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Are bricks and mortar stores beating back Amazon?

Could be:

If growth in Amazon’s ecommerce is limited, does it still make sense for Amazon to keep discounting retail and shipping costs so aggressively?

The limitations of online retail are well known. Last summer at a PandoMonthly talk, Fred Wilson of Union Square Ventures was asked what he thought about ecommerce. Wilson answered bluntly:

I don’t like ecommerce. I think it’s a low-margin business with high capital costs and high customer-acquisition costs. Most ecommerce companies fool themselves into thinking that the lifetime value of their customer is in excess of their acquisition costs when it’s not… Then the whole thing is revealed to be an emperor that has no clothes. And then they really, really struggle.”

Wilson was speaking about ecommerce startups, not Amazon. For nearly two decades Amazon was the exception to this rule because it could leverage economies of scale and pressure publishers and suppliers into lowering prices to lure shoppers with the lowest prices on the Web.

But what if Amazon isn’t that different in the end? What if customers aren’t necessarily loyal? What if the high costs Amazon has been paying for their loyalty don’t pay off? Given the high multiple of Amazon’s stock, based on the premise that Amazon will keep growing, these are questions worth asking in 2014.

For years, shoppers could take for granted that Amazon would offer the lowest price, or close to it. Over the past year or so, just as Amazon’s revenue growth rate began to slow dramatically, that stopped being the case. It’s not just big retailers like Target and Best Buy offering to match Amazon’s prices, other retail chains are beating it without appearing to try.

It’s never been unusual to find, somewhere, a lower price than Amazon offered. But it’s growing commonplace.

Readers, is that your experience?

NOTE For me, since I don't drive, Amazon is, alas, preferable to taking a day to go to the Mall and back via public transportation. But I'm probably an outlier.

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Andre's picture
Submitted by Andre on

At 70, I find it easier to shop online, easier than going shopping wherever, looking for the item. And Amazon seems at this point to be ubiquitous, every item I'm looking for, Amazon seems to be selling. At this point, though I'm really quite frugal, price isn't the first thought, but getting the item is. Shipping costs are a deal breaker also. And Amazon has not discounted their basic shipping costs, but recently increased them (from a minimum purchase of $ 25 to a minimum of $ 35). But I avoid amazon because I know just looking at how they operate, they treat their employees badly. But if I can't get it somewhere else, I hold my nose and buy it on amazon. Their prices on items is not great, But you found the item their. Their customer reviews are great, and I believe a positive force in educating the shopping consumer.

Here's something that I think is going gangbusters at this point and probably will increase more for the 'brick and mortars', unless they blow it; buy it online and pick it up at the store. I've been doing this for four or five years now (Walmart - another 'nose holding' - and Lowes having been doing this for awhile), but recently i noticed lines of people waiting to pick stuff up at HD and Target. They need to have more people working on pickups at busy periods. The best one is JC Penney who charge $2.95 for you to buy it online and go to the store and wait in line to pick it up at any register. I really think that JC Penney has a clueless corporate mentality.

I don't know if any of this helps, but I am quite aggressive in my consumerism, but extremely frugal, and Amazon is not my # 1 choice for something. Though their customer reviews are really helpful. If Costco where close, they would be a a top tier store for me, considering how positive they look, in how they treat their people.

jo6pac's picture
Submitted by jo6pac on

buy from Amazon also but sometime it's cheaper to buy direct from who they buy from. The reason I buy from them is I live 10mi from town so the saving in gas is worth it. I've also have purchased from the site but remember the items come from China so it takes time unless you pay extra.

transcriber's picture
Submitted by transcriber on

Without an e-mail account, you can't order at Amazon. I asked. So I paid more and ordered by phone at Powell's. I enjoyed talking to the guy taking my order, and the books came fine, thank you Powell's. The books I couldn't find at Powell's, I didn't get.

The background at link is that I could not click the button last June on my Yahoo e-mail sign-in that said I agreed to their new mandatory terms changes that said they had my permission to scan my e-mail and analyze my data. Click the Switch Now button that says "I agree" and you can see your e-mail. If not, no. I didn't agree, I don't agree, and I've never been able to see my e-mail since.

I believe what Yahoo is doing is a crime. I believe personally addressed mail is rightfully, constitutionally private, and I believe I own my data regardless of Yahoo's mandatory terms changes and whatever the fuck the Supreme Court says about third parties. The court tore a hole in the fabric of the Constitution and look how it's unraveled. I seem to still be angry.

V. Arnold's picture
Submitted by V. Arnold on

...a rebirth of snail mail. I just sent my first letter, hand written, in well more than a decade.
I've damn near forgotten how to write by hand.

jo6pac's picture
Submitted by jo6pac on

LOL you are braver than me for sure but that's is how my landlord deals with me and I love it. I do need to get back to it;)

DCblogger's picture
Submitted by DCblogger on

any type of retail will be hurt in today's economic slump. no one is buying because no one has any money. Go into a store at the end of the month, no one is there. They spent their unemployment, social security, TANF, food stamps, whatever, and they don't have any money. Not just in poor neighborhoods, but in previously middle class neighborhoods.