It is difficult to believe, but Amazon.com is approaching its 18th birthday! The Pros wanted to take this opportunity to consider the impact Amazon and online stores in general have had over that time period.
We Pros are hard core free market supporters. One of the main threads that runs through all free market systems is that the free market always finds efficiencies and often creates efficiencies that did not exist before. Is Amazon and example of this?
Before Amazon, shopping involved getting into your car, and driving from store to store. This research provided the consumer with information on market pricing, product options and availability. To make a final selection, the consumer selected a store to purchase from that maximized both criteria.
With the launch of Amazon, consumers could now accomplish the same shopping for the same information without leaving their desk. Since Amazon aggregates pricing and availability from many stores, a single click gets all the same information that used to take an afternoon at least to gather. Is this a free market example of a market finding greater efficiencies?
If you couple that with the other benefits provided by buying from Amazon – delivery in 2 to 3 days and not approaching 1 day, the avoidance of paying local sales taxes – the consumer does benefit in a tangible way from using Amazon to make their purchase.
Can physical stores compete against this via innovation of their own? We are starting to see examples of this today. The hardware store Lowe’s is now offering to keep records of all your purchases in their data base. This can be very handy for the consumer and benefits Lowe’s by acting in a similar way to an airline miles points system by driving consumer loyalty. Consolidating all your purchases and buying everything there provides the consumer benefit much better than spreading out your buying over multiple locations. The benefit is not free flights, but a maybe even larger benefit to the consumer – information. Five years from now, will you remember what color you painted your daughter’s room, so you can touch up the walls? Lowes will!
When the time comes to replace a waterlogged hot tub cover, will you choose to buy from a store or buy online? Since a typical spa cover purchase is around $350 delivered, saving the local taxes can be a very nice benefit to buying online. Since spa covers are custom made to order, why not order directly from the manufacturer and pay less than buying from a local store that will have to order it from the manufacturer anyway! There is no benefit to having the local store charge their additional markup?
Happy Tubbing!
Ethel Elliott
