Knowledge

Will Amazon Prime further destroy retail?

Published on January 07, 2011 under Business

Amazon.com box

I know Amazon.com has been offering this service for a long time, but I will admit I finally signed up for Amazon Prime based on suggested from a coworker.  Now I find myself learning how to apply my own foot to my buttocks for not signing up sooner.

With more and more people shopping online, retail stores used to hold on to the ease of localized availability as their edge.  When I wanted something, I'd generally look around for a retail spot to pick it up, then go.  I didn't have to wait the one or two weeks it generally took for an item to reach me by mail.  Yes there are faster shipping options, but tacking on that larger expense doesn't make for a good deal.

Amazon.com launched their Amazon Prime service back in 2005 to the US and then later in other parts of the globe.  The program works basically by charging you one flat fee $79, you get unlimited two-day shipping on almost anything over the course of the year.  The very first attempt at it was a manual treadmill.  I received the box the very next day, and this was the week after Christmas!

I have to admit, I'm both impressed and kicking myself that I didn't try this sooner.  I'm also now curious what the fate of retail could be if I can literally get anything off Amazon.com in one or two days.  Outside of groceries and clothing, I can't fathom why I would go to retail for anything like electronics, books, and general merchandise.

The availability of product factor is also a great advantage now for online sites like Amazon.  Stores have limited space and thus have to be selective on what they stock.  I know for that manual treadmill that you can't find them anywhere retail.  For camera lenses you only have a select few at big box stores like Best Buy and you end up paying $100-$200 more at specialty shops like Ritz Camera.

Let's also toss in the sales tax factor.  Chicago and its parent Cook County have the highest sales tax in the country.  I'm literally paying almost 11% on anything I purchase in a store.  Insane.

So now I can sit at home or at work, research any product I like, weigh the angles, even read the user reviews, buy it, and have it in my hand within 2-3 days.  No salespeople pushing me to get other stuff, and no added charges from the government.  I can't imagine how retail is going to be able to beat that except when one needs it very fast, like last minute Christmas shoppers. I can imagine it will further hurt retail stores in sales and possibly make for many more empty storefronts.  I think the only ones who won't feel the pinch are grocers, clothing stores, and speciality shops who maintain a good online presence to draw customers into their retail locations.

If you shop Amazon.com, I highly recommend signing up for Amazon Prime.

Anyone else out there have experiences with Amazon Prime?

Tags: Amazon.com, online, shopping, ecommerce, business

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