Amazon became the gorilla in Internet retailing by operating at a loss for many years while it was getting started. They offered discount prices, gradually made an easy to use web site, added user reviews, worked hard at getting the orders correctly and timely to customers, and offered free shipping.
In my mind, it was the free shipping that got them to number one, and in the process forced a lot of businesses to close. I still lament the demise of Borders, which I attribute to people going to Borders, looking through the books to find the exact book they wanted, and then going on-line to buy it cheaper from Amazon with free shipping.
Amazon solidified consumer loyalty with user reviews. People bought into the idea of letting everyone know what they thought about products. Consumers gradually gave up on the need to touch, see, and feel products in stores. Every one started to go to Amazon to find the best product by reading reviews.
Others tried to copy Amazon, but failed. Everyone still went to Amazon for reviews, and then to buy. Amazon became the place to go for product reviews. Who wanted to put their reviews on every site on the web. And by continuing to offer discount prices, and free shipping, Amazon became hugely successful. They became the gorilla of eCommerce.
It's been a couple of years now, but I've noticed a gradual change in Amazon's philosophy. It started with Amazon prime. With Amazon prime, Amazon offered free two-day shipping for, I believe, initially $50 per year. It's now $79 a year. Why do this? That was my question when I was getting free shipping, and I was willing to wait a couple extra days.
Interestingly, during this period, I did notice, that either Amazon was opening more shipping centers, or shippers were getting more efficient, because some times items I purchased would start arriving early. Instead of the projected two weeks, it would get to me in one week. No need for Amazon Prime, I was a happy camper.
Not anymore, I'm here to report that Amazon has changed. The bean counters have arrived, and profit is king. Let's start squeezing consumers every where we can.
I don't know if any one else has noticed, but free shipping is pretty much history. It's gone. To be fair to Amazon, it definitely costs more to ship, because of increasing gas prices, but I have noticed that Amazon shipping charges seem high.
I went to purchase a headset from Amazon. I did my careful review, picked out the headset I wanted. The headset was $15.98, Amazon shipping was $8.48. I wanted a picture frame, it cost $12.99, shipping was $8.25, and finally a pair of warm socks cost $19.55, shipping was $8.09. Socks you can put in a small box and ship for $5.00 at the Post Office. What was worse, if I combined all three items into one order the shipping was the total of all three items individual shipping. I understand it, but it didn't seem right to me.
That prompted me to compare prices, and what I found was, that in-addition to many online eCommerce sites, brick and mortar stores were cheaper for the same item. I found many stores, like Target and Walmart, and even Macy's lower in price. From my perspective, that meant that Amazon was raising its prices, and was no longer the place to go for discount prices. They must feel they have consumers locked in, and are now going to turn that into increased profits. Many stores have started out at discount prices, gained a market share, and then gradually tried to raise their prices, only to lose their market segment, and gradually fail.
Amazon, going forward, may start getting some of the medicine it initially dished out to others, like Borders. I'm not saying that Amazon is going to close up shop any time soon, but brick and mortar stores can now compete.
They can order in bulk directly, and therefore, their shipping charges will be lower, which means they can offer consumers a lower price and immediate access to products without shipping.
This can only be good for every one, but Amazon. Oh, I'll still go to Amazon for reviews, but now I'll add a couple of extra steps, I'll do a price comparison, and I'll find out if stores near me have the product in stock at a better price. Yes, its a little more effort, but not that much, and I get the product immediately.
In short, in my mind, Amazon has lost its luster. It's now just another eCommerce site. Admittedly, still my first place to go to research products, but once I make my choice, Amazon is no longer an automatic buy like it use to be.
What stops me from clicking that "Place your order" button, and triggers my search for a better buy is the shipping charge. No free shipping means I can get a better price somewhere else. Isn't it ironic, Amazon trained me to buy on-line by offering free shipping, now they are training me to go elsewhere by taking it away.