In 2018, Amazon’s global net sales reached $233 billion, and its impressive growth continues to rattle the retail industry.
Amazon is on a path to become the largest retailer in the U.S. — and is expected to overtake Walmart by 2022, according to data from a recent market research report by Packaged Facts titled Amazon Strategies and the Amazon Shopper, 2nd Edition. Amazon’s U.S. gross merchandise sales will contribute nearly half of U.S. e-commerce sales by 2022, up from 43% in 2019 and 28% in 2015.
Based on research by Packaged Facts, here’s a closer look at how Amazon built and maintained such a formidable competitive advantage and how retailers across industry categories are fighting back.
The Amazon Effect
Amazon’s dominance has not only challenged the traditional brick-and-mortar business model, it’s also transformed consumer expectations and reset industry standards. To start, no one wants to pay for shipping anymore, and with the onset of Amazon’s one-day free shipping, retailers are locked in a “delivery speed arms race.” Competitors like Walmart and Best Buy have rolled out their own next-day delivery services, following Amazon’s lead.
Amazon is known for offering free shipping and convenience, but it also provides a vast selection of products at competitive prices. No hassle returns, an easy checkout experience, and a huge repository of reviews also help make Amazon a go-to option for a growing number of consumers.
Amazon’s Competitors Fight Back
Over the last two decades, Amazon has expanded from one category to the next — heating up the competition in books, toys, electronics, apparel, pet products, and groceries. As a result, Amazon’s competitors include a range of retail heavyweights such as Walmart, Home Depot, Best Buy, Kroger, Petco, and PetSmart, among others.
These retailers recognize the need for speed and the allure of same-day or next-day delivery, but there are other ways they can differentiate their offerings.
In-Store Services
Retailers have strengths to draw on, particularly when it comes to in-store services. Walmart is a great example. According to survey data, over 20% of Walmart shoppers use in-store services, such as pharmacy, financial, optical, and photo processing. This wide breadth of services helps drive revenue and boost in-store traffic.
Best Buy’s Geek Squad is another type of service that helps reel in customers even in the e-commerce era. Geek Squad consists of more than 20,000 agents across the U.S. who offer tech support for computers, smart home devices, and appliance repair. Geek Squad helps attract customers to Best Buy, encourage impulse purchases, and solve consumers’ underlying needs in a way that is difficult for Amazon to do.
Click and Collect
Another key advantage retailers like Walmart and Best Buy exploit is “click and collect” services, which allow customers to order products online and pick them up at the store. Click and collect gives customers the convenience and instant gratification they crave — without the risk of having a package sit on a doorstep, where thieves can easily grab it.
Home Depot has taken click and collect a step further by setting up automated pick-up lockers in more than 1,100 stores that allow customers to avoid standing in line.
Amazon does offer pick-up lockers at Whole Foods and elsewhere, but it’s difficult for the e-commerce giant to match the scale of click-and-collect programs run by some of the biggest brick-and-mortar retailers.
Where to Learn More
For more detailed information on Amazon’s competitive advantage, Amazon’s core competencies, the Amazon effect on retail, and the strategies of Amazon’s competitors, read the report Amazon Strategies and the Amazon Shopper, 2nd Edition by Packaged Facts.
View the full abstract, table of contents, and purchasing options on the Packaged Facts website using the link above. This report is also available to Profound subscribers on Profound.com.
About the Publisher: Packaged Facts publishes market intelligence on a wide range of consumer market topics, including consumer demographics and shopper insights, consumer financial products and services, consumer goods and retailing, and pet products and services. Packaged Facts also offers a full range of custom research services. Reports can be purchased at our company website and are also available through MarketResearch.com.