Amazon has seen unrivalled growth in the last few years; their stock price has exploded from just $93 a decade ago to $955 today, in 2015 they were worth as much as American giant Wal-Mart – today they are worth almost twice as much. Amazon’s CEO Jeff Bezos even had the honour of being the world’s richest man, and though it only lasted a few hours, it will no doubt be a landmark in the history of the e-commerce behemoth.
It is not simply in sales and value that Amazon has grown, but in scope too. Once a small online book store, Amazon has now diversified its wares to provide almost any product, including groceries, which they expanded through their purchase of Whole Foods earlier this year. The company have also ventured away from their roots, providing streaming services through Prime Video and Twitch.tv, cloud computing services through their Web Services subsidiary, and even into voice computing with their Alexa platform.
Their growth can be attributed in a large part to the increase in consumer trends to shop online, for the sake of convenience and brevity. Amazon was quick to pick up on this, providing next day delivery on countless products, and with drone deliveries potentially on the horizon, deliveries could arrive in under an hour. This convinced more and more consumers to abandon the traditional brick and mortar shop in favour of shopping from the comfort of their own home.
But this comes at a cost.
Companies which were not as quick to adapt or simply too small to do so are taking heavy damage as Amazon absorbs their market share. Toys-R-Us have become the latest victim of the mass migration towards e-commerce, filing for bankruptcy last month. The toy chain was slow to respond to changing consumer buying habits, selling around 14% of its toys online, according to GlobalData Retail, a level far below their competitors. President Donald Trump also expressed his concern on the damage Amazon was doing to small businesses across the US, tweeting that ‘Towns, Cities and States… are being hurt”, likely in response to store closures in the US being on track to hit a record this year, potentially exceeding 8000.
This creates a dilemma for policy makers. Should Amazon’s growth be stopped? Are they causing damage to traditional retailers or simply fulfilling consumer demand? It is an unfortunate necessity that businesses put profit and revenue first and social welfare second, and though it may be hard to pinpoint the net impact Amazon has had on jobs and its competing retailers, there are some who have called for Amazon and other tech giants such as Google to be broken up, due to their domination of their respective markets. There is no doubt that the world we live in will become more automated in the future, and that more of our lives will move online, the challenge will lie in mitigating the costs which will inevitably come with this shift.