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Tech Bytes: Three reasons more retailers are competing with Amazon


Amazon is facing increased competition these days. In some of the more publicized developments, subscription-based e-commerce site is taking off soon, EBay is piloting a service to compete with Amazon Prime in Germany, and Google is reportedly planning to introduce a “buy” button that will turn searches into transactions.

Beyond the natural competition any successful business generates, there are specific factors making it more appealing than ever for retailers of all sizes to try taking on Amazon. Here are three of the most significant ones.

Infrastructure Turns Cloudy

As recently as 10 years ago, developing and implementing the physical infrastructure required to host an e-commerce site was a money- and time-consuming effort. Enter the cloud.

While cloud-based retail operations are not quite as simple or cheap as they are often popularly portrayed, they are a lot more affordable and scalable than old-fashioned physical server farms.

Retailers who want to complete with Amazon still need to invest in software to perform tasks such as inventory tracking, transaction processing, order management, customer service, etc. And populating an e-commerce site with images and product descriptions is not a simple task. But when most or all of the supporting technology can be turned on with a switch and rolled out in as little as 15 minutes, the infrastructure challenge becomes much more manageable.

What’s Loyalty?

Consumer loyalty to specific retailer brands is shrinking even faster than their loyalty to specific product brands. Millennials in particular are displaying a generational tendency to dismiss branding efforts by retailers as phony. Instead, customers of all generations are focusing on buying the products they want from whomever offers the best convenience and price.

Growth in Amazon’s sales and Prime loyalty program suggest its customers are coming back. However, the failure of the Amazon Fire smartphone, which essentially turns the world into an Amazon showroom, shows that consumers are not yet ready to make Amazon their sole digital retail outlet.

Amazon has rightfully earned a reputation as a reliable provider of a vast range of low-priced online merchandise. However, larger social trends suggest consumers are more loyal to what Amazon offers than Amazon itself. This means competitors who can meet or beat its price, selection and convenience have real opportunity to capture market share.

Signed, Sealed, Delivered

Third-party services such as Deliv can allow e-commerce retailers to offer delivery in as little as one hour, with no need for developing an internal distribution platform. Uber is said to be developing its own same-day retail delivery service, and retailers such as Whole Foods and Costco are competing with Amazon’s grocery business using Instacart.

It is instructive to note that eBay’s German priority delivery service leaves it to the participating sellers to find their own means of same-day delivery. And Google’s buy button will leave the actual selling (and delivery) of products to the retailers who sponsor search results.

Amazon’s recently launched pilot of free same-day delivery for members of its Amazon Prime loyalty program in select cities demonstrates the importance of fast delivery. The biggest single challenge of online retailing is getting the product in the hands of the customer. When retailers can pay a fee for someone else to do it in an efficient, reliable manner, the barrier to entry becomes much lower.

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