In the world of online retail, no digital competitor has been able to knock Amazon off its throne thus far. Although many have tried, Amazon seems to have the power to offer consumers the lowest prices while maintaining the highest quality. Their well-developed delivery network is comprised of warehouses around the nation and beyond.
One of the online retailer’s largest advantages over their competition is the number of credit cards they have on file. Just imagine how many people use Amazon on a daily basis. It’s almost mind-boggling when you think about it. And while Apple and Wal-Mart have shown that it is not impossible to compete with this digital leader, it also is not the easiest thing to do. Let’s take a moment to break it down and see how each competitor keeps the other at bay.
Amazon has achieved such an enormous scale that it gets the best prices from its vendors. Wal-Mart can do the same thing from a handful of its vendors, but the cost to manufacturers is not the only factor when setting prices.
Most physical retailers set their prices based on a higher cost of a structure as opposed to a digital store. Wal-Mart has brick-and-mortar stores, and it costs more money to operate those stores than functioning with shipping warehouses alone. Of course, it’s possible for retailers to charge less for online purchases but that would probably infuriate their in-store customers.
Amazon operates on a razor-thin margin and still makes money on each transaction. It’s really not possible for physical retailers to do this. If they drop their online prices, they are at risk of driving their margins down while having to deal with the same overhead costs. Is that even possible?
Since there are no physical stores, Amazon has optimized its effectiveness in the shipping and delivery business. This now includes warehouses that are strategically located around the globe. Yes, global! Combined with robotic features, this company (Amazon) has highly advanced software that helps to set its inventory levels and even pack orders based on a predictive algorithm. (Can you even imagine what that algorithm is worth?)
Amazon also has an incredible relationship with the United Postal Service. While it is possible for competitors to make similar arrangements, it might be difficult for them to match the shipping advantages Amazon has built over time. They already have an advantageous head start in that area.
Phenomenal Credit Card Base
As previously mentioned, Amazon has a credit card base that stands to be reckoned with and stands ahead of all the others in the level of impressiveness. Interestingly, Apple has more registered credit card users on file, but the company has not kept up with Amazon in other areas. One of the biggest hurdles for Amazon competitors is that they have less “power” to make people register their credit card information. What does that mean? Simply put, consumers are in it for the long haul with Amazon. Even the largest of physical retailers aren’t privy to that information and customers are reluctant to give it to them. Customers have built a trust relationship with Amazon and are not as reluctant to hold back their credit card information.
In theory, trying to compete with Amazon is possible, but equaling the company’s shipping abilities and price point may be difficult, as previously stated. Amazon has a sustainable edge that most competitors just can’t reach. Simply put, Amazon has invested far too much of a lead and invested heavily in its online model to allows themselves to be assaulted by even their biggest rivals.
We really cannot deny it. We love Amazon. The surveys tend to prove it. But why? What makes Amazon the go-to choice for shopping? Is it their steadfast customer service or is it their speedy delivery that makes consumers swoon?
When Amazon opened its doors in 1995, it was a website that only sold books. But within one month’s time, Amazon was shipping books to over 40 countries around the globe. Since then, Amazon has become one of the largest online retailers, shipping to virtually everywhere in the world. So what makes Amazon so divine? We’ve already listed reasons that set Amazon ahead of its competitors but let’s finish out this listing with three more reasons why Amazon rocks
#1 Stellar Management
It’s no secret that Jeff Bezos, the CEO of Amazon, likes to live on the edge. Known for his eccentric personality, he encourages primal screaming as a way to let out his frustration while working. But when it comes to management skills, Bezos clearly dominates the world of online retail.
#2 Innovation at its Finest
Although it wasn’t the first online merchant, Amazon is the most innovative. While other companies became uber rich by selling online, Amazon’s success began with one product: books. Jeff Bezos decided that Amazon needed to become an “everything” store, and it did.
Staying ahead of their competition is what Amazon does best, as we discussed at the beginning of this article. For example, one service they offer is called the Amazon Locker. This involves shipping packages to the customer’s workplace when they don’t have the time to get to the post office. Another cool app created by Amazon is called the Amazon Flow. All you need to do is take pictures of products you like and they are automatically added to your Amazon shopping list.
#3 Global Thinker
Knowing the high demand for American-made products, Bezos took his business overseas. Amazon continues to refine the way it connects with its customers. Launching a Global Store in India, Amazon now allows customers to buy products on the USA website while paying in local currency. In fact, in 2016, Amazon invested even more billions into their Amazon website in India (amazon.in).
This move gave customers in India access to millions of international brands and also helped Amazon compete with Flipkart, an Indian e-commerce shopping platform. Enhancing the shopping experience for customers in India was the main objective when the Global Store was created.
Above all, Amazon’s impeccable customer service is what makes them stand out above the rest, especially during the holidays. They consistently rank high in terms of customer service, both in USA and abroad. Amazon also did well in a 2015 customer satisfaction survey.
Bezo’s desire for success and intuitiveness has made Amazon what it is today. From an online bookstore to an industry giant, Amazon is a forced to be reckoned with and demonstrates success in a way that makes us want to go shopping… yet again and again.