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Amazon effect

Contributor(s): Ivy Wigmore

The Amazon effect is the ongoing evolution and disruption of the retail market, both online and in physical outlets, resulting from increased e-commerce. The name is an acknowledgement of Amazon's early and continuing domination in online sales, which has driven much of the disruption.

The major manifestation of the Amazon effect is the ongoing consumer shift to shopping online. E-commerce makes it possible for people to shop from home or anywhere else with an internet connection, which means just about everywhere these days. Frequently, they can find the exact items they're looking for without having to look very hard and can purchase them and arrange to have them delivered with just a few clicks.

Another manifestation of the Amazon effect is the way physical retailers and malls are attempting to make in-person shopping a more compelling experience for consumers. Many malls have created play areas for children, incorporated spas, lounge areas and salons and hosted pop-up restaurants and sports events. The Mall of America in Minnesota includes an aquarium and dinosaur walk museum, for example, and the West Edmonton Mall in Alberta, Canada contains an amusement park.

Encouraging destination shopping is one goal, attracting customers to the location because it offers something in particular that makes it worth the excursion. Another approach is providing a compelling environment and promoting shopping itself as the experience.

Hybrid e-commerce models, like click and collect, have also arisen to streamline the purchasing and payment processes. Click and collect allows customers to select and pay for an item online and pick it up in-store.

Beacon-based technology is another transformation of the retail environment. Beacons located throughout stores can communicate with customers' mobile devices to help them locate products and services and deliver proximity marketing messages, among other possibilities. Proximity marketing might target a customer standing in front of a product display with discount or upgrade offers. The same technology can also enable contactless and automatic payment so the user can just select their items and walk out of the store with them.

Meanwhile, as the shift to online shopping continues, Amazon itself has begun a foray into bricks-and-mortar environments -- albeit with new technologies. Amazon Go, an e-commerce mobile application, uses machine learning, sensor technology, machine vision and artificial intelligence (AI) to enable consumers to purchase items in physical stores without waiting in lines or checking out with registers.

This was last updated in June 2017

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