The phenomenon of “Amazonization” refers to the wholesale disruption occurring across retail and eCommerce due to Amazon’s leviathan-like presence. The spiritual successor to “Walmartization” occurred across North America in the 1990s and early 2000s.
Amazon’s valuation has nearly doubled since 2010, as the company continues to flourish.
Benefits of Amazonization
Amazon has a mission that seems straightforward in spite of their complexity: since Jeff Bezos left his Wall Street job to drive west and sell books, he’s been determined to make Amazon the most customer-centric company on earth largely through personalized service.
1997 Shareholders letter
To this end, Bezos has delivered his 1997 letter to the Amazon shareholders, where he stated his intent to save customers money and time.
Amazon has entirely shifted the paradigm in which we shop and defined customer expectations. Because of the scale of programs like Amazon Prime, we can order just about anything – speedy delivery and all – at our doorstep two days after pre-paying for it. With this size of a platform that provides such fantastic convenience, there’s no need to go anywhere anymore either
The continued innovation of Amazon has forced big companies to either keep up with the ever-changing market or be left behind. As pricing grows fiercer, consumers can thank Amazon for allowing them to always have free shipping from their favourite stores.
The Danger of Amazonization
In 2003, the New York Times published a famous op-ed titled “The WalMartization of America”. In it, the paper argues that large chain stores such as Walmart follow a pattern of moving into a neighbourhood and driving local jobs away resulting in impoverished workers.
While Amazon has grown significantly in recent years, it’s still not a viable replacement for brick and mortar retailers. The drastic change in shopping habits that the online giant has caused has forced many longstanding American businesses into serious trouble. Despite the hardship they have gone through, these struggling companies are vital to the economy
Additionally, Amazon’s scale offers it many competitive advantages that people might consider unfair. “Free shipping” is only possible with the massive economy of scale that Amazon touts.
As the online titan searches for a new HQ2, it literally has major metropolises across NorthAmerica grovelling at its feet. The winning city will gain 50,000 quality jobs but only offering Amazon serious tax incentives that amount to a permanent subsidy. This shows exactly how much impact the single leviathan-like company could have.
As Amazon enters the grocery, fashion, and healthcare sectors in recent years, not only do traditional brick-and-mortar stores struggle to compete but so too does online shopping.