Is Amazon Looking to Put the Squeeze on Retailers?

by Carl Weiss

In the Amazon jungle there is a reptile known for its ability to squeeze the life out of hapless victims.  It is called the Anaconda, one of the world’s largest snakes.  The largest anaconda ever found was measured at twenty eight feet long with a girth of forty four inches. Like its five hundred pound reptilian counterpart, the retail giant Amazon also packs a lot of muscle which it uses to squeeze out the competition, particularly those of brick and mortar retailers. 

Have you heard this one? “What do you call Target?  Amazon’s show room.” 

Maybe you heard the same line with Ebay inserted into the punch line.  For retailers, this quip is no laughing matter.  For years many industry pundits have been predicting that major online merchants such as Amazon and EBay were going to wipe retail stores off the face of the planet.  And how was this going to come about?  Look at it this way, major online merchants have a lot going for them.  In the first place, they have a competitive advantage due to the fact that they can pick and choose from a myriad of suppliers and in so doing tout the lowest prices on the planet.  Plus, both Ebay and Amazon only charge taxes in states where they have physical locations. In the case of Amazon, this means Washington state.   It also currently collects taxes from residents of Kansas, Kentucky, New York, North Dakota, and Texas, where the company has distribution centers.

So how can brick and mortar stores, even big boxes, compete with that?  Until recently, the only thing that the brick and mortars had going for them was the fact that unlike an e-tailer, retailers could deliver the goods on the spot.  Call it a convenience factor. Waiting for a product to be shipped from an e-tailer could take anywhere from three days to a week or more, unless you wanted to pay an extra fee to overnight your item.  Unfortunately, Amazon’s latest offer to overnight or even deliver merchandise the same day means that this last bastion of retail dominance could soon be a thing of the past.

If Amazon can make overnight, not to mention same day delivery its standard, this move is more than mere convenience.  It is surely a game changer.  Same-day delivery combined with low prices and in some cases no taxes means that Amazon will have a huge competitive edge over retailers large and small. 

Whether Amazon can pull off this costly move is another story.  But the company is willing to spend billions of dollars in the attempt.  To streamline shipping, the company is investing in a new distribution center in New Jersey and it is expanding its California operation by opening not one but two new facilities near Los Angeles and San Francisco.  It is also investing heavily in automation including robots that are designed to speed up handling at all their distribution centers.

Think of it.  If you could get the same product at a lower price the same day from the comfort of your home, how often would you choose to drive to the store, look for parking and then stand in line at the checkout counter to make your purchase?    

Does this spell the end of retail as we know it?  Only time will tell.  But one thing is certain, if Amazon can manage to bring same-day delivery to the masses, all I can say to retailers is, “Where’s Indiana Jones when you need him?”

As president of W Squared Media Group, Carl Weiss delivers game changing online marketing technology to his clients every day.  Listen to his radio show Workingthe Web to Win every Tuesday at 4pm Eastern.