Of the Big Tech giants that dominate share market valuations and media headlines, Amazon is the one I have the least to do with. I’ve a subscription to Audible, Amazon’s audiobook subscription service, and regularly buy e-books through the site to read on my ageing Kindle. I love both services. But Amazon isn’t the e-commerce force in New Zealand it is elsewhere in the world after 30 years in business.
The e-tailing giant doesn’t have a presence on the ground here, which would allow it to offer its hugely popular Prime subscription for free two-day shipping. Kiwis are therefore selective in their shopping on the Australian and US Amazon stores, wary of shipping fees and long delivery times.
In the US alone, Prime membership, priced at US$139 a year, is forecast to reach a staggering 180 million subscribers this year. Free shipping is the reason that US Prime customers spend an average of US$110 a month with Amazon, compared with US$38 for non-members.
When it’s possible to buy a single packet of coffee and have it delivered to your front door the next day at no extra cost, US consumers have got into the habit of getting numerous deliveries each week.
Our retailers dread the day Amazon builds the giant distribution warehouses here that it now has in Sydney and Melbourne. No one can match the purchasing power and logistics of Amazon, which has eclipsed US heavyweights such as Walmart and Target in revenue and influence. (Read more about how NZ booksellers have responded.)
Founder Jeff Bezos set up Amazon in a Seattle garage on July 4, 1994, to make it easier to buy books online, a noble aim that morphed into a vision for Amazon to be the world’s largest seller of everything.
The company is a true disruptor, driven by Bezos’s laser focus on “adding value” to customers’ lives. E-commerce was too complex, so Amazon pioneered one-click buying. It invented the Kindle to bring books into the digital age and introduced the Alexa smart assistant more than a decade ago to make it easier to browse the web and check your calendar by talking to a little gadget, an Echo. The company is one of the most valuable in the world and Bezos, who stepped aside from the day-to-day running of the business in 2021, is one of the richest men on the planet, depending on Amazon’s share price on any given day. Amazon employed more than 1.5 million people last year, most of them in its massive distribution centres, but it is using robots to try to replace many of them.
The consumerism Amazon has encouraged with free shipping and shopping that’s just a click away has created what critics view as a sustainability nightmare. The area of its business with the greatest growth potential is Amazon Web Services (AWS), which relies on power-hungry data centres all over the world to store data and applications. Local data centres are planned for Auckland and AWS already does big business in New Zealand, reporting $385 million in 2023. As artificial intelligence services require more computer processing power, AWS has its work cut out, attempting to meet its 2019 Climate Pledge “to achieve net-zero carbon emissions by 2040″.
Many loathe Amazon for what it represents – low-cost, high-volume commerce that encourages consumption, and which boutique retailers can’t compete with. It has monopolistic aspects which have attracted anti-trust lawsuits.
But you have to take your hat off to Bezos, who has now turned his attention to his rocket company Blue Origin. He built the biggest e-commerce operation in the world and shook up retailing worldwide.
