With Black Friday and Cyber Monday just over, I’m marveling at how Amazon has changed our buying habits. It’s not just a substitute for driving to the store, but so much more.
First, you can’t find many of the items on Amazon in any store, because so many of Amazon products are not available elsewhere. Amazon is an example of build it and they will come, they being tens of thousands of products that are available nowhere else. Whether it’s a wall bracket for a large screen TV, a digital rearview mirror, or solar powered spotlights, without Amazon we might not even know they exist. The site has given tens of thousands of companies exposure to their products that were never visible before. Many of these products are from Chinese and other worldwide manufacturers that bypass distributors and middlemen, making them more affordable.
There are some items I’ve purchased that I could never have found eleswhere. For example I needed to add a steel collar to a 1-3/8 inch shaft, but I didn’t want to remove the shaft. So, on a lark, I searched for a “split ring 1-3/8 inches inside diameter,” and I actually found a product, ordered it and had it in my hand in two days. In preparation for a long transatlantic trip my wife found an inflatable footrest that we discovered on Amazon. You simply search for whatever you can imagine and it often pops up.
I can’t count the many times Amazon let me solve a problem with so little effort. When I discovered that the control panel on the driver’s door of my RAV4 had no illumination for the lock and window controls, I did a search that led me to a replacement part on Amazon that replaced the Toyota part, but had illumination. I received it a day later and installed it in 15 minutes.
Amazon is like the Genie’s magic lamp that you search instead of rub, wishing for an item that you don’t even know if it exists.
In addition to the availability of millions of products, Amazon has created a website that’s easy to search, compare, and purchase – no small feat. It’s also become the largest source of customer reviews of millions of products, and now it’s the largest delivery service in the US, surpassing Fedex and UPS.
This past Black Friday I purchased a range of stuff, including a set of charging cables, a grill brush, a phone case for my wife, a backup MagSafe battery, a set of screwdrivers, all about 30-50 percent off. Much of the fun was looking for bargains, much like searching the aisles of a discount store.
Now that my purchases amount to more than a couple of items each week, I opt for deliveries once a week so Amazon can box and deliver everything in a single package and minimize the environmental impact. I also took out a Chase Amazon credit card for just my Amazon purchases; it provides a 5% discount on all Amazon items. Lastly, I use CamelCamelCamel.com to check the price history of the item on Amazon. Many prices cycle up and down over time and you can avoid buying at its high.
Amazon has also done an Amazing job of driving traffic to its site by offering referral commissions to companies that mentions its products. As a result, companies like the NY Times, CNN, and tens of thousands of others get a sizable income whenever they write about a product that’s purchased using a link to Amazon.
The Negative
Yet, as magical as Amazon is, it’s been criticized for its anticompetitive behavior, and it’s being sued by the FTC and 17 state attorneys general as noted here:
The Federal Trade Commission and 17 state attorneys general today sued Amazon.com, Inc. alleging that the online retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power. The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.
The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance. Amazon’s far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small and affect over a hundred million shoppers.
I think the FTC has a very difficult case to prove. Amazon accounts for only 38% of online sales and a tiny fraction of all online and retail sales. Much of its success is a result of the incredible, multi-faceted company it has built – a product delivery machine that excels in all of its elements. Being big has not hurt competition, but has benefited us because of its economies of scale, especially with its ability to deliver a $10 item overnight and still make a profit.
And apparently others feel much the same. Amazon consistently ranks among the top ten admired companies in consumer surveys, such as this Axios Harris poll. It save sus time and money, provides excellent customer service, and brings us nearly every conceivable consumer product with just a few clicks.