Amazon in the Mix

In the early days of slow dial-up connections, Amazon and E-bay were pioneers of the online shopping evolution.  When Netscape introduced the point-and-click web browser in 1994, it enabled these companies to take on a whole new meaning in shopping convenience. Amazon was the first company to introduce the one-click ordering that has now become the industry standard. In fact, it had such a profound impact on the way consumers shopped for even their everyday goods that stores like Walmart and Target were forced to introduce online stores of their own.

Other sites have attempted to mimic the online giant, but Amazon’s status as the pioneer of online retail has enabled the company to remain dominant in the industry. However, that status is slowly fading. Despite boasting a market cap of $115 Billion and 22% increase in first quarter 2013 revenue, the stock has failed to satisfy investors who have become weary of major competitors improving the online shopping experience for consumers. Most valuations indicate that investors should avoid purchasing the stock (at least for now).

Still, don’t be so quick to take AMZN off your watch list. Historically, Amazon has had a way of bouncing back to satisfy shareholders. They certainly were evolutionary in the online shopping experience and in my view, the visionaries who created the online shopping giant still have a few tricks up their sleeves.

Rapid Growth of E-Commerce

Ten years ago, shopping online was considered a novelty. Today, the rate of e-commerce is growing three times as quickly as the overall market rates. Shoppers are increasingly turning to the internet for even their everyday purchases because it is convenient, cheaper and can be done from the comfort of your own home. Holiday shopping in particular has turned to online purchases as consumers look for ways to avoid the rush of crowded malls and shopping centers.

But what is the impact on big box stores and traditional retailers? Companies like Best Buy have suffered the consequences of the online shopping revolution. Customers will frequent these stores to "test" the product and then use the internet to find the cheapest price on the market. The online stores that are selling at such low prices do not have to deal with the overhead of a big box retailer and thus, they have an unfair advantage.

Still, many consumers prefer to go into a retail store and actually purchase a product. The ability to physically touch and feel what they are buying prior to making a purchase is an invaluable experience. Can you imagine buying an expensive leather jacket or pair of jeans without ever knowing whether it even fits correctly? Certainly, there are pros and cons to the online shopping evolution and retailers will be forced to adapt to the consequences. On balance, I'd say it provides a beneficial outcome to most consumers.