If you are in the e-commerce business, chances are you have heard the term “Amazon effect” before. Although you may have heard the term, do you truly understand what it means? The Amazon effect simply refers to the impact that Amazon has had on the e-commerce industry. More specifically, the term refers to the challenges many e-commerce stores face when having to compete with Amazon.
According to a study conducted by eMarketer, by mid-2018, Amazon was responsible for approximately 50% of the United States’ e-commerce sales. Based on this statistic, it is clear that Amazon has a major influence on the future of e-commerce. In this article, we will talk more about the characteristics of the Amazon effect and two ways in which it will impact the future of e-commerce.
Characteristics of the Amazon Effect
As stated previously, the Amazon effect refers to the challenges that other e-commerce stores face when having to compete with Amazon. These challenges include consistently providing fast shipping, low prices, and excellent customer service. For most e-commerce stores, providing all three of these at once is nearly impossible. Most e-commerce stores cannot offer fast shipping and low prices because if they did, they would not make any money. This puts these companies at a huge disadvantage when competing with Amazon. Since Amazon can consistently provide fast shipping, low prices and excellent customer service, consumer expectations have increased. By increasing consumer expectations, Amazon has negatively impacted the shipping industry. For example, Amazon’s fast delivery speeds have made consumers impatient. Consumers now expect fast delivery from every store, and anything less than that negatively impacts overall customer experience. This forces companies to offer fast delivery, and unfortunately, many companies cannot offer that due to financial reasons. Those are some of the characteristics of the Amazon effect, and how it has negatively impacted the shipping industry.
The Use of Artificial Intelligence Will Increase
Now that we understand why Amazon will play a huge role in the future of e-commerce, the next thing to discuss is how. The first way that Amazon will impact the future of e-commerce is through the use of artificial intelligence. Over the last several years, Amazon has been using more and more artificial intelligence. For example, the implementation of machine learning into their business practices has allowed Amazon to create a highly successful and affordable product, Alexa. Alexa is a smart speaker that allows its users to ask it questions, get directions, play music, and much more. This product would not have been made had it not been for artificial intelligence. Amazon also uses artificial intelligence to develop algorithms that help them better understand marketplace trends.
The use of artificial intelligence by Amazon means that every other e-commerce store will have to use it as well. Otherwise, they will fall behind Amazon even further than they already are. That is why predicting that the use of artificial intelligence will increase is a safe bet.
Mobile Commerce Will Be King
The next way that Amazon will impact the future of e-commerce is by enabling mobile commerce to surpass traditional e-commerce. Mobile commerce is defined as the buying and selling of goods and services through wireless handheld devices such as smartphones and tablets. Over the past few years, Amazon has decided to focus more and more on mobile commerce as opposed to traditional e-commerce. Why? Because more people each year are purchasing goods and/or services through their phones than ever before. According to Statista, mobile e-commerce sales in the United States have significantly increased every year since 2013, and are projected to continue increasing for the foreseeable future. Amazon knows this, and as a result, have recently began to focus a majority of their efforts on optimizing their website for mobile devices.
By optimizing your website for mobile devices, you are providing a positive experience for your customers. This positive experience will increase the likelihood of them purchasing a good and/or service from you. Some ways in which you can optimize your site for mobile are to make sure that the load time on your page is fast, and that the site is easy to navigate on a mobile device. These two optimizations will give you a strong mobile foundation to ensure that you will be prepared for when mobile commerce inevitably takes over the e-commerce world.
In summary, Amazon and its effect on the future of e-commerce is something that all e-commerce businesses should understand. If you do not understand the Amazon effect and the impact that it has on the future of e-commerce, then you will not be able to successfully compete with Amazon or other competitors that do make strides to keep up with Amazon.