When was the last time you made a purchase online on Amazon? E-commerce has been expanding for more than a decade, making shopping more accessible and convenient for consumers. The pandemic has made online shopping even more popular, with 50% of consumers currently doing more than 75% of their shopping online. Of the e-commerce retailers, Amazon.com is the clear Goliath, accounting for almost 38% of US online retails sales for 2019. It’s no surprise that the company will only continue to grow because of the pandemic. In fact, consumer spending on Amazon during May – July jumped 60% year over year. But even before the pandemic, Amazon trafficked more than one-third of all retail products bought or sold online in the US. As the recent US antitrust case against Amazon and other big tech giants brought into question whether they had too much power, we still ask: Is Amazon’s growth good or bad for the shopping industry?
Here are three arguments in support of and three more against the online giant.
Three reasons Amazon gives shopping a bad name
Shopping on Amazon isn’t as safe as shopping offline
Not to mention, there has been at least one instance where Amazon’s customer support team was accused of being tricked into handing over sensitive information, thus falling prey to the growing menace of social engineering hacking. Less worrying, but still of concern, is the fact that Amazon has long had and proactively uses patented technology that tracks both customers’ purchasing habits and information about the people its customers buy gifts for. Regarding its small business vendors, Amazon was put under the spotlight for using data from its own sellers to launch competing products.
Too many advertisements
Amazon.com is riddled with ads – specifically pop-up ads – that each prompt the user to buy another product, based on the user’s unique purchase history. Not only are these ads annoying, but they can be a dangerous form of malware. Even if not dangerous, they tend to drive users to make unwanted and perhaps unbudgeted impulse buys. And while 84% of all shoppers have made impulse buys at one point or another, it may be easier to do on Amazon since it invests heavily in exposing shoppers to new products at every step of their Amazon experience – from first opening the homepage all the way through checkout. The economic consequences on consumers living beyond their means can be devastating; various studies, for instance, show that materialism correlates to unhappiness in relationships.
Becoming a monopoly hurts shoppers
With Amazon’s acquisition of Whole Foods, the company is becoming a monopoly on successfully merchandizing convenience, especially for busy Americans and screen-reliant Millennials. Between Amazon Prime and Whole Foods, as well as other grocery stores, the company may account for a large chunk of Millennials’ discretionary spending. If Amazon becomes a monopoly, shoppers will ultimately lose out; monopolies kill competition and, once king, they can willingly change customer perks that made them so popular in the first place.
Plus, the success of Amazon and its slew of digital endeavors, including cash-free grocery stores, cause salespeople and shop owners to lose their jobs. There are hundreds of thousands fewer retail industry jobs because of the successes of Amazon and other online retailers. And millions of jobs continue to be threatened as Amazon’s share of online purchases continues to climb. These findings will only keep rising, as Amazon expands to target other goods sectors, including providing delivery services for restaurant-prepared meals and Prime Air, it’s drone delivery service, which may put delivery people out of work.
Three reasons Amazon is great!
Gives a platform and exposure to small retailers
Amazon allows small retailers to sell on its platform, thus providing them incomparable online exposure. In fact, almost half of internet users in the US live in a household with an Amazon Prime membership, and the site gets more than 2 billion visitors every month. How’s that for reach?
In addition to new consumers, small business can’t ignore the benefits and tools that Amazon can bring them, like sales, marketing and branding pushes. It’s no wonder, then, that since 2017, more than a million small businesses in the US have started selling on the platform.
Streamlines the shopping and delivery process
During searches, Amazon users get the added bonus of being presented with similar products or products frequently purchased together. This makes Amazon’s comparison-shopping of brand vs. brand or product vs. related product fast and effortless. Another benefit of shopping on Amazon is the immediacy in which purchases are received. With services like Amazon Prime, the customer journey of “search – select – pay – possess” is near-instantaneous. Since Amazon has been delivering 26% of its own orders directly to consumers, it’s no wonder that the company is giving UPS and FedEx a run for their money, competition that will only benefit consumers. It’s much faster than most other e-commerce stores. This benefit has been appreciated during the pandemic lockdowns, as with efforts to combat price gouging, among other Covid-19 responses.
Being the market leader that it is means that the standard Amazon adopts becomes the market standard, which, in turn, benefits all consumers. This can also be seen with Amazon’s PillPack acquisition, which highlights how its embrace of disruptive competition is a good thing for consumers. Pushing itself into the health care – pharma – industry will make much-needed pharmaceuticals more accessible to consumers and more affordable.
What truly sets Amazon apart is its brand promise to be “Earth’s biggest selection and the Earth’s most customer-centric company.” Take its Prime video services, with original and award-winning TV shows and movies, or its cloud computing service, which is so successful that it is now expanding to handle classified CIA data. If the promise of the internet is to provide users with what we need, when we need it – whether product- or service-related – then Amazon has proven that those who have the data can deliver on this promise. Also, Amazon’s influence pushes the whole consumer industry forward with innovation, even with the short-lived Amazon Dash and using drones for delivery.
Bottom line: Amazon has made shopping more efficient and more innovative for consumers. Yet, while it has also boosted small retailers, the e-commerce giant has cost the retail industry more than it bargained for. How do you think Amazon has impacted the shopping industry?
Co-written by Rachel Segal