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The Prime of Amazon's Life


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2003463The Weekly Standard:

Irwin M. Stelzer

Jul 23, 2016

 

July 12 just might have been the day on which the retail sector as we have known it here in America came to its end. If not its end, surely the beginning of its end. Amazon has an estimated 54 million Prime customers in the U.S. who pay $99 per year, and millions more around the world who pay about the same "free delivery." Ignore pedants who ask how something for which you pay can be "free". Customers love it. They have items shipped to them in one day, and in one hour in cities from New York to London. On July 12, Amazon's second annual "Prime Day", these customers could order kitchen, dining and bar items at 86 percent off usual prices; treat themselves to a 55-inch television set for $650, a $350 discount; buy watches at discounts of up to 60 percent, and snap up new deals that were offered every ten minutes. The result was a flood of orders, with Prime Day sales topping those on last year's first Prime Day by 50 percent in the US and 60 percent worldwide. And beating Black Friday, the day after Thanksgiving, for many years the biggest shopping day of the year.

 

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None of this will come as a surprise to students of capitalism, especially those who remember that the late, Joseph Schumpeter wrote that capitalism continually innovates in a process he called a "perennial gale of creative destruction". In less elevated jargon, competition produces winners and losers. In the case of the changes in the retail sector, consumers are the clear winners, employees and investors in incumbent firms are the losers.

 

Unless they adapt. Some, like Nordstrom, are setting up cut-price chains to attract price-conscious customers and acquiring firms such as DS Co., a cloud-based firm that enables Nordstrom to ship on-line orders directly from manufacturers to customers, bypassing its bricks-and-mortar stores. Others, like Walmart, are using stores to compete with Amazon's delivery system—90 percent of Americans live within fifteen minutes of a Walmart store. And Amazon isn't standing still. More good news for consumers who, thanks to Google's search engine, tips on social media, and the rapid responses of innovative retailers, now have more choice than ever.

 

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X-Posted Hinge of History 3


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Amazons delivery continues to amaze us. Even if it is a small relatively inexpensive item - they will deliver it on a Sunday - freeohmy.png

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