Click to enlarge:

Source: Institute For Self Reliance

Category: Consumer Spending, Digital Media, Retail

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

38 Responses to “How a Single Company Gained a Stranglehold over Online Shopping and the Future of Retail”

  1. NoKidding says:

    I see no reason to stop using Amazon in that graphic. In fact I find it encouraging. Like Wakmart, it is defeating counter parties on my behalf. And like Walmart it will only get my money when it provides a superior economic result.

  2. mitchw says:

    Security. I feel confident giving Amazon my numbers, and can restrict the vendors that have my numbers.
    Customer Service. They respond to my problems quickly and fairly. They even surprised me once by just forgiving the price of an item when it was defective. No sending it back.
    Used Items. I am happy to buy used books and CDs. Their affiliates have been great.

    Yes, long time customer and Kindly Fire user. Come on Jeff, bring out a clamshell netbook before Redmond!

  3. end game says:

    I didn’t know that employees were captive. And what business doesn’t threaten its suppliers with loss of their business if they don’t lower their prices? The Institute for Self Reliance doesn’t mention that Amazon offers instant comparisons of features and prices, complete with product reviews and user ratings with commentary, lightning-quick purchasing, and nearly flawless delivery. The sales tax advantage is a legitimate point, but otherwise seems to miss the obvious point that Amazon is winning by giving customers exactly what they want. I thought that was the point of free enterprise and competitive advantage.

  4. chartist says:

    it’s absolutely ridiculous that Amazon still gets away with not collecting sales tax…..They should not enjoy such a competitive advantage at this stage.

  5. ashpelham2 says:

    If you read this information and digest it for what it is, and know anything about business, you now see that they clearly enjoy some unfair advantages over everyone else. It’s not enough for them that don’t have brick and mortar stores, and all the expense that goes with that. They extend a few steps farther by employing extreme, unfair labor practices, and bypassing collecting sales taxes. These are advantages that should ring alarm bells. And if the DOL was doing it’s job and not being accused of operating a gestapo, these advantages would be wiped out.

    These are some of the same advantages that have put China into the competitive place they are today, and created Wal Mart’s all-encompassing, blood-sucking empire.

    It seems we are more determined to see all competition be destroyed than we are determined to get the “lowest price. Everyday.”

  6. whskyjack says:

    I buy used books on amazon but not much else. I looked at products but they weren’t that competitive after you pay shipping. I like walmart online order and pick up at the store no shipping.

  7. Neildsmith says:

    All those strip malls are gonna be looking pretty desolate before too much longer. Is that really a good thing? Huge losses for real estate (again) and lots of wasted space growing weeds.

    It is, as stated by chartist, ridiculous that we are passing on sales tax revenue. Something’s got to change there. That’s just not fair competition.

  8. Jojo says:

    Amazon is cutting deals with individual states to collect sales taxes. They made a deal with TX. They are slated to start collecting sales tax in CA this coming fall in CA. And they made a deal with NJ to start collecting there in 2013.

    See:
    http://www.mercurynews.com/opinion/ci_20758596/we-see-it-amazons-tax-bonanza

  9. abravo says:

    Thank you for the article.

    I really need to stop buying from amazon and support my local the brick and mortars (even if they are large brick and mortars like Bestbuy and Barnes & Noble). After all, on Sundays I like to go to my local bookstore and sit and read and have a cup of coffee. And if I don’t buy my books from there, soon there will no longer be a bookstore there. Same for everything else.

  10. Bob A says:

    I like shopping on ebay a lot better. Shopping pages on amazon are a mess… full if irrelevant distractions. It’s really difficult to wade through. I go there for reviews and to check prices but 90% of my online purchases i end up making on ebay.

  11. rtalcott says:

    for used books I always check abebooks.com which is a network of used bookstores…it’s global and most times I find better prices there.
    rt

  12. RC says:

    it’s absolutely ridiculous that Amazon still gets away with not collecting sales tax…

    I wonder about that too. Why are the local politicians where Amazon has distribution centers letting so much potential revenue go? Does this require some sort of a federal law amendment?

    I am not complaining when I get to pay less for merchandise but after all this is a question of general fairness.

  13. scottinnj says:

    I’m amazed that anyone buys music on iTunes. I check Amazon and iTunes before buying an album and 95% of the time Amazon is cheaper. For example the Alabama Shakes Album is $7.99 on Amazon and $9.99 on iTunes and the Amazon MP3 downloader works seamlessly with iTunes. so cheaper even if/when sales tax comes in.

  14. Lyle says:

    State by state Amazon is starting to collect sales taxes, in Texas it is July 1. So that issue is slowly state by state being solved. Note that in states that do have distribution centers Amazon does already collect sales taxes. Currently these states are Kansas, Kentucky, New York, North Dakota, or Washington. Amazon may well be killing off the small town stores more in fact than Wal-Mart. With Amazon you don’t have to go to the big city to find things.

  15. Fredex says:

    The Amazon sales tax advantage could be eliminated by relieving brick and mortar stores of the unfair burden of sales taxes.

  16. Nala says:

    And don’t forget the tax deals that Amazon squeezes out of states, counties and towns in order to locate its warehouses there … states that are desperate to replace the jobs those states used to have in brick & mortar retail locations, pre-Amazon.

    Not that a warehouse does much good for the look and feel of those towns post-Amazon: sad semi-abandoned strip malls and dying, neglected shopping malls.

  17. fp says:

    Amazon is definitely not the only online retailer that doesn’t pay sales tax, so that’s irrelevant.

    “Bully Your Suppliers”.. Good thing other retailers like Wal-Mart don’t do that.

    Don’t forget convenience; I prefer using Amazon because I don’t want to enter my address and credit card info again, or give it to a retailer I don’t trust. Also there have been many times I wanted something but didn’t want to wait for it to be shipped; I wanted it locally, but I don’t know what store had it, or if it was in stock, where in the store it was located, etc. Few brick-and-mortar stores have that info online, and I didn’t want to call a bunch of stores on the phone. (Google Shopping has that for some items but not all.) So I ended up getting it from Amazon.

    I do mostly buy music on iTunes instead of Amazon, because it’s more convenient, and the minor price difference isn’t worth the trouble. Especially since I don’t buy entire albums.

  18. whatever says:

    I buy from amazon and I pay use tax. Amazon is very convenient, but once in a while I will walk across the street to the CVS/Walgreens for cough medicine.

  19. Iamthe50percent says:

    I used to buy on line from Barnes & Noble and from Amazon. Border’s webpage wasn’t up to snuff. I quit B&N when I ordered a book and two weeks later they e-mailed me and said it wasn’t available. By then Amazon didn’t have it either. Scratch B&N. I still go to the brick and mortar B&N to check the discount shelves.

    Amazon did the same thing to me with a VCR (long time ago!) that I could have bought locally for $40 more. I don’t buy hard goods from Amazon anymore.

    Amazon’s used book descriptions are often wrong but you can send them back. I dumped Alibris because there was no way to complain about a shipment. I have Alibris marked as “Spam” in Thunderbird. For used books I prefer to go to Half Price Books where I can see what I’m buying.

    Someday, maybe soon, Amazon will kill physical books. I’ll stop reading then. I want a BOOK not a tiny TV screen to read on. I might eschew the internet too, I’m getting too many loud video’s starting when I just want to read an article. A few days ago I started getting loud obnoxious pop-up video ads. Bye-bye to those sites.

  20. dsucher says:

    Nothing is forever.
    Extremes tend to a mean.

    Consider ebooks, as one example. The ebook market is now 24 months old. Yes, Amazon is far ahead.
    Bur do you really think that there no oner smart merchants. That eventually M’sft, or Google or Apple (etc etc) can team up with distributors? publishers? (Whatever a ” publisher” will become soon) and sell ebooks cheaper an better than Amazon.
    (In fact that’s a bad example — what is holding up ebook prices is the publishing industry , not Amazon.)

    I’m not saying I may not indeed steer some of my online business to others — but it will happen because Amazon has no inherent, structural monopoly power. Others will take business away from Amazon. Just give it time.

  21. dsucher says:

    Nothing is forever.
    Extremes tend to a mean.

    Consider ebooks, as one example. The ebook market is now 24 months old. Yes, Amazon is far ahead.
    Bur do you really think that there no oner smart merchants. That eventually M’sft, or Google or Apple (etc etc) can team up with distributors? publishers? (Whatever a ” publisher” will become soon) and sell ebooks cheaper an better than Amazon.
    (In fact that’s a bad example — what is holding up ebook prices is the publishing industry , not Amazon.)

    I’m not saying I may not indeed steer some of my online business to others — but it will happen because Amazon has no inherent, structural monopoly power. Others will take business away from Amazon. Just give it time.

  22. boveri says:

    After reading most of these truly interesting, valuable and entertaining BP entries this evening, I voting this edition of the BP as the best of all.

  23. deanscamaro says:

    As they build up, it is apparent they are opening up a total new way of doing business. Nothing new!
    Big box sales have been displacing mom & pop businesses for years and Amazon is no different. They will go through the need to manage the cry’s of slave labor and will adjust to solutions to those problems. Since the Industrial Revolution, business operations have been evolving and Amazon is the new evolution.

  24. bonzo says:

    Amazon’s website works and has worked since the beginning. Walmart.com is inferior as I recall (I don’t use it much). Sears was so awful back when I tried it several years ago that I haven’t been back since. I’m reluctant to try anything besides Amazon.com at this point because I’ve been disappointed so many times. People this is not rocket science. What’s more, there is a huge opportunity to beat amazon.com, because even amazon.com seems unaware than many people either: (a) are still using dial-up; (b) are still using DSL; (c) are using mobile phones with limited data plans. There is no need for a website to require MB per page when a few KB would suffice. Then back that decent website up with a good distribution system, which all the big-box stores have in place already. Just like with Microsoft versus its competition, it isn’t so much that amazon is run by geniuses as that amazon’s competitors keep making big mistakes.

  25. econimonium says:

    Wow, I thought I was reading a graphic about Walmart there for a second ;) But here’s where the comparison ends: I get the same high-quality merchandise at Amazon for a better price (even if I were to pay sales tax) than at any local store. Walmart’s merchandise is cheaper because it isn’t the same. The clothes made even by brands are made with cheaper grades of fabric and less stitching, and many of the products come in different sizes than other stores to make them “appear” cheaper. I also have a Fire with a Prime membership so get free 2 day shipping. What’s not to like?

    This is a clear example of giving people what they want. And you know the sales tax wouldn’t change a thing and I think Amazon knows it and will adjust prices a bit accordingly anyhow. The only way I go to a big box store (because, after all, it’s all that’s left anymore) is if I need something NOW or something BIG like a fridge or washing machine. Everyone I know does it. Saves on gas, time, and traffic aggravation. Why should I drive 10 miles to sit in traffic going to the mall on a Sunday? I do that every day. Why should I have to drive around and have my selection limited to brands the store deigns to carry? On Amazon I can get whatever I want when it doesn’t involve something that needs to be touched. The is the free market you’re all asking for in operation. So there goes your inefficient local and expensive local stores, and now even your big box ones are in danger. So don’t scream “free market” on one hand and then bemoan its effects with a graphic like this on the other.

  26. ps62 says:

    I believe Amazon enjoys another unfair advantage and the fault lies with us, bloggers. Whenever we refer to a book in our posts we give an Amazon link. It is as if we are all working for Amazon and virtually for free.

    Can we all stop this practice ?

  27. streeteye says:

    A lot of these are wrong or misleading… Amazon has been losing the sales tax war, we now pay sales tax in NY and they agreed to collect in California starting Sep 15; the publishers fought Amazon to be able to set prices and prevent Amazon from discounting and potentially gaining an e-book monopoly, found an ally in Apple, and the DoJ is investigating anticompetitive behavior by the publishers and Apple to keep prices up; “Backed by Wall Street’s deep pockets,” oh geez…Bezos took huge risks to scale up his business faster than anyone else; no one is ‘compelling’ anyone to use their platform.

    The stock is priced as if they might gain a valuable franchise in ebooks, Amazon Web Services… but they haven’t shown the ability to actually generate big profits and margins from a platform with market power. Quite the opposite, so far it seems like they are playing in ultracompetitive sectors with tough adversaries like Apple, Google, executing extremely well and making customers happy, but generating slim profits and margins.

  28. kaleberg says:

    I buy a lot from Amazon. I live in a small town in Washington State (and pay sales tax). The local selection of goods is limited, so if I want a book, an oddball tool or a lawnmower for that matter, it makes sense to go to Amazon. Two days later, it’s at my door and at a very competitive price. I order from lots of other online suppliers who offer better selection and finer control of ordering, particularly for clothing, hobby gear, food items, furniture, linens, office supplies, computer stuff, and so on.

    Sure, Amazon has been at odds with the publishers. The publishers have been trying to strangle e-books in their crib, just as the music companies tried to strangle online music and the movie and television people are still trying to strangle online video. Profitable companies hate change. I remember IBM single handedly holding back computer technology for over 20 years even after the antitrust settlements. In fact, Amazon backed down on the biggest pricing struggle, and e-books are still relatively expensive which has slowed their adoption. (Half the time, the paper book is cheaper than the digital version.)

    Every generation seems to get a new retail model. In the 19th century there were the emporium bazaars which were roughly like modern shopping malls, and much denounced as a threat to business and morals. Sears took advantage of the railroads, telegraph and stagecoach delivery service (e.g. Wells Fargo in the west) and became a major threat to main street stores everywhere. Then came the department stores which were considered to be the end of carbon based life on earth. The interstate highways and suburban development enabled the big box stores which were called category killers for a reason. Computerization and mortgage securitization enabled massive, rapidly expanding chain stores. Now we have the online giants, with Amazon being the largest, and the world is ending yet again.

  29. kek says:

    Disruptive innovation + scale = Amazon the business. They sure gave it a name that fit.

  30. jonas says:

    You know something right with a business when you can apply a Genghis Kahn quote to them:

    “What is business success? To crush your competition, to see their stock prices fall before you, and to hear the lamentations of their lobbyists”

  31. doug86 says:

    I’m an avid Amazon shopper. Lately, I find that I am willing to pay a small price premium to buy from Amazon instead of going to a brick/mortar or another website. The total ease of buying, tracking, and if needed, returning any purchase (without burning a single gallon of gas) is worth it. Amazon completely understands that shopping is not just about price; it’s a relationship with your customer.

  32. normal1 says:

    A lot of commenters are pointing out the ease of use of this online “mega-store” vs the old brick and mortars. This is the way of the future, and if the olds can’t adapt, then let them perish. Or something along those lines. Makes me start to ponder the true meanings of price and cost.

    What’s interesting to me is how adaptive these new players in the marketplace are in the old ways of implementing tax deals, bullying suppliers, and generally mimicing the financial behavior established by the olds. What’s the line again? Meet the new boss, same as the old boss. I find this very disheartening and disappointing.

    And, I’ve used amazon, until recently when I was informed that my credit card was used to make purchases at a pharmacy in Argentina. I realize this could have happened anywhere I’ve used that card, so I’m not holding a grudge. But, I am genuinely concerned about the thinking of the so-called new breed of business. What relationship, if any, do they think a business should have with its country? You know, the one that provides them with the security to operate day-to day, generally without fear.

  33. number2son says:

    Hey, I’ve just ordered that great Clint Eastwood collection at Amazon. Thanks BR! I mean … damn you! ;)

  34. whskyjack says:

    Somewhere, i forgot to check a box and Amazon is sending me spam(email offers), Today they are offering discount acupuncture, what’s next discount heart surgery?

  35. ssc says:

    Amazon labor practice: As somebody already pointed out, the employees are not captive, and at least they live in the US and protected by US laws, same can most likely not be said about Foxconn, but I guess when it comes to Apple, they just get a pass, or everybody must “Think Different”.

    Author events: My wife is an avid reader, she read so many books that at $14 a pop, it starts to add up, so she started reading the “Amazon singles”, and the .99 specials. Most (pretty much all) are junk (some with 4+ spelling errors in the first page). I suppose with practice, some of these people will be good some day. How many “green” writer events can a B&M store afford to do???

    As for competition, I brought my wife a Nook and my daughter a Nook when they were still $250 a piece, I DO want to encourage competition. Nook is a nice reader, but ultimately, the “ecosystem” just does not measure up to Amazon’s. The success of Amazon is not because of the labor practice, sales tax…it’s because they have a better mousetrap, when they didn’t, such as Amazon Auction, they fail just like anybody else.

  36. Lookout Ranch says:

    I want to shop like a rich man in the comfort of my home and have my purchases delivered to my door.

    Oh, wait, I can…and I do.

  37. [...] Chocolate thought that this infographic in The Big Picture showing the retail strength of Amazon was [...]

  38. the Jess says:

    Amazon hooks in buyers with great programs that are extremely advantageous for frequent on-line shoppers, such as Amazon Prime and reward programs. They also use their size to bully suppliers, intimidate their sellers and send small businesses packing. If you know what you want it’s great, if you are browsing you need an incredible amount of patience. When you find something on Amazon you should do a search. They don’t always have the best prices – especially in branded jewelry, shoes & clothing. They are infamous for taking excessive mark-ups upfront and then promoting at 30% off, when 30% off brings the price to match what others are offering at 20% off the original price. Convenience, customer service and fast delivery, they win.