All From Amazon Or All Too Much?

Amazon continues to fuel the development and its domination of the e-commerce sector with its ever-expanding range of products and delivery services. Nothing is ever too much to ask for anymore. Next day delivery is now old news. Need a product today? Sorted. But wait, need a product in two hours? Consider it delivered. Amazon is able to fulfil all your delivery desires. 

Amazon continues its world delivery domination … I mean, Amazon continues to diversify its business model and expand into new, upcoming markets. It does so by adapting to consumer demands and remaining one step ahead of competitors including the online retail giant, eBay. 

Through innovation and careful marketing, Amazon has caught the attention of shoppers and managed to channel a large volume of traffic to its site. This is unsurprising considering a staggering 86% of UK shoppers use Amazon! with the majority of UK shoppers using Amazon.

The Basics:

Amazon was founded in 1994 by internet entrepreneur, Jeff Bezos. Amazon initially traded in the US as an online book retailer but soon diversified its product range and began selling other items. It was not until 1998 that Amazon launched in the UK!

See the flowchart below outlining some key milestones in Amazon’s development to become the global retail giant that we all know today. (This is by no means all of Amazon’s developments as the timeline would be continually ongoing!) 

All image rights belong to According To A Law Student.

Since the birth of Amazon in 1994, it has become a key player in the development of e-commerce and has fuelled the proliferation in online transactions. Gradually, Amazon has been integrated into our everyday vocabulary. It has become a household name and a broadsheet headline target. We have transitioned to online shopping and slowly become accustomed to viewing products only virtually. It is now second nature to secure a purchase by a few clicks. 

However, it is no longer solely high-street retailers that are challenged by Amazon’s vast range of product availability and rapid delivery services. Amazon is now beginning to target the UK grocery sector and supermarkets. 

Amazon ‘Fresh’ – ‘Fast, Fresh, Free’:

‘Fresh’, Amazon’s latest business venture, is a grocery delivery service available to all Prime members.Currently, 15 million British shoppers are signed up to the Amazon Prime subscription service. ‘Fresh’ is already available to around 300 postcodes in London and the south-east of England butthe service is scheduled to be up and running and accessible to all customers across the UK by the end of 2020. 

The Coronavirus pandemic has exposed how many people rely on grocery delivery services, and in addition to the usual online shoppers, the crisis has brought a new audience. Food delivery services have increased to over 3 million deliveries each week since the onset of the pandemic. Online food retail sales in the UK have seen an increase from 7% at the start of the year to reach 13% by July. This proliferation in online grocery shopping is set to prove lasting and Amazon seeks to obtain a firm position in UK grocery market. Other supermarkets already offer similar services such as ‘Sainsburys Chop’ or ‘Ocado Zoom’. 

At the moment, Amazon only has a 3% share in the UK online grocery market compared to Tesco’s significant 30% or Ocado’s 14%. However, if Amazon is able to successfully encourage members to use ‘Fresh’, then it is a seriously threatening new player to existing the grocery retailers. James Bailey, the CEO of Waitrose, has likened the move to pressing the “nuclear button” in the war for online shopping supremacy.

Is Amazon Too Good at Providing Too Much?

So, do we need yet more options? Is it not becoming too easy not to leave our house? We can have everything, and anything delivered to our doorstep solely by Amazon all through a mere few clicks. The creation of ‘Fresh’ pushes Amazon’s structure into becoming even more monopolistic in nature. 

However, this has not gone unnoticed. Four American companies (Amazon, Apple, Google and Facebook) have recently found themselves testifying before American Congress. They have been subject to antitrust hearings concerning how they use their market power to eliminate competitors. There lingers concern over how such companies use their power to dominate the market and deter competitors. 

There has also been concern about Amazon’s behaviour by the UK’s competition watchdog (Competition and Markets Authority (CMA)) after they initially blocked Amazon’s proposed investment in Deliveroo, a UK food delivery service. This was due to concern over the shareholding this would give Amazon in the sector and the impact this would have on competition. Although, this has now been reversed, the CMA will only allow the move to take place so long as the investment does not exceed the planned 16%

Simply, the concern is that Amazon is growing too big. Amazon became the second US listed firm and its market value has ballooned to over $1 trillion (£779bn)with Jeff Bazos currently holding the position of the world’s richest man. Amazon is able to accurately recognise upcoming markets and sectors and position themselves within these.  Amazon is able to swiftly and effectively adapt to altering consumer demands.

But, is the growth of Amazon not well deserved through persistent innovation successes or does Amazon possess a damaging company structure through which it is able to exercise anticompetitive practices?

The Ultimate Goal: Global Domination:

Amazon is certainly a significant threat to e-commerce as a whole… not merely the grocery sector. Arguably, through constant technological and product advancement, Amazon seeks out to compete (defeat and annihilate) all competitors on both product quality and price to establish itself as the go-to retailer in all sectors of the economy in every market. To some, ‘Fresh’ is just one step closer to Amazon gaining e-commerce supremacy…

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This article was written by Mollie Bailey Hammerton. Mollie is a is Content Writer for According To A Law Student (ATALS) and second year Law LLB student at the University of Liverpool aspiring to pursue a career at the Bar. Mollie is particularly interested in Commercial Litigation.

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