The Amazon Effect is Real, and it’s coming after us all

Donald Trump may be the leader of this country, but Jeff Bezos is setting himself up to become the ruler of the world.

Bezos—the founder, chairman and CEO of Amazon.com—made headlines recently when it was found that Amazon is causing retail stocks to plummet not just in the U.S., but in many countries overseas as well.

Numbers compiled from the Wall Street Journal indicate that shares of international retail stores have dropped in price significantly for the first time by around four percent since the beginning of the year and now are about 13 percent lower in price than the Stoxx Europe index as a whole.

In the U.S., we have seen this trend already. In the past year alone, major retail stores across the country such as Macy’s, Gander Mountain and JCPenney have been forced to close down shops and lay off thousands of employees. As consumers continue to transition more into online shopping for clothes, furniture and even fresh food, it is safe to say retail shopping as we know it will never be the same.

As Amazon continues to grow in size and influence — the company has already seen a 19 percent increase in total net sales compared to last year — U.S. consumers will only witness a few major department stores and some innovative small businesses that survive the eventual collapse of the brick-and-mortar shopping experience.

For those corporations that rely on the success of their brick-and-mortar stores above all else, though, the mindset is no longer how to thrive in corporate America, but rather learning how to simply survive amidst the continual rise of online shopping.

I say all of this because I believe we, the U.S. consumers, have a real problem ahead of us. As revenue streams of U.S. retail companies continue to shrink, prices on the shelves of brick-and-mortar shops will continue to rise steadily. For now, the solution for many is to go on Amazon to find something cheaper, which adds fuel to the fire that is slowly burning down the nation’s outlet malls and mom-and-pop shops.

But that is not the worst part of it. The fact of the matter is, if you want to buy something online, consumer trend statistics say you likely go to Amazon.com first. In fact, a study by BloomReach found that roughly 55 percent of people begin their online shopping searches at Amazon, and no other online retailer comes close.

This trend has created a competition gap that is not only one of the largest is U.S. history, but one that is also growing. Our federal anti-trust agencies are not equipped to deal with such a large corporate player like Amazon, and, as a result, supply and demand states that prices online could very well skyrocket.

 

 

Add all this to the fact that we have stagnant wages across the board and a federal reserve that is committed to raising interest rates without evidence of high inflation, and U.S. consumers face a looming economic problem in the years to come. Though capitalism has long created economic freedom in the U.S., companies like Amazon who abuse those freedoms and showcase the shortfalls of the economic system, and show where government intervention may be necessary.

This is not to say that we as U.S. consumers should stop shopping at Amazon altogether, but it is always best to be informed. Unless Amazon gets some real competition or significant global factors rear their way in the economic arena, shoppers may be better off in the “actual” Amazon—hiding in the rainforest for the sake of their checkbooks.