Has Amazon Finally Got Some Competition?

In our fast-paced lives, the last thing the majority of us want to do is charge through crowds of people in search for that sale bargain in the immortally busy, high street shops. And, it is this laziness that Amazon relies on.

Amazon has ruled the online retail scene for years – squashing the competitors beneath its dominant presence.  In 2013, its overall sales were as vast as those of its subsequent 12 competitors, combined.  Is it possible for any online retailer to compete against Amazon?

Under Pressure

Lately, the competition is heating up in terms of quick-delivery.  Up-and-coming start-ups are putting the pressure on Amazon.  This is due to their smaller client base.  This means quicker delivery time for their customers.  Among those is Jet.com, which has earned more than $200 million worth of sales.  Jet.com has set itself a target to undercut Amazon’s prices by 10 or 15 percent.

Welcome Walmart

But, Amazon retains the advantage of its colossal client base to feel threatened by these start-ups.  This is where its greatest nemesis – Walmart – comes in.  In accordance with a report in the Information, the rich and established competitor is ready to drop the bombshell that will erupt the solidity of Amazon’s Top Dog sales.  Walmart has nicknamed this the “Tahoe”.  This new service promises customers a subscription fee of $50.  This is almost a 50% cheaper fee than Amazon Prime’s $99.  This price difference alone is enough to make those with high-street phobia to jump ship when it comes to online shopping. Plus, this fee will buy you unlimited free shipping for a million of Walmart’s best-selling items.  If we use our common sense, these items are most likely to be home and leisure items such as soap dispensers, coffee jars etc.

Unlike other start-ups, Walmart has a large amount of capital to play with, and annual US sales of $332 billion – 8 times as large as Amazon’s.  Walmart may have been the tortoise in the race with the Amazon hare due to its delay in launching Tahoe.  But, it has spent more than a billion dollars on its eCommerce upgrades.  Plus, it has plenty of leeway to lower item price in order to gain a bigger market share.

Walmart has launched three fulfillment centers last year to reach their goal of two day delivery no matter which part of the country the customer resides.  The Global eCommerce division in Sunnyvale, California is expected to double in size with regards to the workforce.

Is it realistic to think that Amazon will hold its superiority?  Especially when faced with the threat of other online retailers competing so fiercely against it in this ever-changing environment?

Will Amazon Retain Its Top Dog Crown?

In all honestly, I do not believe that Amazon has anything to worry about.  It has the advantage of solely being an online store.  Whereas Walmart possesses both an online, and physical presence.  Therefore, the separate entities of its existence will be competing against each other as well as its competitors.  And yes, both an online and physical presence will increase profit.  But Walmart will still not overtake Amazon.  It will do well in America, but it only ships orders within the states.  It will inevitably lose out on the international profits generated by Amazon.  Even if Walmart does decide to ship internationally in the future, it is not probable to expect Amazon’s loyal customers to subscribe to a retailer which they have most likely not heard of?  As a European myself, I doubt it.  But who knows?

There is no doubt that Amazon will hold on to a lot of its customers due to its popular businesses.  These include the Kindle and music downloads.  Subscribe & Save is a particular gem that will allow Amazon to hold on to its original customers.  Even if item prices are cheaper at competitive sites.

eCommerce Battle

No matter what happens, the customer is the true winner in the eCommerce battle to be Top Dog.  Every online retailer will be competing against each other to lower prices, delivery waiting times, and offer a wider selection to their customers.  So, online shoppers will be rewarded with lower prices, and faster delivery promises for their unwillingness to fight through the crowds of retail stores online.  Amazon may always remain untouchable in my eyes, but that does not mean that I cannot enjoy the perks of its competition with other online retailers.

If you want to find out more about this eCommerce battle, visit: http://www.forbes.com/sites/clareoconnor/2013/04/23/wal-mart-vs-amazon-worlds-biggest-e-commerce-battle-could-boil-down-to-vegetables/

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