Twenty-five years ago, Jeff Bezos had an idea to sell books online. Today, he has changed the world.
Every entrepreneur should wonder if their business could be taken over by Amazon, as The Everything Store effects change across many industries. Amazon already has around a 40 percent market share of all online sales, even if it says it only makes 4 percent of all U.S. retail sales.
According to the online commerce research firm eMarketer, Amazon has:
■ 67 percent of the online books, music and video market
■ 46 percent of the online computer and electronics market
■ 45 percent of the online toy market
■ 34 percent of online furniture sales
And with more than $25 billion in revenue just from Amazon Web Services last year, Amazon is the world’s largest cloud services provider.
It also owns more than most people realize. A recent BuzzFeed article, appropriately titled “These Are All the Businesses You Never Knew Were Owned by Amazon,” found hundreds of businesses, brands and subsidiaries that Amazon owns that don’t use the Amazon name.
Amazon’s 2017 purchase of Whole Foods is not only a move to get into the grocery business but also allows it to see consumers’ buying habits in over 400 locations. These locations are set up as distribution centers for Amazon Prime, which allows the company to get its goods to people in a timely manner. The speed of this could eventually increase as Amazon is looking into self-flying delivery drones.
Amazon is in a position to take over any industry that sells retail goods that could be purchased online. Amazon Prime is so user friendly that it doesn’t make much sense for a person to go into a store anymore.
I think the retail industry is on the brink of a major overhaul. The malls that have the best chance to make it will be ones that create an experience when you shop, so it’s more entertainment than shopping. Retail centers with services that you can’t buy online will also continue to be successful.
What it means for housing
I don’t believe the housing industry will be affected by Amazon directly — other than the ease of using services such as Alexa, which is now being installed directly into routers through a company acquired by Amazon called Eero. This again allows Amazon to see the consumer’s buying behavior. Amazon also owns Ring, a home security service.
I feel that even if Amazon entered into our industry, we would be able to compete. One of the most important aspects of our customer experience is creating speed and flexibility.
But with the pace of today’s society, you and your employees must continue to innovate to stay relevant in the marketplace and make sure you won’t become obsolete.
Brian Schottenstein is the president of Schottenstein Real Estate Group, one of the largest developer/builders in the Midwest, focusing on residential and mixed-use developments throughout the Midwest and Southeast. It also is the only three-time Developer of the Year named by the Building Industry Association.