Published on: December 20, 2022
From Bloomberg, a story suggesting that Jeff Bezos' prediction may be coming true - that eventually Amazon would be disrupted in the same way that is caused so much disruption.
"The idea seemed absurd in the middle of the pandemic. Amazon’s online sales had exploded as people avoided stores. Restless consumers, buoyed by stimulus payments, were on a shopping spree. Between 2019 and 2021, Amazon’s online store sales grew 57% to more than $222 billion; subscription sales, which include its prized members’ service Prime, surged 65%; and its share of consumer retail spending surged to overtake it biggest rival, Walmart Inc. It became more of a utility in consumers’ minds than an online store. What would we have done without online delivery? Without Amazon?
"At the same time, retailers that had been lagging behind in e-commerce were forced to catch up — and fast. Nearly everyone from luxury names to department stores ramped up online. Walmart, for one, expanded its online assortment, opened its marketplace to international sellers, rolled out curbside and in-store pick up, and ramped up online order fulfillment out of its stores. In the first nine months of the pandemic, its online sales grew at twice the rate of Amazon’s, albeit off a far smaller base, according to data from retail technology research firm YipitData."
Now, Bloomberg writes, "Amazon no longer seems unassailable. This year saw the world’s largest e-commerce company at one point lose a trillion dollars in market value as growth in online shopping slowed sharply and its forecast for the all-important holiday quarter disappointed. Prime memberships have flat-lined following the pandemic surge. And the firm is in the midst of its biggest-ever employee cull, targeting about 10,000 jobs across the devices and retail businesses.
"Inflation-squeezed shoppers are more cautious about what they do with their wallets, and less willing to spend on novelties like $20 for an avocado chopper or $25 for a few wands that remove histamines from a glass of wine. Instead of impulse buys, people are spending more on groceries and other necessities — Walmart’s sweet spot. Amazon’s prices are still generally cheaper than Walmart, but Walmart does price matching all year around and its annual Walmart+ membership of $99 compares with $139 for Prime. With some back of the napkin math, a pack of toilet paper may end up cheaper to buy from Walmart than Amazon.
"The dramatic shift in sentiment coupled with more aggressive online competition have seen Amazon fall back in the battle for consumers’ wallets as Walmart leverages its advantage as the country’s largest grocery store. So long as we’re in an inflationary environment, Walmart’s lead in groceries and Prime’s increased cost put Amazon on the back foot, according to Tom Forte, a senior research analyst with D.A. Davidson. Research firm Insider Intelligence estimates that the brick-and-mortar giant will generate roughly $39 billion in online grocery sales this year, and widen its lead over Amazon through 2024."