The “Amazon Effect” is in full swing, for better or worse. This term is used to define Amazon’s success and its impact on the retail space as a whole. Stores, both online and brick and mortar, are fighting the retail giant and its hold on the eCommerce industry. By the middle of 2018, Amazon accounted for around 50% of the nation’s e-commerce sales and Amazon shows no sign of slowing down.
The Amazon Effect’s definition can vary depending on what is being cited, but it generally refers to the struggle other stores face when they compete with Amazon, especially brick and mortar shops and those focused on a parcel and big item shipping. Amazon’s vast inventory, low prices, and Prime subscription all come together to create high customer expectations that are difficult to compete with. Studies have shown that Amazon has contributed to the closing of some businesses, but many have taken on the challenge of competing. So, the Amazon Effect is not as debilitating as one might think. Businesses are not failing left and right because of Amazon’s massive presence in the retail world. This means that the Amazon Effect is just another reason the retail realm is always fluctuating. With the Amazon Effect in mind, the predictions for 2019 are fairly straight forward.
Amazon’s ability to ship products in a few days or even hours is hard to match. The ever increasing pressure to equal Amazon’s delivery times means that shops will need to get creative. One of the best shipping solutions stores can leverage is at-home shipping services like uShip that can ensure larger items make it to their destination on time. Since the demand for faster shipping isn’t slowing down, retailers will continue finding new solutions.
E-commerce has been thinking about mobile for a long time, but now a switch is about to happen. It is expected that by 2020, 45% of commerce decisions will be made on mobile.
For context, that 45% will equal around $284 billion in revenue. Shoppers are interested in being able to shop anywhere in the world and that means companies will have to adapt their websites to mobile. Companies will need to shift from desktop to mobile-first if they want to keep the interest of shoppers.
It is estimated that 3 billion potential shoppers in emerging markets will have access to the Internet by 2022. The emerging markets such as China, India, Russia, and South Africa, are expected to play a major role in the future of E-commerce. Currently, these markets are relatively untapped by E-commerce, meaning that the entire industry will grow from these markets joining the fold. All these new customers will help shape and mold the future of E-commerce. As the markets merge, new issues and solutions will arise.
One of the biggest E-commerce stories of 2017 was Amazon’s purchase of Whole Foods for $13.7 billion. There were questions about whether or not Amazon made a mistake, but online grocery shopping is increasing. A mid-2018 report found that online grocery orders account for 5.5% of total U.S sales. This indicates that online grocery shopping could increase in 2019.
AI and E-commerce
AI and machine learning might not sound like they fit in with E-commerce, but they actually play a huge role. Machine learning drives Amazon’s Alexa smart speaker and Amazon Web Services provides AI cloud computing. AI is also used by Amazon to detect marketplace trends, upsell customers new items, and test new copy. AI is also featured in chatbots for customer service and marketing strategies. It is expected that more companies will integrate AI in 2019 and beyond.
Overall, the Amazon Effect is real, but it doesn’t bring impending doom to all other businesses. Other companies will continue to grow and evolve as they fight to keep up with Amazon. Ship times will go down, mobile-first development will increase, AI will be added into the landscape, and the war for groceries will continue. 2019 will be a year of continued growth for both Amazon of other businesses, as e-commerce will only increase in size.