Cadabra, Inc. was founded in 1994 in Jeff Bezos garage as an online bookstore. The company changed its name to Amazon a year later, followed by a public offering in 1997.
Twenty-five years later, Amazon exemplifies how an e-commerce giant operates in the 21st century’s digital landscape. With 300 million active users (generating $386 billion revenue (2020)), Amazon is the globe’s most influential and valuable brand!
Since its inception, Amazon’s business model has been to expand its product lines and services. In 2005, Amazon created the wildly popular subscription service known as Amazon Prime.
In 2017, Amazon acquired Whole Foods & the home security/smart technology company Ring, LLC. Just last year, Amazon introduced Astro, the first of its kind household robot run by Alexa’s smart technology.
Every order that is placed on Amazon’s website contributes to a phenomenon that has been dubbed the ‘Amazon Effect.’ This has led to an overall shift in some of each consumer’s more deeply ingrained habits and expectations.
Many of these established consumer patterns had seen little change in decades, which speaks to Amazon’s influence across markets and countries.
Amazon created proprietary processes to meet newly evolving consumer needs. Ultimately, Amazon’s success is both unique and self-evident. More than half of Amazon’s sales are from one of the online store’s 2.5 million third-party sellers (2020).
Amazon meets this incredible delivery demand by partnering with several types of services, including utilizing 3PL (Third Party Logistics) companies.
6 Ways Amazon Prime Has Influenced Online Shopping
The following details how Amazon Prime has influenced the expectations of online shoppers in the modern retail landscape –
1. Shipping Fees Can, And Often, Kill An Online Sale
Previously, consumers understood and accepted that the cost to ship an item was the price one paid for the convenience of online shopping.
However, through the Amazon Prime Effect, online shoppers now view shipping costs as a ‘sales hurdle.’ Many buyers often choose to buy from another seller that is offering free shipping for the same or similar product.
2. Instant Gratification For Consumers Has Become the Norm
Technology & convenience have contributed tremendously to the modern retail environment. The result - consumers who are less patient, demanding a frictionless buying process.
Customers now want one-click buying options, with a 2020 survey revealing that the product/service’s convenience influences 50+% of shoppers.
In addition, Amazon and e-commerce stores have seized on an untapped market of customers who wish to shop (and order) around the clock.
3. A Price-Fixated Consumer Has Emerged
According to Statista (2021), nearly 80% of the population shopped online. Consumers now choose to shop on the go as often as they buy from home.
They expect e-commerce companies to empower them with easy access to comparison and pricing tools. In addition to expecting a fast check-out process and free shipping, consumers are now even more price sensitive.
4. Customers Expect Comprehensive Product Information
The Amazon Effect influences a customer’s expectations regarding the way in which they receive product and service information.
Customers demand comprehensive product information, not simply product details to become better buying decision-makers. This information includes other buyers’ experiences.
Nearly three-quarters of consumers admit to reading product reviews prior to making a purchase. This data implies that online reviews are now considered a trusted, unbiased resource for many online shoppers.
Some brick-and-mortar stores have created online review sites to keep pace with this type of consumer demand created by the Amazon Effect.
5. Personalization Expectations Are On The Rise
Amazon personalizes each consumer’s online shopping experience by applying technological innovation, which is the fifth facet of the Amazon Effect.
By leveraging available data that identifies customer patterns, Amazon builds customer loyalty intrinsically from hard and fast data. Ultimately, this creates strong consumer demand for personalized online shopping experiences.
In response, customers now expect other retailers to understand their personal needs better. About ¾ of consumers expect retailers to offer recommendations based on the collected digital data of their previous spending habits.
6. The Speed Of Innovation Continues To Influence Consumers Expectations
Innovation is at the heart of the Amazon Effect. With high-tech capabilities that offer fast and free shipping convenience, Amazon has transformed consumer expectations in many surprising ways.
Amazon is no longer just a successful retail store; it is also the world’s largest online marketplace, cloud computing, live-streaming, internet company.
In addition, Amazon is working on Prime Air, a delivery service using drones to autonomously deliver packages to each customer within one-half hour of placing the order.
The service, which would be supplemental to 3PL services, is still in the works and is currently being certification-tested by the Federal Aviation Administration (FAA).
The Amazon Effect is forever shifting consumer expectations. These revised expectations have created a bit of a gap that differentiates what a customer expects and what is currently being delivered by retailers.
The key to achieving success as a retailer is to proactively close the gap that exists between consumer expectations and a retailer’s services. This data can offer insights to retailers as to how to meet these new consumer expectations and demands.
Savvy retailers and marketing experts recognize this still-to-be-met market need. Their business objective is to create processes that provide speed, personalization, and convenience that modern consumers have come to expect and demand.