Business Technology

Monday 18 February 2019

Adrian Weckler: 'Why Amazon is crushing shops'

A fifth of shoppers say they spend less at other retailers because of Amazon
A fifth of shoppers say they spend less at other retailers because of Amazon
Adrian Weckler

Adrian Weckler

Last month, I signed up to Amazon Prime. For those unaware of what this is, it gives you two things: access to films and television shows (in a similar way to Netflix) and free, faster delivery for things you buy from the giant online retailer.

I signed up to it for this latter reason. I knew I'd be using Amazon for several things in the run-up to Christmas. It was a handy way to save lots of money on delivery charges.

But in the last four weeks, I've bought way more than I thought I would. Amazon is a bit of a trap: the e-store is so well set up and quick to use that I've found myself returning to it to buy things I would normally buy in a local shop.

And so, I have become one of the reasons that local shops selling stuff are now being replaced by an endless stream of non-product retailers, like eateries.

I take no pleasure in this and I know that I'm not alone.

I've written several times in recent years about how Amazon is silently crushing the Irish shopping high street by sucking product-shopping online with its superior service. I believe now, as I believed then, that it looks unstoppable.

The figures appear to bear this out. In its last major Irish retail analysis, PricewaterhouseCoopers found that 67pc of Irish consumers now shop on Amazon.

That is a startling, vastly under-reported figure. Of these shoppers, one in six (17pc) are Prime subscribers, like me. But an even more significant statistic is this one: 18pc of Irish shoppers say that they shop less often at other retail stores as a result of Amazon. (This figure may well increase: in America, one in three says the same thing.)

For some reason, many people still don't believe this is happening. It's still common to hear theories that sluggish retail performance is somehow the fault of "commercial rates" or "traffic management" or "the weather".

Really? In an economic boom? With unemployment a third of what it was six years ago? Sorry, no. It's simply that our habits are changing. Where it was once fearful and potentially dangerous to buy things online, it's now relatively easy, even pleasant.

Tragically, for me, Amazon has become an occasional browsing app. And it is becoming a gateway drug. I've started to buy things I see in ads on Instagram. A couple of years ago, I wouldn't have ever done that: I would have worried about the provenance of an outlet I see in a social media ad.

But because I now have experience buying things from traders on Amazon, I just don't have that fear anymore. This changes things a lot for me: it creates an utterly different retail environment, one where I'm no longer worried about planning a trip to a certain shopping centre or worrying about traffic, parking or giving up an afternoon. It also means that I'm starting to buy things like clothes.

Should people go out of their way to shop in local stores instead of online? In some cases there is a strong case to do so. I definitely still try to shop locally for things that I could get online, specifically to maintain a sense of community.

I do the same for specialist outfits, like camera shops (my particular hobby). I will pay more in one of these shops than I would online.

But this isn't an attempt to signal any virtue. Because it isn't a selfless act. I like the idea of local shops being there because I like the idea of living in an area with shops. And I like the idea of specialist shops being there to give me advice or fix something when I need it.

So being brutally frank, I'm acting in my own interests when I shop locally. That being the motivation, it seems a little hypocritical to criticise others for shopping online if they think that it's in their own best interest.

What about Irish alternatives to Amazon? Is it possible to support the home team that way? That's a very challenging task. Amazon has spent billions making its online store ultra-slick. It's quick, powerful and easy to search for things. Payment takes just a few seconds and you have a lot of comeback if something goes wrong. In my experience, local shops have online stores but many of them are rubbish. They're slow or messy - particularly on phones - with poor or non-existent search functions. It's a major chore trying to search for, or buy, things there.

Oddly, there is still a view among people who should know better that online shopping is a niche activity for niche products and services. "It's alright for tickets to things and the odd thing but sure you wouldn't buy a telly or a jacket," is a still-common refrain. This is simply out of touch with reality. Almost 80pc of those who shop online say they buy clothes through the medium, with around a quarter using it to buy major electronics. It also probably explains why €3bn of the €5bn spent online in Ireland last year went to retailers outside the country, who are more in touch with reality.

An even worse miscalculation is made about phones, which many Irish retailers don't take seriously as an online purchasing channel. The PwC figures illustrate that almost a third of Irish consumers make significant purchases on their phones at least once a month, a figure that is rising every year. And why wouldn't it? Almost all phones sold now have screens that are almost as large as mini-tablets - they are now unquestionably the main computer that everyone uses everyday. The inability to grasp this among traditional Irish retailers is depressing. It's also killing a chunk of their business.

So is Amazon a bad guy? Is it becoming too big? One problem in answering this question is that it's not clear how it could be broken up. With Google, you might conceivably separate YouTube from the search engine. With Facebook, Instagram or WhatsApp are obvious breakup targets. But how do you separate retail divisions of Amazon?

The only thing to stop it being as dominant here as it has become in the US is our island status. Even with a premium 'Prime' membership, it takes four to five days for delivery. In the US, same day delivery in a city is common.

But how long will that delivery scenario endure?

The only shops that look safe are those selling very cheap goods - such as Penneys - or those selling boutique goods or services.

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