What Does the Amazon Effect Mean For Small Businesses?

What Does the Amazon Effect Mean For Small Businesses?

The Amazon Effect refers to the impact created by the eCommerce/digital marketplace on traditional brick-and-mortar businesses, which has resulted in the changing in shopping patterns and customer expectations. As online shopping has grown in popularity, it has hurt many small, local businesses that have been forced to compete with the online marketplace.

Because Amazon is the world’s largest eCommerce website, this disruption is often called the Amazon Effect. The convenience and wide selection available with online shopping.

How the Amazon Effect Has Changed Shipping

As the reign of online shopping continues, the gains are coming at the expense of brick-and-mortar stores. Shoppers are increasingly heading for their screens instead of stores; in 2020, approximately 2.05 billion people bought goods online.

Amazon’s adoption of “free shipping” in the 2000s with the Super Saver Shipping program had a resounding impact. In realizing consumer psychology favored anything with a label of free, they ran promotions and programs that greatly increased their sales, likely not realizing the effects this would have across other industries like shipping and distribution.

The truth is, free shipping is not really free. Most often, the consumer is paying for shipping whether it’s labeled free or not. Many companies execute this as a shipping profit strategy,  labeling shipping “free” but inflating the price of the product you’re buying. Not only does the price hike cover shipping costs, it adds a little extra to make a profit. Alternatively, they may claim free shipping for you but then charge their vendors or manufacturers more to compensate for the difference. 

At Front Desk Supply, we choose not to offer free shipping because it’s the most affordable option for our valued customers. We believe our customers are best served by this choice; we don’t inflate our prices to cover a general shipping price estimate, which many other companies overestimate and use as a profit center.  We are in the hotel supply business, not the shipping business and our pricing is reflective of that.

Unsure about how to help your hotel continue functioning successfully during these changing times? Download our Free Hotel Checklist. This list provides your hotel with information on how to keep your doors open safely and successfully.