Is Mobile Commerce Helping Amazon Destroy Competitors?
While Jeff Bezos says Amazon (NASDAQ:AMZN) isn’t primarily concerned with besting the competition, the retail giant certainly has a knack of doing so. The numbers tell a compelling tale of the modern consumer’s behavior: nearly 80 percent of shoppers are using their phones to gather information on products while in the store. Since this price-crunching sometimes leads to customers buying nothing, Amazon’s virtual showroom approach is taking a heavy toll on its competition among brick-and-mortar retailers.
Most saw the shift coming, as Amazon’s bar code scanner app allowed customers unprecedented access to other available actions. With the app in hand, everywhere you shop becomes an extension of Amazon. The numbers also say that customers are not just reading background information, either. Of those who are shopping, the majority (62 percent) are checking on prices listed elsewhere.
Clearly, the big-box retailers out there see the storm on the horizon. Walmart (NYSE:WMT) and Target (NYSE:TGT) specifically have reason to fear the Bezos method of undercutting his company’s own prices to make the customer happy. If they see that buy — and the shipping cost is reasonable enough — then customers are happy to wait a few days to receive the item in the mail (37 percent of in-store smartphone users end up buying online).
Though Bezos spent much of his 2012 letter to shareholders explaining why Amazon is customer-first, the emphasis on mobile activity seems destined to destroy brick-and-mortar operations. Best Buy (NYSE:BBY) and Dick’s Sporting Goods (NYSE:DKS) are two other major retailers facing the wrath of Amazon and its mobile-empowered following.
The question may ultimately come down to lifestyle. Those who are comfortable using their phones to dictate shopping decisions — a number growing all the time — will have fewer reasons to spend time browsing through stores, other than to get a feel of what the product is like. Google (NASDAQ:GOOG), for its part, sees one area of weakness in the Amazon approach: shipping.
Google’s same-day shipping (called Google Shopping Express) will do what Amazon still cannot do in expediting the transaction process. The only question is whether Google can pull it off. Same-day shipping requires efficient movements of the merchants involved, which can never be guaranteed. Either way, it is clear that the emphasis on mobile commerce will only be more pronounced in the coming years.