This paper responds to the questions regarding online firms such as Amazon and brick-and-mortar retail stores. The paper looks at the specific advantages of Amazon over brick-and-mortar retail stores. The answers include brick and mortar retail stores’ responses to the online shopping competitors. The possibility of an “even playing field” is analyzed between local department stores and online firms. The paper also describes how Amazon manages its logistics services.
In the fast-changing world, almost every person is concerned with time and how they spend it. Amazon’s online marketing strategy aims to promote online shopping and deliver a wide range of products up to fresh groceries, which Amazon started delivering in 2017 (Ives et al., 2019). Amazon focuses on convenience, large assortment, and competitive prices (Jindal et al., 2021). A specific advantage Amazon and other online firms have is their ability to provide more products than brick and mortar department stores, with the whole process being more convenient by delivery. However, local retail stores have some advantages over online shopping leaders like Amazon. Local retail stores often purchase products directly from the manufacturers, allowing them to save money on inventory carrying and lowering the cost of the products (Ives et al., 2019). While online shopping may seem to take over the market completely, local retail stores are still attracting customers.
As mentioned above, one of the ways brick and mortar retail stores compete with online shopping firms is by lowering spending on inventory carrying for products that are purchased from the manufacturers. However, there are other ways, which may seem confusing at first. Some brick-and-mortar stores respond to online competitors by opening their own online channels. Research shows that this approach provides customers with a seamless shopping experience between offline and online stores of the same retailer (Jindal et al., 2021). In such cases, customers tend to spend more time with the retailer, which results in increased loyalty (Jindal et al., 2021). For example, Walmart and Target focus on online shopping along with the locations of their stores to provide a quicker delivery than Amazon (Jindal et al., 2021). Research shows that Amazon’s main disadvantage compared to offline retailers is the delivery time (Jindal et al., 2021). While brick-and-mortar retail stores to online shopping may be puzzling, it still seems to be attracting loyal customers.
Achieving an “even playing field” for both the local department store and an online merchant may be complicated because the largest players continuously try to overcome each other. As mentioned before, offline retail stores such as Walmart and Target try to take over online shopping by offering quick delivery of groceries. At the same time, Amazon tries to increase its brick-and-mortar presence because the company believes that the customers still prefer buying groceries offline (Jindal et al., 2021). For this reason, Amazon bought Whole Foods stores in 2017 and started opening Amazon Go convenience stores in 2018 (Ives et al., 2019). The constant competition over the whole market between the biggest online and offline retailers makes it harder to achieve an “even playing field.”
One of the main aspects that need to be considered in online shopping is delivery. Specialists at Amazon have to manage logistics for fast and affordable delivery constantly. For example, Amazon Prime, which typically makes next-day deliveries, requires a lot of investment from the company. The company connects its distribution centers by adding smaller jets to its air-cargo fleet, opens sortation centers close to big cities, and has its own delivery vans (Jindal et al., 2021). Moreover, Amazon has 75 fulfillment and 25 sorting centers across the nation and is planning to open regional air hubs in major cities (Jindal et al., 2021). Amazon heavily focuses on managing its logistics services to provide all the clients with quick delivery.
References
Ives, B., Cossick, K., & Adams, D. (2019). Amazon Go: Disrupting retail?. Journal of Information Technology Teaching Cases, 9(1), 2-12.
Jindal, R. P., Gauri, D. K., Li, W., & Ma, Y. (2021). The omnichannel battle between Amazon and Walmart: Is the focus on delivery the best strategy?. Journal of Business Research, 122, 270-280.