Last week I read this business case about Amazon vs. Walmart and the Wheel of Retailing. Over the past two centuries of retailing there have bene several repeat instances where a new comer grabs mindshare and marketshare through discounted offerings and differentiated experiences. Soon this incumbent grows up and wants to get revenue share and profit share, resulting in increased prices or shift in target customers. This leaves open the possibility for new entrants to come in. Walmart did this only three to four decades back and became the behemoth. Amazon has grown rapidly in the past two decades. Now will there be continued duel between these firms or will new entrants come in.
As a consumer and valued customer for Amazon, Walmart, Costco, Ikea, Target, and numerous other retailers, I believe that I am interested in both differentiated experiences (ex: convenient to get low cost gas at Costco) and lower prices (ex: low cost household supplies from Walmart or furniture from Ikea). One persistent challenge that I face is: it takes a long time time to find and decide on things. Consider grocery shopping – it takes as much time to select items online as it is to shop offline at a retail store. Plus when I browse around I get to feel and smell the items to decide on what to get. The more I consume or in general, the customers consume, the better it is for the seller. Saving time and easing choices will expand the consumption.
One persistent example where I had seen consumption dramatically improve is from Netflix and the likes entering the home theater and TV set up. Prior to Netflix, the experience was: drive to video store, browse and search for what one wants, stand in checkout line, checkout, drive back, watch, remember to drive back and drop-off, etc. With the streaming experience and mobile phone based search and reviews, Netflix and the likes had dramatically reduced time for selection, despite expansive choices. And that means we consume a lot more.
My believe is wheel of retailing can continue to run without stoppage, if we can keep the wheel of consumption continue to run. And yes, fortune has to smile on all parties involved too. So instead of asking what can stop the wheel of retailing, a better question is: what can keep the consumption going stronger?
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