Everything You Need to Know About the "Amazon Effect"

Amazon Go store in Seattle
Source: The Verge

In today's evolving retail landscape, many brands are struggling to strike a balance between ever-changing consumer demands and the alluring appeal of new technology.

To make matters worse, traditional retailers face an uphill battle against a company that's redefining the rules of the industry: Amazon. A recent study shows that half of retailers cite Amazon as their biggest threat.

Fast Company recently declared Amazon the world's most innovative company of 2017 due to the brand's unstoppable ability to grow into other markets, remain popular with consumers, and threaten traditional retailers. This has been dubbed the "Amazon effect."

Download the webinar recap for "4 Opportunities to Win in the Digital Retail World."

What is the "Amazon effect?"

Amazon's ability to construct holistic buyer personas in an age of erratic, nonlinear consumer journeys gives them a huge advantage over brands still trying to understand their customers' online and in-store habits. 

In Fast Company's words: "Our mobile-first, on-demand world finds its roots in Amazon’s founding idea: that digital commerce will radically reshape our marketplace."

Amazon's clear understanding of the consumer enables them to create optimal user experiences in store and online as well as penetrate new markets

What makes the "Amazon effect" so powerful?

Amazon Prime is the powerhouse behind the "Amazon effect." The membership provides services shoppers demand, such as free two-day shipping, streaming content, and more, while collecting valuable data and driving sales—Prime members spend 4x more than nonmembers annually. According to Fast Company:

To truly understand how Bezos is meshing size and agility in 2017, though, you need to look beyond sales figures ($100 billion in 2015) and the stock price (up more than 300% in the past five years) and consider three initiatives that drive Amazon today: Prime, the company’s rapidly proliferating $99-per-year membership program; an incursion into the physical world with brick-and-mortar stores, something the company has long resisted; and a restless rethinking of logistics, epitomized by a new fulfillment center an hour outside Seattle that features high-tech robots working alongside human workers like a factory of the future.

Traditionally brick-and-mortar big box stores' inability to refine omnichannel, reach consumers at all touchpoints, and pinpoint a linear buyer's journey make them vulnerable to the "Amazon effect." 

How are retailers combating the "Amazon effect?"

Innovative brands are investing in 4 key areas of their digital strategy. Find out what they are in our next webinar "4 Opportunities to Win in the Digital Retail World."


Topics: Trends