THERE ARE AT LEAST TWO SIDES TO EVERY STORY

Is Amazon Good or Bad for the Shopping Industry?

By Talia Klein Perez
 Getty Images: Matt Cardy
*Updated 2021
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 made online shopping even more popular, adding an additional $105 billion in US online revenue in 2020. Of the e-commerce retailers, Amazon.com is the clear Goliath, accounting for almost 40% of US online retails sales for 2020, a number that’s expected to grow this year. Pre-pandemic, the online retailer’s sales were expected to grow by 17.2% in 2020; instead, they grew by 44.1%, reaching $318.41 billion. But even before the pandemic, Amazon trafficked more than one-third of all retail products bought or sold online in the US. However, 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

Shopping on Amazon requires users to input their personal information, which may put shoppers at risk. While online privacy concerns are not an Amazon-specific issue, the company’s privacy policy may raise concerns about safeguarding shoppers’ personal information, security and privacy (as might varying Amazon smart products). In fact, the company stood trial in Del Vechio v. Amazon.com as part of a class-action lawsuit for deliberately going against its customers’ privacy preferences and sharing its customers’ personal information with third parties without their consent – and against their wishes.

Not to mention, in the past 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 do many people find these ads annoying, but they can potentially 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 so 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 2017 acquisition of Whole Foods and its recent launch of Amazon Fresh in the spring of 2021, the company has become a monopoly of successfully merchandizing convenience, especially during the pandemic. Between Amazon Prime, as well as introducing cashierless supermarkets, the company will continue accounting for a large chunk of consumers’ spending. But shoppers may 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 growing success of Amazon and its slew of digital endeavors may cause people and shop owners to lose their jobs as 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 an estimated 1.7 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 delivers nearly two-thirds 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.

 

Pushes Innovation

What truly sets Amazon apart is its brand promise to “deliver the broadest selection of products and services at the lowest prices with minimal hassle.” 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, including its Dash Smart Shelf scale that automates purchases of refills and even with the short-lived Amazon Dash  and using drones for delivery.

 

The 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

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