The Amazon Model of Consumer Shopping - Is it Right?
Amazon started as an online business selling books. It has transformed into a giant consumer business where almost all products are being sold on the web. They accomplished this by investing heavily in technology and automation and packaging and shipping. They also attracted the millenials by making it convenient to shop and free delivery if you are a prime member.
- June 2017
First Item Ordered
What is the Amazon model?
- discount prices
- online shopping via web
- membership in prime - free shipping
- liberal return policy
- efficient shipping including 1 day shipping
- inventory management robotics
- Infrastructure and technology
- supply chain
- video streaming
The original concept of selling books at a discount is an excellent one. A book is an impersonal item. Once you decide to buy it, the only choice is price. A physical book store is limited in size. It cannot contain all possible books in print. An online store is a perfect fit. It can have a huge inventory somewhere out of the way and convenient to transportation. The item is small and indestructable. Shipping it just make total sense.
Once the infrastructure and the technology is in place, they expanded their repertoir to include other products. The rest is history...
History of Shopping
Before the internet age, we do most of our shopping in Malls. It was a fun place to visit, to bring our families, to hang out for teenagers, to see a movie, and grab some food... It was a good way and efficient way to do most of your shopping in one location.
The rise of the internet and Amazon, and online shopping changed all that. People started staying home and order items from the web and having it delivered to their home. We became less social and more Into self. Even watching a movie became as simple as clicking a button and have it streamed into your home's flat screen TV.
Our Malls started to wane. One by one, the stores closed. First were the smaller stores who cannot compete in price with the big box stores. Next, the large chain stores started to fail with declining sales. The overhead of a large store front and sales people cannot compete with online shopping - for the most part.
There are some items that cannot be bought easily online. You still need to try out your shoes, or jeans or dress, or buying the perfect jewelry or getting that haircut or your nails done.
Migration to Outlets
In this downward spiral of shopping malls, there is one silver lining. The rise of Premium Outlet Shops. These places offer name brand items at tremendous discounts, even cheaper than online. The Woodbury Commons in NY is one such store. It has grown to over 220 stores while some neighboring malls are on life support.
What is Left?
Besides the obvious items where you need to be physically present in the store, there are some items that cannot be shipped easily or economically. For example, home remodeling stores like Home Depot and landscaping items like trees and bushes and plants and flowers are better purchased in the store. The same goes with perishable foods like meats and groceries, and frozen items.
What About Efficiency?
I see the advantage of convenience when you can do most of your shopping online. However, what about efficiency? Is this the most efficient way to get items from A to B? Compare this with the old way. In a shopping mall, items are shipped in bulk to the local stores. The shoppers drive to their local stores and picked up the items and brought them home.
In the modern Amazon model, the items or inventory are stored in fulfillment centers. When an order comes in via the web, the item is retrieved and packed and shipped via UPS or FedEx. The item arrives at your door a few days later.
If you look at the big picture, when millions of items are being distributed, what is the more efficient model? How does that impact jobs and commercial real estate and the shipping industry? We have replaced millions of sales person with delivery men driving trucks.
We can't stop progress. The rise of Amazon is a sign of our times. We can only stop and reflect on the changes. In some ways, it is a trade off. We are gaining convenience at the expense of social contacts. It is quicker and easier to click a button to order something and receive it by mail than going to a store, touching the product, talking to the salesperson and learning about the pros and cons of each model.
What about returns? A whole other can of worms. And what about customer service when things goes wrong? Who do you talk to?
Some Related Info
- Completely Surreal Photos Of America's Abandoned Malls
An inside look at nine abandoned malls. There is nothing creepier and more fascinating.
© 2017 Jack Lee