An article in yesterday’s New York Times talks about how Amazon is increasingly becoming the general store of the Web, one of the few e-tailers to thrive amidst the general recession.
Sometime later this year, if current trends continue, worldwide sales of media products — the books, movies and music that Amazon started with — will be surpassed for the first time by sales of other merchandise on the site. (That transition already occurred this year in its North American business.)
In other words, in an increasingly digital age, Amazon is quickly becoming the world’s general store. Alongside the books and CDs and DVDs are diapers, Legos and power drills, not to mention replacement car clutches and more arcane items like the Jackalope Buck taxidermy mount ($69.97).
The “Amazon effect” has already put independent booksellers in a really tight spot. Stacey’s Bookstore, a mainstay of technical books a couple of blocks away from us in downtown San Francisco, closed earlier this year after 85 years in business. Their sales had dropped 50% since March 2001, partly due to competition from Amazon. And now Amazon looks to be doing the same to other product categories as well.
From personal experience, the availability of reliable pricing from a trusted retailer (like Amazon) via connected devices (smartphones, etc.) is bringing a level of pricing transparency that small businesses are going to find difficult to deal with.
Leaving the mall empty-handed…
This weekend, I was at the mall to buy a guitar pickup, capo and some sets of strings. I was fully intending to purchase these items on that visit, because I need them for this coming weekend. The mall store did stock a couple of different pickups including the Dean Markley ProMag Grand which I was interested in. It had one brand of capo (Kyser, Quick Release).
The problem was not actually the selection, though—something which an outfit like Amazon could be expected to win hands-down. The problem was that the $93 price for the ProMag Grand seemed quite stiff. And $25 for the capo seemed a little expensive also.
A year or two ago, I would have simply made the purchase, because I didn’t want to make another trip to the mall. But having a smartphone on me let me check Amazon’s mobile site, find the two products and confirm my suspicions.
Now, let me say that I am actually specifically inclined to support local stores. In this particular case, it didn’t help my confidence that a) the products did not have stickered prices to begin with and b) a second salesperson came up behind the first and told him that he didn’t need to charge the original prices he quoted. It all seemed a bit fishy.
On Amazon, I ended up buying the guitar pickup, capo and a 3-pack of strings for less than the cost of the pickup in the mall store—even after taking into account paying for 2-day shipping. If I had a couple more business days to play with, I could have gone Super Saver and knocked another $12 off.
Information Ubiquity
The point of this story is that for non-differentiated products you now have to assume that price information is not only ubiquitous but can be accessed at point-of-sale. People are in fact walking through retail stores and checking their cellphones to see if they can buy that pack of diapers in bulk.
How does the rise of a dominant retailer like Amazon affect your own e-commerce strategy? What is it that you can offer that Amazon can’t? Is it the extensive product configuration of boutiques like Javis Davis—customization that is beyond what Amazon is going to be able to offer in its more “department store” style? Or is it the built-to-order stores of organizations like Sport Supply Group? There are strategies that will work, but they certainly can’t depend on obscured pricing and assume friction in information.
Tags: amazon, E-Commerce, ubiquity of information
