globe, large online players are launching initiatives to loop the former into their supply chains in an attempt to make it a win-win. For instance, many online shopping portals allow online ordering with a pick-up option at a nearby retail store. Store operators benefit by receiving a cut for their service, by supplying a few of the ordered products from their own stores, and by an increase in foot traffic in their stores.

Irrespective of the developments, online shopping continues to evolve with new high tech offerings, and continues to disrupt retail markets across the globe.

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The "Amazon effect" refers to the impact created by the online, e-commerce or digital marketplace on the traditional brick and mortar business model due to the change in shopping patterns, customer expectations and a new competitive landscape. As more and more people across the globe are turning to online shopping, the retail landscape continues to change rapidly.

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We spend a lot of time talking about the impact of the "Amazon Effect" on traditional retail's current misfortunes. But there's another "Amazon Effect" which goes largely ignored, and which could be even more disruptive. As we heard Amazon's VP of Payments, Patrick Gauthier, tell me last week at The Innovation Project, Amazon is thinking well beyond the "buy button" to a new commerce interface that has the potential to put the company in the middle of commerce every place a consumer wants to buy, using the most natural buying interface there is - the voice.

Just not paying for those purchases using the digital payments methods you're all hawking right now.

The other "Amazon Effect?" - the Amazon Effect on Payments.

Happy Monday.

First, a little context.

The Amazon Effect on Retail

You know the typical tale of woe told by many of retail's walking dead all too well by now. But let me add my two cents.

It's a story that portrays Amazon as a powerful online force. But it's a narrative that its storytellers still say offers hope from the Census Data - which, at last count, reported that about 92 percent of retail sales still happen in physical stores. This story is told despite reports of massive store closings in the face of falling foot traffic - down 50 percent since 2010, by some estimates - and the sea of red ink that has come to define traditional retail's bottom lines.

As PYMNTS.com readers know, the Census Data on retail sales underestimates online sales. And for some categories, the in-store/digital split is jaw-dropping. Books, office supplies, apparel and sporting goods show online sales that approach 30, 40 and even 60 percent for those same categories in retail sales. Even grocery sales are starting to shift online - admittedly a very tiny increase at about one percent in 2016 - but which are projected to grow by double digits as it becomes more convenient for consumers to trade buying bulky commodities like paper towels and laundry detergent in a store for a more convenient online experience that ships those items to them instead.

Some of that shift is truly the Amazon Effect on retail. Since every story needs a protagonist, it's easy to cast Amazon in that role. But the subplot to this story is that many retailers aren't really giving people a reason to go to their stores anymore. The stores that used to be showrooms for the latest and greatest merchandise have become graveyards for stuff that hasn't sold (aka stuff consumers don't want until it is marked down to next-to-nothing prices). Consumers have lost their incentive to make the trip to the store since there's nothing new to see and, therefore, nothing new to buy - so why bother?

Quite naturally, the good brands say "Why bother?" too and shift their focus to the places that consumers now go to shop.

In some cases, that's their own branded physical stores or websites, where they can control the experience and the merchandising. The rise of the direct-to-consumer retail model is exploding, with 40 percent of all manufacturers now using this model to reach consumers.

It also occurs via the many new digital marketplaces that have become the modern shopper's department stores: sites like Net-A-Porter, FarFetch or Moda Operandi that aggregate brands and curate outfits in a virtual storefront where merchandise is refreshed daily.

And Amazon.

Those still living under the delusion that designers would rather cut off their limbs than sell on Amazon might want to take a quick spin over to Amazon Fashion. There, you'll find contemporary designer brands like Michael Kors, Stuart Weitzman, Ray Ban, Vince, Theory, Rebecca Minkoff, J Brands, True Religion - to name but a few - selling the very same products sold in their stores and/or on their very own websites, right there on Amazon Fashion. Making sales has a funny way of getting brands to buy in - pun intended.

All of this, of course, is happening at the same time that online sales are growing at triple the rate of in-store sales - according to latest Census stats, 14.3 percent last year against in-store sales growth of roughly four percent. Sure, that's rapid growth on a small base, but a base that, as I mentioned earlier, is delivering a world of hurt to some sectors already. And it's growth in a channel that's coming at the expense of traditional retail's operating margins - by some estimates - slicing those already fragile margins by as much as 25 percent.

Concurrently, Amazon appears to be cornering the share of those online sales. Last year, the company captured 53 percent of the overall online sales growth in 2016 and accounted for 43 percent of all online sales.

Amazon is also reshaping consumer's expectations for retail service. For instance, Amazon Prime customers get their orders in two days, and they get it shipped to them for free. Free shipping in traditional retail isn't really free at all - it comes with a price tag measured by twice as many days as it takes Amazon to ship products to a consumer. So it's not too surprising that more and more consumers start their buying journeys on Amazon. Our research of more than 2,000 consumers in 2015 reported that 55 percent of all consumers started their search on Amazon. A year later, it wouldn't surprise me to find that number well north of 60 percent.

Additionally, Amazon Payments is moving off Amazon to other retail sites to offer those consumers the benefit of their one-click checkout experience. Sites that accept Amazon - 10 percent of the top 1,000 retail sites by our last count - eliminate checkout friction by prompting check-in, using the familiar Amazon log-in. Bypassing the retailer's own log-in entirely, once consumers are ready to checkout, they're one click away, using their registered Amazon card and shipping preferences pre-populated.

And, finally, all of this is happening at the same time that Amazon's building an entirely new voice-activated ecosystem - Alexa - that's intended to recast the consumer's commerce experience. Alexa and her ecosystem is not only intent on taking commerce anywhere that a consumer is able to access her, it's using Alexa to make commerce contextual and conversational, ushering in an important, yet subtle, shift in the commerce experience for both consumers and brands.

Alexa abstracts the buying environment by transforming it into a relationship between the consumer and the brand a consumer wants to buy via a friendly interface named Alexa. Not a consumer and a website. Not a consumer and even Amazon's website. But a conversation that consumer is having with Alexa about buying something.

"Hi, Alexa, I want to buy a pair of black suede Louboutin's - the ones with the 3.5 inch heel in a size 35 - who has them in stock?"

"Hi, Karen, (she knows me via voice printing) I see they're in stock at Saks in Boston for pick up today; Neiman's only has the higher heel in stock, but they can be shipped out tomorrow. ChristianLouboutin.com has them in stock, and if you buy from them today, they'll ship them overnight to you at no charge. Which do you prefer?"

With Alexa in that scenario, Neimans and Saks and Mr. Louboutin don't have to co-mingle their merchandise on Amazon, or even have the Amazon button on their site to enable that purchase. All they need is a skill inside of the Alexa ecosystem.

And if consumers want to buy that way from Alexa, why would those brands and those retailers say no?

Which brings me to the "Amazon Effect" on Payments.

The Amazon Effect on Payments

Today Alexa is a voice on the other end of a growing list of devices: at home via Echo and the Dot, on the road with Amazon Tap - even in the car and in the browser.

And as of last week, Alexa's on the iPhone via the Amazon app - one of the most downloaded and used apps in Apple's app store.

RBC Capital Markets issued a report two weeks ago that estimated the size of the Amazon Alexa market. They project that by the year 2020 - just three years from now - there will be 128 million Alexa Echo, Dot and Tap devices globally and 500 million active Alexa users via those devices. This is exclusive of users who access Alexa via apps in the car, the browser, the Amazon app itself or the many other hardware/software environments that will likely emerge over that period of time. Alexa, as we've observed, is a fast-moving train. Two years ago, there were less than one thousand skills on Alexa; last year this time there were five thousand; this year there are more than eleven thousand.

Those users, RBC says, are also using Alexa to buy stuff.

As part of their analysis, they surveyed Amazon customers to ask about their interest in using Alexa to shop. They found that 17 percent use it already - my guess is that's mostly food delivery or the purchase of simple things from Amazon itself. RBC believes that the percent of commerce attributed to Alexa will only increase and will drive incremental sales of existing Amazon customers by 15 percent, simply because it's easier to shop using her. They estimate that incremental lift to be $5 billion a year.

That's $150 million more than the entire annual revenue of Under Armour in 2016.

That's also not including what might happen if everywhere Amazon was accepted off Amazon Alexa went along for the ride.

What does all of this have to do with payments, you ask? Well, it all depends on who's answering.

If you're an issuer or a card brand, you're probably not sweating all that much yet - but hold that thought. Amazon users register those cards on file today, and where Amazon and Alexa go, those card credentials follow and are used to make those purchases.

If you're one of the "Pay" players, you might be sweating - and sweating a bit more now that it's quite apparent that Amazon and Alexa want to meet consumers and commerce anywhere they might want to do business. Remember when everyone was worried about Apple as the big, bad payments and commerce gatekeeper? Today, that powerful new intermediary is Amazon.

Think about it. How does one get to use Amazon on a site off Amazon? By checking in with an Amazon account. How does one get to order Dominos from Alexa? By first registering an Amazon account with them. Those same Amazon accounts that don't today include any of the mobile wallet "Pays" that Apple, Android, Samsung and PayPal would like consumers to use when ordering pizza from Dominos online.

Amazon, like any other merchant or merchant services platform, will make decisions about payment methods on the basis of what adds value to their consumer experience and eliminates friction. Retailers too. If consumers aren't using the "Pays" to shop online today - which with the exception of PayPal they really aren't - not being able to use those Pays with their Amazon accounts or Alexa is something consumers won't even notice they're missing. Retailers won't care either.

There is one exception - and another player whose name starts with an "A."

If I were Alipay, I'd be investigating short-term rentals in Seattle and not leave until a deal to allow Alipay to become a payment option inside of Amazon was done. For Alipay, it's a key merchant win for the Chinese consumer who seeks alternatives to Alibaba's online marketplaces to spend their growing piles of disposable income.

For Amazon, it's the fastest way to close in on a billion consumers - Amazon's existing 300 million, plus Alipay's 450 million, plus the hundreds of millions of others that Alipay is enabling (like India's Paytm) who like to shop and spend a lot online. It's also Amazon's back door into China via a powerful Chinese company that's struggled to succeed outside of China. And who, in the face of the MoneyGram uncertainty, might like to put a big score like this in the win column.

Access to those consumers, of course, is also a new incentive for merchants to play with Amazon - on Amazon, off Amazon and with Alexa. New consumers with money to spend is just what the retail doctor ordered too.

Making, at least for now, a bit of a gloomy picture for the Pay Players who, for Amazon, just represent a layer in between the cards on file that their consumers already have registered with them and a friction-free checkout.

The Amazon Effect on Payments

Some have said that the real risk to payments is Amazon flipping all of its many cards on file to DDA-accounts on file. I doubt it. Why create friction for consumers, when they can, instead, create friction for the card networks and issuers to negotiate better deals?

Look no further perhaps than the new Visa-branded, Chase-issued Amazon Prime Card that runs over ChaseNet, as one example.

I got one when it was first introduced. It's a great-looking card, has amazing cash back benefits, and, given the economics of the Chase/Visa deal, I'm sure with very competitively priced terms that favor Amazon. Terms that are part and parcel of the ten-year deal that Chase and Visa signed - now 4 years ago. Terms that will likely serve as critical thresholds as negotiations between the networks, the Pay players and Amazon happen over the next three to five years. Deals that will likely include the same sort of "tariff" that Apple set when it launched Apple Pay. And perhaps a new business model that provides an incentive for me, in my example earlier, to pick Saks over Neiman's - funded by the issuer or the network. All setting the course for commerce for the decade to follow.

Unless, of course, a serious rival to Amazon emerges. At the moment, it's crickets in that department, despite a few players out there with the scale and assets and potential to change the field of play. If you're reading this and you're one of them, now might not be a bad time to let the world in on your plans. Otherwise, the only commerce playing field that might be left are the ones in the space that Bezos has decided not to pursue. Mars and the moon are already taken.

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The "Amazon Effect" On Digital Payments | PYMNTS.com

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We spend a lot of time talking about the impact of the "Amazon Effect" on traditional retail's current misfortunes. But there's another "Amazon Effect" which goes largely ignored, and which could be even more disruptive.

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It's no secret that people are spending more and more time online. It's also no secret that much of that time is spent, well, spending.

However, a lot of the money going to online retailers is money that used to go to brick-and-mortar businesses. Amazon may be the main culprit, but it's far from alone. As more and more shoppers head to screens instead of stores, brick-and-mortar retailers need to offer better customer experiences if they're to have a future.
The Amazon Effect
The Amazon effect has dramatically changed the way we shop since the company debuted in 1994. This term describes the effect that the entire digital marketplace has had on traditional forms of commerce, like brick-and-mortar retail. Namely, the Amazon effect has introduced consumers to an almost completely frictionless shopping process with near-immediate results (more and more, this refers to delivery, too).

However, the Amazon effect has also spilled over into more traditional spaces. Customers now want the same experience, whether they're in front of their computers or inside a shopping mall.
Three Ways Retailers Can Counter The Amazon Effect
The very real impact of the Amazon effect can be seen all over the world. Every year, more retail locations close down. Those that want to continue will need to take a page -- if not several -- out of Amazon's book by offering customers a technology-driven experience that meets their lofty standards.
1. Use brick-and-mortar to support online stores.
While physical spaces still serve a purpose, many companies are rethinking what that purpose is. One result has been new-age retail stores like Nordstrom Local, a clothing store with no dedicated inventory. Customers can pick up their online orders and make returns. Beer, wine, cold-pressed juices and espresso are available, too. There are onsite tailors. Nordstrom Local and stores like it are designed to serve the online experience, not compete with it.

Another company taking a similar approach is Rent the Runway, an online subscription service that lends clothing to its customers. CEO Jennifer Hyman recently made it clear at the NRF Big Show that its stores account for less than 10% of its sales. Rather, they're "supplemental to the customer experience." These stores are for customers who want in-person style tips and product advice from one of their professional stylists. This kind of personal attention wouldn't be possible through a screen.
2. Track customer behavior in store.
Everyone knows that you can use analytics to improve your website, but these digital tools are now increasingly effective in offline stores, too. E-commerce websites were the influence behind candy retailer Lolli and Pops literally tracking the paths customers take once they enter its stores.

The insights have already paid off. For example, the company found that one of its locations wasn't seeing the same revenue coming from its high-sales sweets section. After checking in-store analytics, they found that there was a table in the way that deterred customers from exploring the area in which these items were located. These analytics also help them better train their staff to engage with customers, including offering them free samples.

Using this type of technology has allowed Lolli and Pops to almost completely forego a marketing budget, relying almost solely on their customer service instead.
3. Leverage mobile technology in store.
A recent study done by SOTI found the following:

* 92% of shoppers prefer stores that offer mobile experiences.

* 73% want mPos for quicker checkout times.

* 65% want location-aware coupons.

* 61% would choose using a kiosk over speaking with a sales associate.

* 47% expect personalized service.

In this way, mobile and offline stores can work together to accommodate shoppers who are becoming more independent. They already know what they want when they enter a store. The retailer's opportunity is in providing a mobile experience that will make it as easy as possible for them to acquire it as quickly as possible.

According to a Forrester Report, $1.26 trillion worth of offline retail sales were influenced by digital media in some way. The same report estimates that number would be $1.4 trillion in three more years.

While not all of that "digital media" may have happened through mobile devices, it's clearly playing a sizable role. Furthermore, mobile technology isn't just about the shopper: 89% of retailers are expected to provide their employees with mobile technology by 2020 for everything from customer identification to customer engagement to POS and payments.

Given the demand, the potential returns and the adoption rates we've already seen, mobile-technology has widespread potential among offline retailers. Plenty of large retailers have gotten in on the act, but they're not the only ones. Montreal clothing company Frank + Oak uses its mobile app to improve customer engagement in a number of ways, including once they enter a store.

Its digital loyalty program offers customers 24-hour live-chat support, cash-back deals, free express shipping, in-store appointment booking and two-hour shipping on demand. The app also promises customers smarter, more personalized customer service the moment the user walks in the door. In fact, the app sends a signal to employees to tell them that one of their members just walked in and to offer them a complimentary cup of coffee.
The Future Of Retail
The physical stores that will be most competitive in the digital age will be those that are able to offer something online stores can't. In some cases, this will mean the opportunity to physically experience the product (e.g., Nordstrom Local allowing customers to try on clothing) or those that offer more convenience (e.g., two-hour shipping with Frank + Oak).

This is where the opportunity lies, but it will only be available to those retailers who use technology to make the most of it.

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What The Amazon Effect Means For Retailers

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It's no secret that people are spending more and more time online. It's also no secret that much of that time is spent, well, spending. However, a lot of the money going to online retailers is money that used to go to brick-and-mortar businesses. Amazon may be the main culprit, but it's far from alone.

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Amid shrill clamor that should be Amazon.com Inc. broken up because it is vaguely " too powerful ," some retrospection on a continuing narrative that the Seattle company will " kill retailing " is appropriate. Those prophetic warnings were and remain flatly wrong.

Over the 2017 holiday season, Amazon did quite well. But so, too, did Walmart, Target, Best Buy, Costco and a host of other retail companies whose death has been forecast for years by many of those same economic pundits. The reality is that selling consumer products is a tough business, both online and at brick-and-mortar locations. To succeed, a firm has to remain hyper-competitive, committed to customer attraction and fulfillment, and vigorous in pursuit of logistics efficiency and cost reductions.

That is the lesson of Christmas '17. To survive in the Internet age, traditional retailers need to evolve and adapt. RadioShack, Toys "R" Us, Payless and Sports Authority could not. Like and decades before it, iconic seems destined for oblivion. Macy's is in big trouble, but has not succumbed, at least not yet . But other traditional retailers have changed in positive ways that enhance their competitiveness, revenues, and profits by offering consumers lower prices, increased "engagement," and better shopping experiences.

As the Wall Street Journal , "This year, Amazon.com didn't steal retailers' Christmas." A few pertinent examples:

Best Buy, whose stock price is up 74.5% over the past 12 months, limited some popular Black Friday products, like the Nintendo Super NES, to its physical locations in order to drive "foot traffic" in stores.

Walmart, which is riding high on its stellar earnings and comparable store sales record, " made a big bet on digital " and added tens of millions of products to its own website; heading into the holiday shopping period 75% of the hottest toys sold were on walmart.com , the highest percentage of any traditional retailer.

Target, which fourth quarter earnings estimates twice Wall Street's expectations, spent $550 million to purchase Shipt - bringing same-day delivery to about half of its stores by early 2018 - and continued substantial investments in supply chain management, remodeled retail locations and a massive restructuring of pricing.

VF Corp. - which owns retailers Timberland and The North Face along with established clothing brands like Wrangler - a direct-to-consumer revenue increase of 18% in Q3 2017, with digital revenue up 38%, and has been as a pioneer in use of NFC (near-field communication) technology to merge the physical and digital worlds of e-commerce.

Even discount warehouse leader Costco, which estimate-shattering same-store sales growth of 11.5% and a digital sales increase of 33% in December, hasn't seen its revenues eaten by Amazon " ."

These are all illustrations of good old-fashioned competition. Not too long ago, no traditional retailer offered online ordering and same-day in-store pickup (dubbed " buy online pickup in-store," or BOPIS , by the industry). Now it is common, almost a necessity; a huge 45% of Home Depot's online orders are picked up in store. Not long ago, few traditional retailers outside the grocery sector operated their own warehouses and trucking fleets. Walmart and " distributed order management " made that a competitive advantage. And until 2017, few traditional retailers offered same-day home delivery. Now we're seeing a wide array of brick-and-mortar companies - not just Target, whose Shipt-powered service launched February 1 , but also those extremely low-margin supermarket chains - acting more like Amazon and Domino's than Sears or Macy's.

Part of this retail revival is a result of what is termed " omnichannel marketing ": providing a seamless shopping experience at physical locations and through an array of consistent digital channels that differentiates retailers from peers and offers a competitive edge over online-only competitors by leveraging store assets. In other words, not only is it important to have a digital presence, it's critical to have one that is integrated with retailers' physical footprints as well.

Lowe's, for instance, attributed its 33% online sales growth in 2017 to a "best-in-class omnichannel offering." As a Harvard Business Review found last year, "omnichannel capabilities drive the engagement of core shoppers with the retail brand and ultimately draw them to the physical store." That changes the customer experience in ways traditional retailers are only beginning to exploit, according to the Associated Press :

As mundane tasks like checkout and inventory are automated, employees are trying to deliver the kind of customer service the Internet can't match. So a Best Buy employee who used to sell electronics in the store is dispatched to customers' homes to help them choose just the right products. A Wal-Mart worker dashes in and out of the grocery aisles, hand-picks products for online shoppers and brings them to people's cars.

These are all illustrations of how the push by Amazon into new markets, and its core focus on consumer satisfaction and data-driven logistical efficiencies, has been a good thing. Those traditional brick-and-mortar chains that "get it" and apply the lessons of Amazon's success - indeed, go beyond replicating to surpass and differentiate from Amazon - are prospering and growing, not dying. Conversely , "retailers that do not provide a compelling draw for their customers may not make it." Once bland Walmart, for instance, "has changed dramatically over the last five years" and as the Motley Fool , is now "positioned to thrive in the new retail environment." More broadly, despite those dismal predictions of demise, retailers overall recorded a fourth consecutive month of gains in December, making 2017 the strongest year for retail sales growth since 2014 . Like Mark Twain, reports of the death of retail from the so-called "Amazon Effect" were greatly exaggerated .

The most recent, alarmist calls about Amazon stem from a new venture with J.P. Morgan and Berkshire Hathaway in health care . That follows last year's frenzy over Amazon's acquisition of organic supermarket Whole Foods , which proved to be a nothingburger from an antitrust perspective (witness Instacart's impressive growth). Yet if the consumer retail sector is a predictor, Amazon's disruptive entry into these and other new spaces can only be positive, forcing lazy incumbent firms in concentrated industries to innovate, meet customer needs, and drive efficiencies in their supply, fulfillment and distribution systems - while paying better wages to employees, too.

The much-ballyhooed " retail apocalypse story " is simply false. To the contrary, the lesson from Christmas '17 and the beginning of 2018 is that Amazon is good for consumers, good for competition and, yes, good for traditional retailers. Leave it be.

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Why Amazon Is Good for Traditional Retailers - Disruptive Competition Project

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Amid shrill clamor that should be Amazon.com Inc. broken up because it is vaguely " too powerful ," some retrospection on a continuing narrative that the Seattle company will " kill retailing " is appropriate. Those prophetic warnings were and remain flatly wrong. Over the 2017 holiday season, Amazon did quite well.

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Amazon’s one-two punch: How traditional retailers can fight back

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Amazon’s one-two punch: How traditional retailers can fight back

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If you think physical retail is dead, you couldn't be more wrong. Despite the explosion in e-commerce, we're still buying plenty of stuff in offline stores. In 2017, U.S. retail sales totaled $3.49 trillion, of which only 13 percent (about $435 billion) were e-commerce sales. True, e-commerce is growing at a much faster annual pace. But we're still very far from the tipping point.

Amazon, the e-commerce giant, is playing an even longer game than everyone thinks. The company already dominates online retail - Amazon accounted for almost 50 percent of all U.S. e-commerce dollars spent in 2018. But now Amazon is eyeing the much bigger prize: modernizing and dominating retail sales in physical locations, mainly through the use of sophisticated data analysis. The recent reports of Amazon launching its own chain of grocery stores in several U.S. cities - separate from its recent Whole Foods acquisition - is just one example of how this could play out.

You can think of this as the Amazon one-two punch: The company's vast power in e-commerce is only the initial, quick jab to an opponent's face. Data-focused innovations in offline retail will be Amazon's second, much heavier cross. Traditional retailers too focused on the jab aren't seeing the cross coming. But we think canny retailers can fight back - and avoid getting KO'd. Here's how.

The e-commerce jab starts with warehousing

Physical storage of goods has long been crucial to advances in commerce. Innovations here range from Henry Ford's conveyor belt assembly line in 1910, to IBM's universal product code (the "barcode") in the early 1970s, to J.C. Penney's implementation of the first warehouse management system in 1975. Intelligrated (Honeywell), Dematic (KION), Unitronics, Siemens and others further optimized and modernized the traditional warehouse. But then came Amazon.

After expanding from books to a multi-product offering, Amazon Prime launched in 2005. Then, the company's operational focus turned to enabling scalable two-day shipping. With hundreds of millions of product SKUs, the challenge was how to get your pocket 3-layer suture pad (to cite a super-specific product Amazon now sells) from the back of the warehouse and into the shippers' hands as quickly as possible.

Make no mistake: Amazon's one-two retail punch will be formidable.

Amazon met this challenge at a time when automated warehouses still had massive physical footprints and capital-intensive costs. Amazon bought Kiva Systems in 2012, which ushered in the era of Autonomous Guided Vehicles (AGVs), or robots that quickly ferried products from the warehouse's depths to static human packers.

Since the Kiva acquisition, retailers have scrambled to adopt technology to match Amazon's warehouse efficiencies. These technologies range from warehouse management software (made by LogFire, acquired by Oracle; other companies here include Fishbowl and Temando) to warehouse robotics (Locus Robotics, 6 River Systems, Magazino). Some of these companies' technologies even incorporate wearables (e.g. ProGlove, GetVu) for warehouse workers. We've also seen more general-purpose projects in this area, such as Google Robotics. The main adopters of these new technologies are those companies that feel Amazon's burn most harshly, namely operators of fulfillment centers serving e-commerce.

The schematic below gives a broad picture of their operations and a partial list of warehouse/inventory management technologies they can adopt:

It's impossible to say what optimizations Amazon will bring to warehousing beyond these, but that may be less important to predict than retailers realize.

The cross: Modernizing the physical retail environment

Amazon has made several recent forays into offline shopping. These range from Amazon Books (physical book stores), Amazon Go (fast retail where consumers skip the cashier entirely) and Amazon 4-Star (stores featuring only products ranked four-stars or higher). Amazon Live is even bringing brick-and-mortar-style shopping streaming to your phone with a home-shopping concept à la QVC. Perhaps most prominently, Amazon's 2017 purchase of Whole Foods gave the company an entrée into grocery shopping and a nationwide chain of physical stores.

Most retail-watchers have dismissed these projects as dabbling, or - in the case of Whole Foods - focused too narrowly on a particular vertical. But we think they're missing Bezos' longer-term strategic aim. Watch that cross: Amazon is mastering how physical retail works today, so it can do offline what it already does incredibly well online, which is harness data to help retailers sell much more intelligently. Amazon recognizes certain products lend themselves better to offline shopping - groceries and children's clothing are just a few examples.

How can traditional retailers fight back? Get more proactive.

Those shopping experiences are unlikely to disappear. But traditional retailers (and Amazon offline) can understand much, much more about the data points between shopping and purchase. Which path did shoppers take through the store? Which products did they touch and which did they put into a cart? Which items did they try on, and which products did they abandon? Did they ask for different sizes? How does product location within the store influence consumers' willingness to buy? What product correlations can inform timely marketing offers - for instance, if women often buy hats and sunglasses together in springtime, can a well-timed coupon prompt an additional purchase? Amazon already knows answers to most of these questions online. They want to bring that same intelligence to offline retail.

Obviously, customer privacy will be a crucial concern in this brave new future. But customers have come to expect online data-tracking and now often welcome the more informed recommendations and the convenience this data can bring. Why couldn't a similar mindset-shift happen in offline retail?

How can retailers fight back?

Make no mistake: Amazon's one-two retail punch will be formidable. But remember how important the element of surprise is. Too many venture capitalists underestimate physical retail's importance and pooh-pooh startups focused on this sector. That's extremely short-sighted.

Does the fact that Amazon is developing computer vision for Amazon Go mean that alternative self-checkout companies (e.g. Trigo, AiFi) are at a disadvantage? I'd argue that this validation is actually an accelerant as traditional retail struggles to keep up.

How can traditional retailers fight back? Get more proactive. Don't wait for Amazon to show you what the next best-practice in retail should be. There's plenty of exciting technology you can adopt today to beat Jeff Bezos to the punch. Take Relex, a Finnish startup using AI and machine learning to help brick-and-mortar and e-commerce companies make better forecasts of how products will sell. Or companies like Memomi or Mirow that are creating solutions for a more immersive and interactive offline shopping experience.

Amazon's one-two punch strategy seems to be working. Traditional retailers are largely blinded by the behemoth's warehousing innovations, just as they are about to be hit with an in-store innovation blow. New technologies are emerging to help traditional retail rally. The only question is whether they'll implement the solutions fast enough to stay relevant.

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Amazon's one-two punch: How traditional retailers can fight back

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If you think physical retail is dead, you couldn't be more wrong. Despite the explosion in e-commerce, we're still buying plenty of stuff in offline stores. In 2017, U.S. retail sales totaled $3.49 trillion, of which only 13 percent (about $435 billion) were e-commerce sales. True, e-commerce is growing at a much faster annual pace.

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Amazon.com (AMZN) is everywhere. By disrupting the way people shop, Amazon has created economic ripple effects that go far beyond the customer's wallet. Amazon, directly and indirectly, impacts inflation, jobs, and investment.

The Retail Giant

Amazon started with books and then added everything from engagement rings to jail cells for mobile phones until it became "the everything store." Add the convenience of having it delivered promptly to your doorstep, and customers have rewarded Amazon with open wallets.

According to Digital Commerce 360, Amazon's revenue from U.S. consumers' web purchases amounted to 30.7% of U.S. online retail sales in the first quarter of 2021. In 2020, ecommerce spiked to account for approximately 21.3% of U.S. retail sales, meaning Amazon accounted for about 6.5% of all retail spending. This huge increase can be attributed to the surge in online shopping as a result of the global pandemic due to the novel COVID-19 virus.

If you consider the macro picture, consumers spending more is a good sign because it contributes to the GDP. That being said, consumer spending on Amazon is not significant enough to tip the GDP scale. However, it could be in the future.

How Amazon Kills Inflation

Amazon has disrupted traditional retail and accelerated the demise of struggling players. Without storefronts, the company's overhead costs are significantly lower than other retailers. That gives Amazon the edge to undercut rivals on prices and operate on a thinner profit margin.

Some economy watchers are nervous about Amazon's deflationary impact. Ideally, low unemployment is accompanied by wage growth, which in turn fuels inflation as companies pass on the costs to consumers. That is the logic of the Phillips curve, but Amazon has disrupted it as well.

Greater competition and lower prices can limit the ability of companies to pass on any wage increases to consumers. Those worries were echoed in the wake of the Whole Foods acquisition in 2017. Chicago Federal Reserve President Charles Evans noted that mega-mergers can put downward pressure on inflation.

Jobs at Amazon

By the end of 2020, Amazon employed approximately 1.3 million employees worldwide. In 2020 alone, the company added 400,000 jobs. That includes both full-time and part-time employees. Although over one million seems like a large number, it is actually low by retail industry standards because Amazon does not have a significant storefront presence. A traditional store requires far more employees. For example, Walmart (WMT) employs approximately 2.3 million people worldwide.

Amazon also engages several third-party contractors and companies for tasks like deliveries. Those people go door-to-door, dropping off Amazon packages. However, they are not employees of the company. Does that matter-yes and no.

In a way, these are jobs for people. Therefore, some credit could go to Amazon for job creation. On the other hand, hiring contractual workers helps the company keep its costs in check. Some have criticized the company for harsh working conditions.

Another angle of the jobs conversation is how many jobs Amazon is eliminating. Consider how much the company is hurting other retailers, forcing them to shutter stores and cut back on costs. Job gains at Amazon may not mean anything for overall employment.

The company came under fire from Sen. Bernie Sanders. He introduced a bill, Stop Bad Employers by Zeroing Out Subsidies, or the Stop BEZOS Act, in Sept. 2018. He proposed levying taxes on large companies to the extent that their employees relied on public benefits. Sanders had attacked Amazon and founder Jeff Bezos on account of worker pay and worker safety conditions. In response, Amazon raised its minimum wage to $15 per hour, on November 1, 2018, much higher than the federal minimum wage of $7.25 per hour.

Amazon's quest for innovation and technology to achieve operational efficiency has people worried about the elimination of jobs. Those worries are not far-fetched considering that the company has introduced cashier-less Amazon Go stores in several large U.S. cities.

The Facilitator of Small Businesses

Amazon's logistics infrastructure doesn't just help it ship to consumers all across the globe; it also aids another group of people: small businesses. Listing their products on Amazon helps them increase their customer reach, and the delivery essentially becomes Amazon's headache.

"More than 1.9 million small and medium-sized businesses sell in our store, and they make up close to 60% of our retail sales," the company said in its 2020 letter to shareholders.

As small businesses thrive, further job creation and spending are bound to happen. According to Amazon, 1.1 million jobs have been created outside of the company as a result of the Amazon Marketplace.

Amazon as a Taxpayer

Amazon does pay taxes, but it pays far less than some people believe that it should. For 2020, Amazon's effective income tax rate was 9.4%-versus the 21% statutory corporate tax rate. The company paid $1.8 billion in federal income tax on $20 billion in profits-versus the $4.1 billion that Amazon would have paid with the 21% tax rate.

Amazon saves billions on taxes using tax credits and stock option tax breaks. Over the three-year period, 2018 to 2020, Amazon paid an effective federal tax rate of 4.3% on income in the U.S. Longer-term, Amazon has been just as good at avoiding taxes, with an average effective federal tax rate of 4.7% over the last 10 years.

Amazon is structured to minimize corporate income taxes. The company reinvests profits into expanding its business instead. While some joke that this policy makes Amazon the largest nonprofit organization in America, reinvestment leads to increased market share and capital gains. Amazon's lower tax bill helps the company to expand, and expansion helps Amazon to reduce its taxes.

Not having a physical presence or employees in many states also saved Amazon from having to collect sales tax. Sales tax is a complicated subject with rates and rules varying across states. The most straightforward explanation in this context is that tax laws in many states need the physical presence of an online retailer in the state to collect sales tax. Therefore, Amazon saved on tax by not having its own warehouses or employees in certain states.

The problem was not specific to Amazon, however, as it applied to any online retailer shipping goods across state lines. As time passed, Amazon started collecting sales tax on all products that were sold in or delivered to states that have such a tax. The following do not have sales tax:

The sales tax issue gets even more complicated when it pertains to third-party sellers.

Investing in Amazon

Amazon became the second trillion-dollar company by market cap on September 4, 2018. As of July 2021, it holds third place behind Apple and Microsoft, boasting a $1.875 trillion market cap. Another milestone, in July 2020, the company crossed the $3,000 mark for its share price, which has been steadily increasing since. Amazon's founder and executive chair, Jeff Bezos, is frequently the wealthiest person in the world, depending on current market prices.

The multi-year run for Amazon shares has been phenomenal. The company made its stock market debut in 1997, and $100 invested then would have turned into six figures. Amazon has significantly outperformed the S&P 500 over the last several decades, but it has been a rocky road at times. In particular, Amazon lost more than 90% of its value when the dotcom bubble crashed.

Here, past returns are clearly not indicative of future results. Amazon's strong performance during the 2020 bear market is a sign that the company is maturing. The thousandfold return available to early investors in Amazon simply cannot be repeated. Without hyperinflation, a trillion-dollar company will never be worth a quadrillion dollars because that is more than the combined value of every stock market in the world.

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Amazon.com (AMZN) is everywhere. By disrupting the way people shop, Amazon has created economic ripple effects that go far beyond the customer's wallet. Amazon, directly and indirectly, impacts inflation, jobs, and investment. Amazon started with books and then added everything from engagement rings to jail cells for mobile phones until it became "the everything store."

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For hundreds of years, consumers had a specific brick-and-mortar location in mind when the necessity for a product arose. If they needed groceries, they went to the market or before markets a fruit stand. If they needed a new shirt, they went to the department store. If they needed to replace a light bulb, they went to the hardware store. Then along came the Internet and the subsequent boom of online retailers and e-commerce, which not only changed the consumer journey, but also made change very difficult for brands with heavy equity in old distribution models.

In today's market, the journey keeps evolving as technology continues to advance and new innovations are developed. Rather than having to fit time into their increasingly hectic schedules to run errands and stop by the store, consumers are able to access virtually any product or service they need from their smartphone (or should I say, modern-day Swiss army knife). This has led to what we at FutureCast refer to as "The Amazon Effect."

The Amazon Effect is the impact the digital marketplace has on the traditional business model regarding consumer expectations and the new competitive landscape. Consumers now expect their buyer journey to be entirely frictionless and immediate, regardless of the particular industry or product in question. This has in turn raised the status quo for a brand relative to both direct competition and indirect alternatives. For example, Amazon does not directly compete with a salon chain, as consumers are unable to purchase a haircut from the web platform. However, Amazon's convenience, value characteristics and extensive network have influenced consumer expectations, meaning they will still compare the experience they have at the salon to the high bar set by Amazon.
Amazon embraces the Millennial Mindset to win big
While perhaps seemingly unfair, this is the reality of the market today, thanks to the influence of the Millennial generation. Our research has proven that Millennials are 2x more likely to be adopters of new technology and digital trends, and they have very specific behaviors and attitudes in the market. Our most recent study investigating the Millennial Mindset proves that Millennials place high value in six areas related to brand performance:

Social Circle - Is your brand part of a consumer's close social circle (not just social media)?

Self - Does your brand have an emotional connection with your consumer?

Innovative - Is your brand in a constant state of beta?

Trusted - Does your brand put the consumer's needs first?

Purposeful - How does your brand add good to the larger community?

Accessible - Does your brand simplify the lives of consumers?

Instead of being isolated to a particular category, these mindsets are evoked in all industry verticals, from CPG to retail to finance.

These mindsets are also not isolated to one generation. As the largest generation today, the Millennial influence is permeating other generations at an increasingly accelerated rate. In fact, Gen X puts almost equal value on the mindsets.

In our research, we found that Amazon outperformed all other benchmark brands (others included in the study: Apple, Netflix, TOMS Shoes, Uber) not only across mindsets, but also across generations because of its consistent ability to reduce friction in the consumer journey and stay at the forefront of market innovation.

As brands continue to connect with a modern consumer market, it will be imperative that they follow Amazon's path and deliver across the Mindsets in order to maintain relevancy and develop brand relationships.

About Jeff Fromm

Although not a Millennial as defined by his age, Jeff Fromm is the Millennial Marketing Guy. Jeff is President of FutureCast, a marketing consultancy that specializes in Millennial trends, and is a contributing writer at...See Jeff's full bio.

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"The Amazon Effect" and the Future of Retail Competition | Millennial Marketing

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For hundreds of years, consumers had a specific brick-and-mortar location in mind when the necessity for a product arose. If they needed groceries, they went to the market or before markets a fruit stand. If they needed a new shirt, they went to the department store.

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What the Amazon Effect Is

So, what is the Amazon Effect? The meaning of the phrase can vary depending on the industry being cited, but it generally refers to the difficulty many stores -- particularly brick-and-mortar outlets -- face when they compete with Amazon. The online retailer's vast selection, fast shipping, free returns, low prices and "Prime" subscription service all serve to create high customer expectations for any retailer hoping to compete.

Does that mean Amazon is obliterating the competition? Studies show that Amazon’s success has led to some business closures, but many companies, in fact, have tackled the Amazon effect creatively and effectively to compete for customers and hold their ground. In short, the Amazon Effect is just another reason the retail environment is always is flux.

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What the Amazon Effect Is

So, what is the Amazon Effect? The meaning of the phrase can vary depending on the industry being cited, but it generally refers to the difficulty many stores -- particularly brick-and-mortar outlets -- face when they compete with Amazon. The online retailer's vast selection, fast shipping, free returns, low prices and "Prime" subscription service all serve to create high customer expectations for any retailer hoping to compete.

Does that mean Amazon is obliterating the competition? Studies show that Amazon’s success has led to some business closures, but many companies, in fact, have tackled the Amazon effect creatively and effectively to compete for customers and hold their ground. In short, the Amazon Effect is just another reason the retail environment is always is flux.

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Its me Seema

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Hi