It's become common for shoppers to browse physical stores, such as Best Buy, and then buy from... [+]
A Wall Street Journal article in March discussed the market share threat that Best Buy faced from Amazon.com. A growing number of consumers had taken to going to Best Buy to test consumer electronics and then going online to get them at a cheaper price. As Greg Melich of ISI Group and others have pointed out before and since then, Best Buy appears to be in danger of turning into Amazon's "showroom."
It turns out that Best Buy is not the only chain that needs to be looking over its shoulder at Amazon. The e-tailer, according to William Blair & Co. analyst Mark Miller, is gaining ground in quite a few categories beyond just consumer electronics.
William Blair conducted a study of 2,400 items at 24 retailers (22 with stores) and compared them in terms of product selection and price to Amazon, according to a MarketWatch report. The results found that Amazon's prices on average were 11 percent cheaper than the competition. The price differential was even greater when factoring in free shipping on items priced over $20.
Interestingly, William Blair's research found that even if Amazon was collecting sales tax, which it is not in many instances, its price would still be cheaper.
Among the chains seen most at risk to Amazon were Bed Bath & Beyond, Best Buy, Dick's Sporting Goods, hhgregg, Kohl's, PetMed Express and Target.
Walmart was seen at being only at a medium risk to Amazon, largely because it concentrates on sales of more lower-priced items than the other merchants.
“Amazon doesn't have to maintain physical inventory, physical stores or retail salespeople," wrote Ryan Mathews, founder, ceo of Black Monk Consulting, in a recent RetailWire discussion. "It's all a huge advantage. Not to mention that they can source at a lower cost and have branding advantages. The only effective way to counter this threat is to emphasize what Amazon can't do—provide a hands-on, physical experience of a product. That doesn't eliminate the ’showroom’ problem however, so it may be necessary to work out some after-market service and/or support programs that Amazon is likely not going to be willing to offer.”
Carol Spieckerman, president of newmarketbuilders, sees the issue along apples and oranges lines.
“Amazon is a platform, its competitors are retailers,” said Ms. Spieckerman in her RetailWire commentary. “Oddly enough, the only retailer looking at things the same way is Sears. They may not win but they have the right ‘Amazonian’ mindset.”
Ted Hurlbut, principal, Hurlbut & Associates, offered another perspective.
“The problem for many retailers, especially the larger national chains, is that by necessity (they're trading in commodities and near-commodities) they've had to emphasize the rational considerations of price and convenience,” Mr. Hurlbut said. “The challenge is to find ways to re-engage customers on more than just a rational level, to make shopping in their stores a more stimulating and satisfying experience, rather than just another trip to pick up whatever is on sale.”
