History of E-commerce: The Amazon Effect
Amazon.com
How Amazon took the ball running and changed ecommerce trends
Only growth seems likely for Amazon, the e-commerce giant that got its start as an online bookseller and has now grown to the extent that it’s working on drone delivery and movie production. Amazon has landed itself in a position of leadership for e-commerce, and we’ll take a look at some of the decisions they’ve made along the way to achieve this.
Taking the Lead: eBay, Amazon
Both eBay and Amazon were leading e-commerce innovators that generated consumer excitement about the ease and affordability of online shopping—especially in their early stages. But there were two big differences between the two: while eBay created a marketplace where consumers could bid on items other consumers or businesses offered, eBay wasn’t responsible for the distribution of these products. This is why it had more popularity with consumer-to-consumer sales. Amazon, on the other hand, created an efficient storage and distribution system so that, when it began to move away from book sales exclusively, they could house their vendors’ products. This led businesses—not consumers—to be interested in doing work with Amazon opposed to eBay.
Distribution at the Core
Because Amazon is primarily a distribution company, they are able to carry products for their vendors and distribute them at a reduced price than what the vendor would be able to offer. A TIME article differentiates Amazon from three other dominating companies in today’s marketplace—Facebook, Google, and Apple:
“Amazon…is a tech company that is firmly rooted in the age-old industry of retail, in the quotidian business of getting the products from the people who make them to the people who want them.”
Interestingly enough, it’s in the distribution arena where Amazon is moving forward: offering free shipping, improving capacity for distribution—and, now, even talking about same-day shipping for every order, which would have massive effects on brick-and-mortar retailers.
One Stop Shopping, Customer Data
When Amazon morphed from an online bookseller to an e-commerce, one-stop-shopping hub, they gained access to large amounts of data about their customers. Now, Amazon can track how likely customers are to buy things online that they viewed, how often they make purchases online, and what other products they may be interested in. Also, with the popularity of reviews—written by customers and read by potential buyers to gauge the quality of the product—Amazon has become a resource for people to learn more about the product.
Growing Operations, Looming Competition
As Amazon continues to expand, they remain true to their roots as a high-quality distribution service. By expanding distribution hubs, working to maintain quick deliveries, and developing technologies to create even better, more accurate distribution, they’re setting new trends.
But all of this doesn’t mean that Amazon has made the competition obsolete. As they grow, they risk losing customers to longer delivery times, or inaccurate deliveries, to smaller distributors who have the capacity and flexibility to handle more difficult distribution. Look towards these smaller distributors to find niches in the market that Amazon won’t be able to.