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Amazon and a Repeating History of Retail

by on August 14, 2018 4:00 AM

 

The other day I was chatting with a group of friends about where and how we buy certain items. My main concern was a fruit bar – specifically one flavor of a certain fruit bar brand – that is sometimes difficult to find locally. Goodness knows when you are trying to maintain a no-grain, no-starch, no-sugar diet and you find something that’s both tasty and fits the diet, you want to have a good supply around at all times.

I’ve bought the bars locally, and try to support local retailers whenever I can, but the conversation turned to, of course, Amazon. No, not the jungle or river in South America, the internet company.

Although, isn’t it interesting how companies can co-opt the names of geographic locations around the world for their own corporate interests? And in some cases legally trademark those names because they’ve so co-opted them that the geographic location is no longer the primary thing you think of when you hear it? I’m not sure how I’d feel about that if I was a jungle. Or a river.

In any case, the discussion veered off onto the topic of how omnipresent Amazon has become in our society. One of the people chimed in “It’s 2018, I can get almost anything delivered by Amazon!”

Imagine that. We’ve reached a time in history where you can get almost anything you want delivered to your home by one company. How convenient.

Imagine a small startup company begins by selling a single niche product to people who don’t want to or can’t get to a traditional physical store. Instead these customers submit their orders to the company and the product is delivered right to their home. Or their business. Or wherever else they want it. What freedom! Especially for those of us in rural areas such as Happy Valley. Which, because of changes in delivery systems, means even the most remote customers can be delivered to.

Then because the company does such a good job marketing the availability of its niche product and the associated delivery, eventually it begins to sell other goods because people want them, need them, and are willing to buy them from the company. And then more goods. Big goods, small goods, sports goods, leisure goods, all kinds of goods.

Sales continue to grow and eventually the company makes the move to become a true corporate titan – it goes public, sells stock and gets listed on the stock exchange. It builds millions of square feet of warehouse space from which to ship the hundred thousand products customers order from it every day.

Then, after more than a quarter-century of operating solely as a company that delivers everything it sells, the company opens a brick-and-mortar store.

So it was that just more than a year ago today Amazon opened its pickup and return location in downtown State College. Granted, this was not Amazon’s first-ever brick-and-mortar operation – at the time it was the 22nd in their company. And just a few weeks later they spent $13.7 billion to buy Whole Foods and instantly had more than 450 stores in their corporate domain.

Which is wonderful for those who like all things Amazon.

It’s fascinating though, that the company I was describing above isn’t Amazon. It’s Sears. And the time in history where you can get almost anything you want delivered to your home wasn’t 2018, it was 1925 when Sears, Roebuck and Co. opened their first retail location inside their Chicago mail-order plant.

Which is a bit ironic since here in Happy Valley, within six months of the Amazon pickup and return location opening, our local Sears store closed for good.

I’m not suggesting those two events were in any way related -- Walmart opening a store in town back in 1990 probably had as much to do with the latter – but you have to admit the coincidence is at least a good lesson in history. When a company that became a corporate giant by delivering all manner of goods to customers all over the country, and was for decades the largest retailer in America, shuts down their only local store not long after the arrival of a company that seems to have followed their blueprint for success a century later, well, it may not be related but it’s a good 400-level business management course discussion.  

And it has been discussed in the media and academia. The similarities between the two are interesting to compare. That means we can probably look forward to buying our insurance from Amazon, paying for all our purchases with our Amazon credit card instead of a Visa, Mastercard, American Express or Discover (the last one is the card Sears launched), installing Amazon appliances in our house, and lastly, living in an Amazon house that was ordered and delivered by Amazon along with the instructions for building it (You think you have problems with instructions for furniture assembly? Imagine the instructions for assembling an entire house).

But as Sears did before it, attracting the animosity of local businesses, merchants and salespeople who were replaced by its presence, and as Walmart has found in the last four decades, Amazon will run into the same societal concerns about its size. I rarely buy anything from Amazon and prefer to support local merchants whenever I can, as do others I know. Most do not though. And if history teaches us anything it’s that we can expect it to keep growing for a number of years.

Which means the really important question is, in the year 2090, after decades of market dominance, what small company will take over the American marketplace from the old, stale, stodgy and stagnant Amazon?

 



John Hook is the president of The Hook Group, a local management consulting firm, and active in several nonprofit organizations. Previously John spent 25 years in executive, management and marketing positions with regional and national firms. John lives in Ferguson Township with his wife Jackie and their two children.
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