The Prime Effect: Disrupting Power of 2-Day Shipping

Discuss the impact of Amazon's two-day delivery service on the entire retail industry and consumer behavior and expectations.

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Amazon's two-day delivery system has caused the entire retail industry to appreciate and plan for delivery services to their customers. The Prime program that allows customers to have their shopped goods shipped at no fee has been adopted by hundreds of other retailers in the industry (Christopher, 2018). Being a leading retailer, Amazon reaps the benefits of economies of scale even in their shipping. The more goods they ship, the less the shipping product per product. Due to this reason, companies such as Target and Amazon have invested heavily in free shipping to their customers to maintain their loyalty. The result is increased costs of doing business in the said organizations. However, the greater goal is achieving consumer loyalty and maintaining a competitive advantage against Amazon. Small retailers in the same industry have borne the brunt of the move. Due to their significantly lower sales revenue than Amazon, offering free shipping would cause tremendous effects to the revenue flow and may render the businesses unprofitable.

The two-day shipping strategy has positively affected consumer behavior. Consumers can more readily plan their shopping and expect timely deliveries industry (Christopher, 2018). The shipping program allows consumers to shop more without worrying about the associated shipping fees. Customer retention rate is bound to grow due to the strategy, and newer markets will be explored. However, at times the delivery strategy fails to deliver the said products within two days, the result is an upset customer base whose shopping plans were altered. However, due to the long history of shipping at Amazon, the company has put in place measures t ensure that shipping delays are reduced to an absolute minimum. Consumers across the retail industry consider shipping as an additional advantage to online shopping. They are bound to develop a negative attitude towards retail companies that have no provision for free shipping.

Evaluate strategies pursued by leading retailers such as Walmart and Target as well as shipping companies like UPS and FedEx to gain competitive advantage(s) vis-a-vis Amazon. Which company do you think has the best chance/potential to unseat Amazon from its leading position? Why?

Leading retailers such as Walmart and Target have focused more on developing customer services to enable them to compete favorably with Amazon. For instance, Walmart set aside $1 billion to improve their service delivery and wages for their employees (Bolton & Shankar, 2018). The move created a positive public response and worked in line with their corporate social responsibility. They increased the minimum wage for their staff and enhanced the efficiency of services rendered at their outlets. All retailers improved their shipping policies with companies such as FedEx and UPS to ensure timely delivery of products to their shelves and to customers who order online and request for home shipping.

Shipping companies have in turn strengthened their brand and market presence by diversifying their business models to accommodate more business. They have adopted integrated management approaches to monitoring their services and the arms of governance that form their business strategy (Bolton & Shankar, 2018). UPS have enhanced its services by using a single network for pickup and delivery. Using the same system allows the company to utilize its resources to a maximum and save on costs usable in improving other sectors. I think Walmart can unseat Amazon. Walmart is the leading brand in consumer goods and foodstuffs. They have the most outlets and command a considerably large customer base. I think Walmart can become a leader if it strengthens its online presence and liaises with smaller retailers to provide virtually all goods in one online interface.

From Chapter 4 of the text - Building an E-Commerce Presence: Websites, Mobile Sites, and Apps. In your own words, explain the process that should be followed in building an e-commerce presence and why?

Building an E-Commerce presence has proved to a critical part of the success in the retail industry. The contemporary world is in the digital age, and online services are a key part of human living. a company must garner consumer loyalty and trust in the goods that it offers to build an E-Commerce presence, (Laudon & Traver, 2013). The trust is vital because customers will only shop online if assured that they would get the same products that they order without compromise on quality. Consumer loyalty is crucial because E-Commerce activities usually require additional infrastructure. To transform customers from physical shopping into internet-based shopping requires a degree of loyalty to a company's brands.

After the above strategies, an organization should set aside a department to plan its E-based activities and liaise with developers of websites, applications, and mobile sites. Experts of developing convenient apps and user-friendly websites should be hired to assure the usability of the E-Commerce policies implemented. The presence should be monitored keenly by a dedicated department to prevent downtimes and guarantee the security of both the users and the organization. Continuous improvements and vast advertising would increase user traffic in E-Commerce and become a growth factor in a company.

References

Bolton, R. N., & Shankar, V. (2018). 5. Emerging retailer pricing trends and practices. Handbook of Research on Retailing, 104.

Christopher M. (2018). The Prime Effect: How Amazon's Two-Day Shipping Is Disrupting Retail. The Wall Street Journal Sep 20, 2018

Laudon, K. C., & Traver, C. G. (2013). E-commerce. Pearson.