The Amazon Effect: Competition is a Great Thing!

By Rich Kenney

Amazon is a technology firm that has changed the world around us. Recently, we’ve heard some say this kind of progress is bad. Among other things, the naysayers point to the loss of retail jobs in traditional stores, rampant consumerism and materialism, and environmental harm. So, we wanted to examine the way Amazon is affecting our community to see for ourselves. We were surprised to find that Amazon seems to be accountable for a fair number of changes including the following:

Creating A Better Shopping Experience

The retailer’s pledge is to provide what you want, when you need it. They also promise to deliver the goods efficiently. That’s an old retail promise that Amazon seems to have improved upon. Recently, I needed a special replacement part for my sink and black ratchet tie down straps. I checked several local retailers by using up about 2 hours of my Saturday morning driving from place to place. I could not find any stores in or around Wilmington that had what I needed. The sink part was quite specific, so I was not surprised. Ratchet straps, as I have come to find out, are really only available from local stores in camo or florescent colors. Then I checked Amazon, and Voila!! I quickly found the exact items available, unbelievably low priced, and shipped to my house for Monday delivery and free shipping. No stress.

Amazon had much to do with this phenomenon. And, it’s better.

Eliminating Bad Retailers

Competition is a good thing. It is poetic justice that the least attractive retail establishments with the worst records in customer service are the first to go. Without naming specifics, there are several retail chains with that reputation. I always wondered how they were still in business with their poor selection, unorganized store racks, and total lack of cleanliness. They are terrible places to shop … I know you are thinking of a specific chain store right now. So, they are the first to go. Then, other stores react and up their game. Economic “Darwinism” at its best. We see this almost every day with poorly performing stores closing down and going out of business (think K-Mart and Sears just for starters).

Amazon had much to do with this phenomenon. And, it’s better.

Forcing Other Retailers to Innovate

Amazon is not the only one who can innovate. Most surviving retailers are sharper and more efficient. In general, today’s successful retailers provide a better service and are looking for new ways to serve their customers. After Amazon bought Whole Foods, Giant Foods is finally delivering groceries as a service in a cost-effective way. That is not only convenient for busy families, but it also enables seniors to live in the home longer with more independence.

Amazon had much to do with this phenomenon. And, it’s better.

Enabling New and Better Use of Old Retail Space

Retail space becomes vacant as some major store names around Delaware – such as Sears, JC Penny, and Best Buy – consolidate and/or vacate their retail space. As a result, new concepts are filling those spaces. Planet Fitness fills old retail store space on Concord Pike and Kirkwood Highway; trampoline parks, dog care businesses, churches, and indoor car dealerships have all moved into old retail spaces where K-mart stores were once located. Good progress.

Amazon had much to do with this phenomenon. And, it’s better.

Keeping Inflation Low During Economic Growth

Some people actually give Amazon credit for helping to prevent inflation. Amazon ushered in a new kind of retail efficiency with lower prices during this period of economic growth. Usually, low unemployment with wage growth sparks higher prices to consumers … which fuels inflation. This is sometimes deduced using the logic of Phillip’s curve, but Amazon has disrupted that as well. For most of us, lower inflation and continued economic growth is a good thing.

Amazon had much to do with this phenomenon. And, it’s better.

Providing Environmental Benefits

We believe Amazon has an incredible opportunity to impact the environment in a positive way. Its pursuit of innovation includes environmentally friendly ideas such as reusable containers and parts (think glass returnable/reusable milk jugs). Additionally, Amazon’s extensive selection means that older products can have an extended life. If the only thing your electric razor needs is new blades or a new battery, you don’t have to go buy an entirely new razor … just replace the part(s) that need to be replaced. Landfills don’t fill up as fast.

Amazon had much to do with this phenomenon. And, it’s better.

So, what is the Amazon Effect?

Amazon has its critics, and the company is not perfect. However, their ability to innovate using technology is making a huge difference for shoppers, families, and the community. We believe that Amazon (and other businesses alike) should keep innovating! Most importantly, Amazon has demonstrated a commitment to using technology to aggressively improve the lives of consumers by paving the way for new concepts, products, and services. Amazon, and therefore other smart companies, will continue to respond to consumers’ needs faster and with greater urgency.

Thanks Amazon. Goodbye slow retailers who try to continue to live in the past.

P.S. Cumulatively, there are more jobs in retail now than there were in 2009.