How Amazon revolutionised shopping over the last 20 years

Earlier this week, Amazon.com announced it was going to celebrate its 20th anniversary today, July 15, with what it is calling Prime Day; a 24-hour online shopping bonanza which they declared would be “filled with more deals than Black Friday”.

The event is meant as a reward to its 40 million Prime members, who each pay the equivalent of $99 to access deals on everything from books to beakers.

Undoubtedly, the publicity around the spree will lure more members to its ever-growing ranks and continue the revolution that has changed the face of retail.

“It’s taken traditional sectors, ones that are applicable to an online environment and it’s changed them dramatically,” says Damian O’Reilly, Lecturer in Retail management at Dublin Institute of Technology.

“What it’s very good at is books, downloads, computers and electronics; things are that are comparable within a sector. So if I go to an electronic store I can compare their prices directly with Amazon and if it’s an item, like a computer, that you don’t want immediately, you know what you’re getting and it’s comparable, you’ll end up buying it on Amazon because it’s cheaper.

“So it’s that kind of look and see versus touch and feel; look and see means you know what you’re buying and you’re going to buy that from the cheapest location so, Amazon, whereas touch and feel is where you want to buy a fashion item, for example, and you might want to try it on so you’re more than likely going to go to a shop.

“With Amazon a book is a book I know what I’m getting, I trust the product and I can wait a few days.”

O’Reilly’s reference to books is apt. This is of course the first jungle, founder Jeff Bezos decided he would hack through in his pursuit of retail domination and not everyone was happy that he chose to do so.

“We’re happy to sell through Amazon,” says Sean O’Keefe, co-founder of Liberties Press, an independent publisher based in Dublin.

“But obviously we prefer if the customer goes through our independent bookstore or our own website. I think if Amazon had their way they’d get rid of publishers because they’d have more control. I think they’d rather deal with customers and authors directly so in that, we’re slightly at cross purposes I suppose.”

O’Keefe’s assessment was amply displayed last year when Amazon applied pressure on Hachette, a large American publishing company which had refused to pay more for the privilege of having their books hosted on the site.

Amazon responded somewhat petulantly; delaying delivery times of Hachette publications, removing pre-order buttons for many Hachette titles and raising prices on some of the publisher’s titles. It did not go unnoticed by the wider publishing world but as O’Keeffe points out it is impossible to ignore them.

“It has certainly become an important shop window,” he says, “in that it’s a first port of call certainly for authors, and so you need to get information to them all the time because it’s often the first place that people go. We update and send them information all the time.”

Bezos, who had spent years on Wall Street, started his operation in his garage in Seattle. Within two months, book sales were generating $20,000 a week. By the time some of the company’s stock was floated in 1997, it was valued at $18 per share.

At that point Amazon had diversified into an unimaginable array of goods and sectors and in 1999 Time declared Bezos their ‘Person of the Year’. Today the company is valued at $436.72 per share, employs over 150,000 people around the globe, including over 2,000 in Ireland, and in 2014 it reported revenue of almost $89bn. The statistics are impressive were it not for one failing.

“They have issues around their profitability,” says O’Reilly. “They’re involved in so many sectors that their profits tend to vary wildly and they’ve yet to find their true base.”

Last year the company reported a loss of $241m, down from a profit of $274m in 2013. For now investors still seem willing to pour money into the company.

And while its diversity might well be hindering its profits, the suck it for a while and see method might yet produce spectacular results when the company figures out what it is and isn’t good at.

“I think you’re going to see online retail level out at about 25%,” says O’Reilly. “That’s my prediction anyway, and I think you might see supermarkets change.

“People will go there to have the experience of buying fresh food and supermarkets will adapt and make it feel more like a market, whereas I think people will get detergents and bulky goods delivered to them. This is an area I think Amazon will look to get in to and they can maybe bring their delivery expertise to the table.”

Whatever the masterplan, this is one Amazon that is in no danger of disappearing anytime soon.