Amazon – The Concurrent Biggest Threat and Biggest Opportunity to UK Multi-Channel Retailers
In a recent survey of major companies in the UK Amazon was unsurprisingly named as both the biggest threat and concurrent opportunity for their futures.
The numbers are nothing short of staggering as Amazon can now claim to transact 49% of all online retail sales in the UK and continues to grow in both of its scale and multitude of services. This domineering scale, coupled with a generational change of digital consumption of products and services, only exacerbates the requirement for businesses to manage and engage with this fundamental change in the retail landscape.
The monolithic and forever expanding Amazon retail online platform now creates a fundamental dilemma for businesses as their commercial choice is stark in relation to the binary trading options available.
Option One– join Amazon and become either a wholesale supplier or vendor on their platform and increase retail sales dramatically, but ultimately forsake building their own controlled market share and guardianship of their own customer database.
Option Two– try and compete on a ‘standalone’ basis and differentiate their consumer offer and customer proposition from Amazon and hope they can drive enough traffic to their own ‘owned’ transactional online website to mitigate this risk.
There is, of course, a ‘middle ground’ that many brands maintain – operating their own transactional website, and also a large presence on Amazon too. By matching parity of pricing offers on both platforms they can concurrently thrive alongside one another.
The challenge, however, continually remains that brands in their own operations must deliver to the precision ‘standard’ of Amazon in terms of timing, reliability and price. No easy task especially when Amazon continues to push their own ‘standards’ even higher – most recently offering delivery of selected items within two hours of ordering online.
It would appear as Amazon continues its relentless march to grow their online global dominance that the options for brands to maintain their independence from the platform will become increasingly unviable as online shopping continues to grow in overall multi-channel terms exponentially year on year to 18.2% in 2018 (source: Office of National Statistics).
The story for brands who have tried to ‘go it alone’ from Amazon – ToysRus being the most extreme recent example of failure – is increasingly a fight with an inevitable difficult ending for those concerned.
The challenge for brands from Amazon is, of course, now not just online following their acquisition of Whole Foods Market in 2017 and many recent reports of them being potentially involved in bidding for other traditional bricks and mortar ‘household name’ retailers from the UK High Street, and the anticipated introduction of their own standalone physical retail outlets Amazon Go.
The threat may be continually growing with Amazon, but for the nimble the opportunity continues to expand too…