Welcome to Amazontopia. From starting out as just an online bookseller, Amazon has turned into one of the biggest and most influential companies in the e-commerce marketplace.
As Amazon’s empire continues to grow, critics are wary if the corporation will soon turn into an unstoppable force. After all, it’s aggressively expanding its reach into untapped markets such as smart homes, aviation robotics, and physical retail.
But even though Amazon is dominating different industries and accounts for 5% of total retail sales in the US, online shoppers still consider the retail giant their most-liked and trusted tech brand. In fact, they largely trust Amazon with their personal info and buying behavior.
Let’s take a step back and learn about where Amazon started and how it became one of the most influential players in the e-commerce landscape.
Where It All Began
Even before the internet, people were already shopping remotely through mail-order, which took home a small share of commerce. It allowed consumers to shop from a catalog and receive their order through mail delivery. One of the most popular mail-order systems was the Sears Roebuck catalog in 1888 that reached rural black homes in the South.
Mail-order shopping wasn’t the ideal way to buy, however. Sometimes, receiving an order took weeks, and consumers couldn’t access reviews before placing an order. Others simply preferred to shop at in-person department stores.
But everything changed when Amazon came along. It started offering everything that mail-order couldn’t do — comparison shopping, fast (or free) delivery, easy returns, and detailed product reviews.
What Made Amazon Different?
Based on Q4 2021 data, Amazon had a revenue of $137.4 billion, just slightly under forecasts because of rising pandemic costs. Still, the current revenue share shows just how successful the retail giant has been year-on-year despite COVID-19.
But what is the secret to Amazon’s success?
The answer is simple: it’s the e-commerce company’s ability to adapt, evolve, and innovate. After all, Amazon is one of the few retail providers that’s managed to stay relevant despite the different trends in shopping and tech.
Consider how Amazon started as a fledgling online book shop and grew into an internet-based enterprise that sells almost anything. As other online stores stuck to a single product or service, Amazon decided to expand and diversify. Now its products and services range from consumer electronics to digital content.
Retracing the Roots: A Retail Revolution
Since Amazon introduced the first smart speaker with Alexa in 2014, the internet-based enterprise has grown in unprecedented ways. So you may be wondering: how did Amazon get from there to here?
Below, we’ve elaborated on the different products, sectors, and markets that the retail giant has been a part of in the last 25 years.
Amazon first started out in 1994 as an internet-based business that coincided with the dot-com bubble between 1995-2001. Jeff Bezos, Amazon’s co-founder and executive chairman, started off with selling books on the platform because of its relatively low price. Today, Amazon is behind more than half of all print book distribution and sales in the US.
E-books & Digital Publishing
After establishing its foothold in the print book market, Amazon started investing in e-books. Later on, Amazon would turn into a digital publishing powerhouse. In 2007, the tech company released its first Kindle e-book reader for $399. Since then, Amazon has used different versions of Kindle, and competitor brands like Barnes & Noble and Kobo have been unable to keep up.
During the late 90’s, Amazon started selling CDs and DVDs. But it wasn’t until the launch of Amazon Prime in 2005 that the company started laying the groundwork for its digital media ecosystem. In April 2021, Amazon reported that Prime had over 200 million subscribers worldwide.
One of the biggest selling points of getting a subscription was Prime Video access. The streaming and rental service includes thousands of movies and TV shows, making it a clear contender with Netflix.
Amazon Web Services is the world’s most adopted cloud computing platform, giving access to 200 fully-featured services from global data centers. The platform is a direct competitor of Microsoft and Azure, as well as IBM and Oracle’s cloud businesses. When it came out in 2006, it was the first of its kind to offer cloud storage, hosting, and tools for managing remote digital infrastructures.
Smart Speakers & Voice Assistants
Since Amazon first created Alexa, it’s turned into one of the most widely used digital voice assistants. And the company is continuing to expand with smart home products voice assistants. In 2014, it announced the Echo speaker available to all Prime members for $99. The speaker was connected to the cloud and provided info about everything from music to the weather — basically everything consumers could expect when they performed a Google search.
But Alexa wasn’t just limited to home speakers. In 2018, Amazon created an Alexa-powered microwave to compete with kitchen appliances from LG and KitchenAid.
Twitch & Live Streaming
Deep down, Amazon knew it could never compete with YouTube’s user-uploaded videos and Facebook that allowed people to share videos on their timelines. However, it had the budget to purchase Twitch, a live-streaming platform for video games. In 2014, Amazon acquired Twitch for almost $1 billion. Today, it’s a popular streaming platform for Fortnite, Apex Legends, and VALORANT.
Household Supplies & Groceries
In 2014, Amazon started an Amazon Fresh program, a grocery delivery service that competed with Walmart and Target. Eventually, customers could also purchase ready-cook meals on Fresh, which included recipe cards and pre-portioned ingredients.
Three years later, Amazon purchased Whole Foods for $13.7 billion. The company rewarded Prime subscribers with in-store discounts and other pick-up and delivery perks.
Logistics & Warehouse Robotics
Amazon has an expansive logistics network that includes sea freight shipments and air cargo hubs. In fact, its shipping service called Shipping with Amazon competes with brands like FedEx and UPS. But on top of that, the e-commerce giant is also drilling down on last-mile deliveries with self-destructing air drones (during cases of emergencies) and delivery drone beehives in every city.
The Amazon Effect: In Focus
Experts describe the effect of the entire digital marketplace on conventional brick-and-mortar stores as “The Amazon Effect.” Since Amazon offers a vast selection of products, low prices, free returns, and a Prime subscription service, it’s become almost impossible for any other retailer to catch up.
So does that mean Amazon’s influence is a bad thing?
From a macro point of view, higher consumer spending on Amazon contributes to stronger economic activity. Amazon’s dominance also contributes to a more competitive retail landscape so brands can be more creative and stay relevant.
In fact, Amazon is empowering small businesses to create value, drive innovation, and respond faster to customer needs. It’s logistic infrastructure enables small to medium-sized enterprises (SMEs) to expand their reach. Listing their products on Amazon lets them improve brand exposure, while leaving Amazon to take care of their delivery needs.
In particular, Amazon Business can help small businesses with low revenue and supply shortages stay afloat and get the supplies they need. SMEs can create an Amazon Business account for free and get access to business products, exclusive pricing and discounts, and flexible payment options.
On a similar note, 1.9 million SMEs sold their products on Amazon in 2020, and it made up
almost 60% of the tech giant’s retail sales that year.
A Few Pitfalls
If the Amazon Effect teaches us anything, retail providers need to stay more agile and prioritize customer needs over anything else. The company affects more than just the way people shop, and the ripple effect extends to areas such as employment, inflation, and investment.
So even though it’s brought a positive change to the e-commerce landscape, it also has a few caveats.
Online Competition & Pricing
Economy experts argue that Amazon is killing inflation. Consider how the company’s overhead costs are significantly lower compared to other retailers with a conventional storefront. This means Amazon is free to undercut rivals on pricing and competition.
The low prices and competition could, in turn, harm inflation rates. In fact, experts blame Amazon’s aggressive pricing to the recent era of low inflation. After all, Amazon’s prices have intimidated competitors into keeping prices in check.
Unfavorable Employment Opportunities
Before 2021, Amazon hired about 1.3 million people worldwide, and introduced over 400,000 new employment opportunities. Since Amazon doesn’t have a significant storefront presence, these numbers are quite low based on retail industry standards. Walmart, for example, employs 2.2 million people globally.
Taking that idea further, a significant fraction of the Amazon workforce relies on third-party contractors for deliveries. But even though these employees deliver Amazon packages from door-to-door, they technically “don’t” work at Amazon.
The tech giant’s investment in robots is also eliminating human jobs. From delivery drones to Amazon Go, a chain of cashier-less stores in the US and UK, the company isn’t taking automation lightly. However, the brand’s relentless pursuit of operational efficiency could put the jobs of thousands of people at stake.
How Amazon is Changing the E-commerce Scene
It’s clear that the e-commerce provider has a strong relationship with its customers because of its low prices and convenient shopping experience. That being said, let’s take a closer look at how Amazon is changing the e-commerce landscape — and what trends we should expect in the coming years.
One-click shopping started with Amazon. Up until 2017, it was the only e-commerce platform that offered this type of purchasing method.
Back in 1999, Amazon secured the patent for one-click orders, and it was a breakthrough in hassle-free shopping. People had never used a platform where they could enter their billing, shipping and payment info just once then immediately place an order. The feature also gave shoppers the freedom to reorder as many times as possible without answering additional inquiries.
Amazon’s one-click legacy proved that customers had a good reason to share personal data and enjoy a convenient shopping experience. One-click shopping addressed issues related to shopping cart abandonment because all people had to do was click to purchase.
A growing number of e-commerce transactions take place through mobile. Retailers are still playing catch-up with Amazon’s mobile app that appeals to Millennial and tech-savvy shoppers. Since the app offers one-click orders and fast shipping, it’s a must-have app for any customer.
That’s where the concept of mobile-first e-commerce experiences comes in. The mobile-first design strategy prioritizes design for smaller screens (like mobile and tablet) before moving up to desktop.
Starting with small screens lets designers address screen size, bandwidth, and multitasking limitations. In turn, they can prioritize essential features and deliver the right user experience on the right device.
Ultra-fast Delivery Networks
Amazon’s delivery and logistics network is expansive: it uses state-of-the-art tech to ensure fast shipping speeds. In 2019, the company started field-testing a new delivery system called Amazon Scout, a fully electric delivery system that safely delivers packages autonomously. The device is the size of a small cooler, and rolls along streets at a walking pace.
The e-commerce giant promises to deliver almost anything within days or hours. Retail competitors will need to match Amazon’s speed and efficiency, so there’s a possibility that e-commerce businesses will depend more on innovative courier software in the coming years.
Did you know that product up-selling and cross-selling on Amazon account for 35% of its overall revenue? Amazon’s product recommendation tech is powered by artificial intelligence (AI), translating to significant conversions.
Using AI in online shopping is transforming the e-commerce landscape because it can predict buying patterns based on previous behavior. For example, suppose a customer buys a particular brand of shampoo for color-treated hair every week. In that case, an online retailer could send a personalized offer about supplementary hair products (like scalp treatment scrub or silver conditioner).
Expect more e-commerce companies to embrace AI through chatbots, virtual assistants, and inventory management.
Online Grocery Shopping
Amazon is currently America’s top grocery store. To quote, a study from the Dunnhumby Retailer Preference Index shares that, “COVID-19 created a perfect storm that played right into the unique strengths of Amazon’s customer value proposition.”
Since the start of the pandemic in March 2020, Amazon recorded an extreme surge in online orders. The only grocery shopping service is limited to Amazon Prime members, who enjoy free shipping and fast delivery times. In fact, since Amazon offered such a compelling alternative to supermarket shopping, the delivery of some of its non-essential items could take at least a month to reach customers.
Amazon’s convenient online grocery delivery option puts it lightyears ahead of big-box retailers like Walmart, Costco, and Trader Joe’s.
What the Future Holds
The Amazon empire has revolutionized the marketing and e-commerce landscape in ways we could never have anticipated. Its ability to prioritize customer needs and adapt to ever-changing technology proves that it will remain relevant long after the pandemic is over. However, this doesn’t mean that Amazon will be the last e-commerce company standing.
As e-commerce trends shift and evolve, a contender will soon rise from the ashes — and they’ll know that matching the Amazon Effect will depend on cultivating a strong brand identity as early as now.