Amazon is outpacing the growth and margins of its brick-and-mortar competitors and driving them to bankruptcy (Toys R’ Us, Claire’s and Payless to name a few), and the industry must be careful to set barriers that prevent a monopoly.
Is the answer political regulation and involvement or to take a chapter out of Amazon’s own artificial intelligence (AI)-first strategy?
I am a Prime subscriber and love the Amazon convenience as much as the next person, but I don’t want to live in a world where Amazon is the only retailer I can buy from. Consumers are getting too comfortable with the idea that Amazon has won, and will operate every aspect of their lives – from controlling their house entry to stocking their refrigerator and supplying nearly every retail item they own. They’re even getting into health insurance.
This gives Amazon control over a consumer’s complete set of data and creates a monopoly with complete control of consumer consumption habits. Is it any wonder that their private label brands are an area of significant recent investment? Amazon, as well as retail in general, need a healthy dose of competition. Regulation isn’t the answer.
Traditional retailers are not dead. But they need technology for survival. Implementing AI can offset their existing debt and transform their business into an automated decision-making machine that maximizes margins and customer loyalty. AI can predict demand forecasting to avoid stockouts, surplus inventory, spoilage, and help traditional retailers grow their valuable loyalty base.
Amazon has already mastered this process with in-house AI and that’s the real competition killer. It’s not illegal; AI has created a very lopsided competitive playing field. We see this already in China, where just a few retailers control the price of goods every step of the way. The result? Prices are higher than they should be and consumers are the real losers.
Amazon will no longer be all-powerful when retailers understand their consumers’ behavior the way the tech giant does. As these traditional retailers move from survival mode into competition mode, it will allow them to use AI to legitimately transform their business in a profitable way.
Currently, Americans spend $5 trillion in retail, with Amazon taking a $177 billion slice of that in revenue last year in the U.S. So it is hyperbolic to conclude they’ve won the retail war. Ninety percent of North America doesn’t live the Amazon-only lifestyle. Retail industry: it’s your move. Don’t let us live in a one-retailer world.
Kerry Liu is CEO and founder of Rubikloud, a leading global provider of AI solutions for the retail industry.