The Amazon effect

The Amazon Effect, What Is It And What Does It Mean For Retailers?

Introduction

With the rise and continued growth of digital buyers and the internet, many have predicted the high street will be almost entirely digitalised in the near future. But is this really the case?

Growth-in-digital-buyers

eMarketer data demonstrates that ecommerce sales will continue to increase and grow over the years.

As online retailers get more innovative, so do offline retailers. The majority of good retailers are well aware of the rise of digital and are in the process of re-shaping, transforming and re-inventing high streets.

This is known as an ‘omnichannel’ approach in order to engage with consumers. Some might argue that stores with offline presence are in a better position than those without, so long as their online presence is equally as good.

This doesn’t just refer to e-commerce, either. Having a ‘digital presence’ doesn’t mean you have to sell your products online, it just means you have a website that’s strong enough technically to drive footfall to your physical stores.

For example, big players such as Primark and B&M are famed for not having an e-commerce offering but are never shy of success.

What Exactly Is The Amazon Effect?

The Amazon Effect is a term generally used to describe the difficulty that stores, both online and offline, of today face when having to compete with the e-commerce giant that is Amazon and its delivery network that’s colloquially labelled as a logistical phenomenon.

Analysis from GlobalData has found that Amazon is the fifth largest retailer in the UK, accounting for 33.5% of all UK spend, so it’s clear that Amazon is a leader in online sales – offering competitive prices on consumer goods and boasting an impressive and original delivery service that includes same-day delivery options.

Not to mention their extensive and mighty product range. There’s not much you can’t buy on Amazon nowadays.

And with all of this at the click of a consumer’s finger, right in the comfort of their own home, it’s no wonder other retailers are feeling the pressure – namely, the Amazon Effect.

Amazon - Tecmark

The graph above provided by the Guardian and Mintel shows the opinion of UK based customers and their opinions on Amazon.

Does This Mean Physical Stores Will Close?

This is where the big debates come into play, some argue that offline stores and the act of physically going to a store are considered as a thing of the past, while others would argue that the high street isn’t dead, it’s just evolving into something bigger and better.

Retailers with physical stores, the ones that are doing well, are fighting back against the digitisation of retail and are meeting the needs of consumers in terms of providing an experience and memory. Not to mention honing in on a sound digital strategy which complements their offline activity.

Amazon online sales

From figure 4  above, it is evident that consumers still want to purchase in offline stores.

We see the rise of lifestyle and concept stores offering trendy coffee shops and in-store exclusive events that provide much more to the consumer than just buying a product.

Examples of this include small independent stores such as Form in Manchester’s Northern Quarter, right through to established giants such as Macy’s in New York who have recently launched ‘Story’.

Which is described as “an ever-changing and Instagram-worthy millennial dream.” It’s this kind of activity that encourages footfall and is ultimately what all brands need to adapt to keep their physicality in tact.

Will Amazon Head Offline Too?

Well, they already have.

Amazon currently has 4 ‘Amazon Go’ stores, 2 of which opened in January 2019.

‘’Welcome to Amazon Go. The world’s most advanced shopping technology, no lines, no checkout – just grab and go!’’ – Amazon Go.

Amazon Go

You need nothing more to prove that the high street is still alive and kicking. Many think that retailers are moving solely online, but Amazon disproves this.

Born as an online outlet, they too see the value in having physical stores that are complemented with a digital presence – hence their opening of – and plans to expand on – the Amazon Go stores.

Image Credit: Quote Catalog

Lauren Watson

Lauren Watson

Lauren is a digital producer at Tecmark, she has over five years of project management experience working with a variety of brands both online and offline. Lauren is a lover of all things digital when it comes to communication and marketing and is also currently studying a postgraduate masters degree in Digital Marketing to further enhance her digital expertise.