Having attended the 2013 Shop.Org presentation by Forrester Analyst Sucharita Malupuru, I visited her blog where I found an interesting post entitled Who Will Displace Amazon? One Of These 3 Will where it was suggested that Walmart.com, Ebay and a vertically integrated manufacturer-retailer may provide the challenge. There was an interesting comment saying that a threat may come from outside the US. (My response was rejected as spam by Forrester’s blog security, so I thought I’d post it here).
There are some powerful non-US companies around: Rakuten and Alibaba are two that I’m watching in the East, but nobody significant is appearing in Europe as a consolidated force to challenge Amazon yet.
Yet the Forrester conclusion here is about right the way things stand. The question for me is how a retailer is able to add VALUE in the new model. Historically, retailers fulfilled a role in society – curating a range, moving physical product and breaking bulk. Today with social media, ecommerce platforms, third party logistics – the barriers to entry have fallen.
The results mean that manufacturers and brands are now able to not only reach their customers directly, but also to sell and ship to them – so this is where the vertically integrated conglomerate might appear (TATA has such a presence I think) . To defend themselves retailers need to find new ways to add value to a product in its journey from manufacturer to consumer. As the advantages of traditional models of the in-store experience or a beautiful site are eroded by consumers armed with mobile devices, retailers have to go somewhere else.
Assortment is one way and Amazon is the master of the broadest assortment on the planet. Google indexes the web. Amazon indexes what you might want to buy. The ability to make FINDABLE 1 billion products and then to be able to deliver them faultlessly at a profit is key to this. Additionally Amazon has made their marketplace very easy for vendors with Marketplace and Fulfillment By Amazon. None of the other challengers to this have removed this obstacle with such focus.
The giants will continue to fight it out at the top for the next few years. There may be consolidations or new technology entrants (Facebook and Google might move beyond the advertising model and actually allow a further click to transact), but in general, the new is going to come from new and innovative online propositions like Etsy, OneKingsLane and Zaarly and offline like Lululemon and the Omnichannel Apple Store. However, for the next couple of years, I also believe that Amazon will remain dominant.