Amazon has U.S. retail sales of $26 billion last year which puts it in the Top 15. The company has a way to go to catch up with the likes of WalMart and Target but with a 42.5% growth rate, the firm's power in the marketplace is increasing. Their ongoing developments in the logistics and delivery fronts may give them new advantages which will challenge marketers in new ways.
The online retail giant has been busy opening warehouses across the country. It’s also forming partnerships that allow for storage of customer orders in lockers. When this effort is done, customers will be able to pick up their orders, in some cases, on the same day.
Retailers are already feeling Amazon’s pinch because of the showrooming effect and price guarantees. Now, ResearchFarm analysts believe the company’s logistics strategy will benefit it on another front. They believe consumers will enjoy the convenience of picking up orders and they may also appreciate the added security of a locker. The company’s expanded logistic system will reduce its cost of delivery. By doing so, they will become ‘price-setters’ in the lines of goods they sell. Pricing can often only be as low as a manufacturer will allow but this development will increase pressure on retailers to find better ways to compete with Amazon.
If retailers cannot compete on price or convenience, they may need to resort to exclusive arrangements with manufacturers. This shift could mean a big change in marketing practices in which a retailer and manufacturer would work closely together on promoting a specific product line.
If you’re selling against Amazon, have you explored the idea of selling exclusive products for a manufacturer? Has the strategy been successful?
[Sources: Wilson, Marianne. Amazon will cement position as retail price setter. ChainStoreAge.com. 3 Apr. 2013. Web. 16 Apr. 2013; Top 100 Stores. Stores.org. 16 Apr. 2013]
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.
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