By The Biz Team (Siam)
Before the COVID pandemic, Amazon was already the major player in the world of online business. Now it is the most dominant online retailer on the planet. The coronavirus pandemic has been a boost for many online retailers, but none more so than Amazon.
The COVID pandemic has forced nearly 250,000 store closures in the US alone, paving the way for Amazon to be “King of the Jungle.” As the pandemic persists, it is estimated that another 15,000 stores will permanently close, which will mean even less competition for Amazon. Many people have switched to online shopping and grocery delivery, and it is unlikely that many will revert to their in-person shopping habits when the pandemic ends.
Amazon, which already accounts for 40% of the US online retail market (that is nearly eight times bigger than its closest competitor, Walmart) is set to expand even more. The reason for this expansion, is that Amazon had already established its online business with seamless and fast delivery of essential home items and groceries before the pandemic. With the virus outbreak, the only thing that has changed is that millions more have become Amazon dependent. Just over the past month, Amazon hired 80,000 new workers and on Google, it is the most searched online website for shopping.
To order from Amazon is simple; just go to the website, pick the item, and order. Almost every type of household item is available on the website and the choices are endless. For those who become Amazon Prime members, delivery is assured within 24-48 hours. Amazon also offers excellent competitive prices or in many cases, the same price as Walmart. It also has outstanding customer service. If an item is broken or you do not like it, just send it back at no extra cost to you. In some cases, the customer is also allowed to keep the damaged item. With this type of customer service, there is no online retailer that can compete with Amazon.
However, that does not mean Amazon is running away from the competition. Other traditional giant retailers like Walmart, Costco, Target, and Kroger have also started to heavily improve their online business and offer rapid shipping, same-day shipping, and 24/7 customer service. Walmart even offers same-day pick-up services from its local mortar store.
A report from eMarketer suggests that the eCommerce sales market in the US will exceed $710 billion in 2020, which is an 18% increase over last year. If the COVID pandemic continues, the trajectory will be even higher.
So far, only Walmart has risen to the challenge of Amazon. With its new same-day delivery service, it has already acquired more than 120 million monthly visitors on its online website. Walmart will also be initiating its Walmart+ service soon, which will be similar to Amazon Prime, and offer its members free music downloads, videos, games, and even movies. The yearly membership will be $98, which is cheaper than Amazon Prime's yearly membership of $119. Other perks of Walmart+ membership will include access to discounts and deals at Walmart gas stations. Furthermore, the membership will permit rapid checkout at Walmart stores, via the company’s Scan & Go service. Walmart is hoping that these features will gain traction, especially since the service is cheaper than Amazon Prime.
Depending on the area served, Walmart+ promises to deliver items in less than two hours. Members are also permitted to select from over 160,000 Walmart products that include consumables, foods, and general merchandise. Other retailers like Kroger, Costco, and Target are also improving their online modus operandi to compete with Amazon.
Despite the growing initiatives of these other companies, Amazon’s prime momentum is currently unrivaled. The company has a dominant position in the online retail business and continues to grow. At this present moment, there are about 150 million Amazon Prime members and the numbers are growing each month. In the last twelve months, the company has spent heavily on expanding its center network and building delivery stations to cut down on shipping costs, and at the same time accelerate delivery. This is the one area where Walmart has an edge over Amazon; it already has hundreds of Walmart stores all over the country from where merchandise can be shipped locally, saving time and expediting delivery.
There was a time when Walmart was viewed as a villain and a bully because of its dominance in the retail business, but now Amazon is viewed in the same light. The pandemic has created a surge in customers, and this has exacerbated the company’s relationship with its workers. Labor issues continue to hamper Amazon because of its brutal demands on workers, inadequate protection at the warehouse, and continuous demands for efficiency. There have been staged walkouts at several Amazon warehouses, but with job scarcity, these workers have little choice but to continue working with the company. Amazon has already installed 200,000 robots to perform automated tasks and with the growing labor disputes, it may invest more in robotics to do most of the tasks.
While Amazon has been good for people seeking convenience and cost efficiency, it has decimated the small retail business sector because of its cheaper products, efficient delivery, and excellent customer service. Lawmakers may pose to be an issue for the powerhouse as they view Amazon’s business practice as anti-competitive, and its abuse of workers unacceptable. In the end, it is the virus pandemic that has made Amazon more powerful than everyone else. This is what capitalism eventually creates; the rich become richer. Most members of the public would agree that Amazon is a good thing, but at what cost to society?