Too Good for its own good? Amazon continues to dominate.

 08/27/20

Too much of a good thing just might not apply when it comes to Amazon.com and their current business model. Far from the garage of CEO and founder Jeff Bezos, Amazon’s latest quarterly earnings posted double digits numbers. Data from Bloomberg shows an increase year over year, even during the 2020 pandemic, or perhaps because of it, although the data is too new to make any concrete determinations. Bezos came under fire on Capitol Hill along with other Silicon Valley titans last month amidst insinuations of unfair market domination by members of the House Judiciary committee. Besides the danger of antitrust laws, which, in my opinion may be the number one and only competitor the company faces, there is no other retailer that stands alongside.

    Amazon continues to dominate any market-space it decides to compete in. Gadgets such as the Echo, now in its third and most popular iteration, continues to outshine any and all of its competitors. Echo Auto, a device which offers the Amazon Alexa service to motorists, is just another space in our lives that Amazon now occupies. Bloomberg market research shows Amazon leads the online retail space with an untouchable 49% share of the Market, compared to its three nearest competitors, Ebay, Apple and Walmart, at 6.6%, 3.9%, and 3.7% respectively. As an Amazon Prime member for over ten years, I can honestly say there has not been a single issue that has not been resolved to my satisfaction. These experiences are not atypical which is why Amazon does so well with retention numbers for their Prime service with a 93% retention rate among first year subscribers, and it only gets better for those who stay longer.

    Amazon does not limit its presence to the virtual space only. As a store manger for Circle K corporation, I learned in 2017 that Amazon was opening two brick and mortar AmazonFresh pickup store locations in Seattle Washington. The two stores are seen by some as Amazon “dipping a toe” into the physical space of retail sales. While neither store sold goods in the manner of a Circle K or a 7 Eleven, it is not hard to imagine the technology being converted to anything that Amazon desires. Now with the novel coronavirus the number one concern on shopper’s minds, a no human contact model does not seem as strange as it did in 2017.

    So where is Amazon’s number two competitor? Not even in the rear-view mirror according to posted earnings from the last ten years. Ebay and its pay service PayPal, at one point and time dominated the online space just as completely as Amazon does now, so when did it change? According to Paige Leskin of Business Insider, in 1999, just two years after Amazon went public, eBay’s posted earnings were less than Amazon’s for the first time ever. Paige cites Bezos’s letter to his annual shareholders from 2019, where Amazon shows a 52% increase in Third-party sales (vendors who use Amazon as a virtual Marketplace), compared to eBay’s 20% on average year after year. With statistics such as these it becomes clear that Amazon has no real competition.

    Which leads us back to our initial question, Is Amazon too good for its own sake? The answer to that question is evolving daily, congressmen and women will no doubt have more hearings on the issue but expect no major legislation with an election looming this November. For now, those on Capitol Hill will have to contend themselves with mere ‘saber rattling ‘and like the rest of us, order most of their holiday gifts from Amazon.com.