Back in 1990, other stores still had a chance against Walmart. As recalled in Charles Fishman’s The Wal-Mart Effect, a great history of the rise of the retail giant, it was that year when Walmart surpassed Kmart in sales. It wasn’t until 1992 that Walmart sold more than Sears. But by 2011, Walmart had higher sales worldwide than the combined total sales of the next six biggest retailers: Kroger, Target, Walgreens, Costco, Home Depot and CVS.
That year, Amazon ranked 15th on the list of overall largest retailers. Its sales for the past year, however, are likely to bump it to at least number seven in the rankings, ahead of CVS, and just a few billion behind Target. Amazon is bigger than Lowe’s, Best Buy, Safeway, Macy’s and Rite Aid, not to mention Kmart and Sears (now both part of the same company). Some Wall Street analysts believe Amazon’s sales could yet triple by 2016, which would make Walmart and Amazon the only two true rivals in retail.
The single best precedent for Amazon’s rise is Walmart’s own, and whether one day Amazon could top Walmart will be interesting to see. In the meantime, if its own experience offers any lesson, Amazon cannot rest. Though the company continues to cement its dominance as the internet’s default destination for buying stuff, a small army of little guys are seeking to peel off chunks of Amazon’s business, much as Amazon started out by taking aim at bookselling. And if Amazon was able to unseat so many iconic stores in just 15 years, then Jeff Bezos knows that the same could happen to him.
Bezos also knows that, unlike him, the startups biting Amazon’s ankles have an ally that sports a huge pair of shoulders on which to stand. Oh, and unlike Amazon, this giant – Google – makes huge profits.
Google’s increasingly aggressive effort to steal online retail from Amazon is turning into one of the most intriguing business battles of the year, and not just because of the sight of two behemoths pounding on each other. Google’s unique position in the internet’s infrastructure means that it can count on more than its own resources to take on Amazon. The search giant also serves as the platform from which everyone else trying to beat Amazon can use to fire their salvos. It’s a pretty high perch from which to take aim.
San Francisco-based Inkling is specifically shooting for Amazon’s book business. Founder and CEO Matt MacInnis observes that the Kindle isn’t especially well suited to the oversized, graphics-intensive layouts of many textbooks. Inkling seeks to overcome this limitation of traditional e-book formats through a layout engine specifically designed to re-envision textbooks for tablets, smartphones and the web.
But elegant design doesn’t take you far if most online shoppers are going straight to Amazon to buy books. That’s why Inkling has developed an information architecture based on the concept of “cards.” Each of the books is divided into chapters, and each chapter is divided into cards. A card contains what amounts to one quantum of useful information. Cards themselves are viewable for free on a limited basis; readers can buy Inkling’s books by the chapter. Each card also has its own URL, which means Inkling’s cards are what Google indexes.
Inkling is banking on the quality of the information in its cards to rise to the top of Google search results (and generate attention on social media) to get Inkling’s books noticed. People aren’t going to discover content through Inkling, MacInnis says. They’re going to discover Inkling through content.
With Google’s search results as a storefront, MacInnis believes his company can unlock the value of knowledge contained in books without arbitrarily tying buyers of digital content to an object in the physical world. “People are looking for knowledge,” he says. “They’re not looking for books. They never were.”
Challengers to Amazon in the broader retail realm are staking their value to an analogous belief. People want their stuff. They want it fast, for the lowest price possible and from someone they trust. And that someone doesn’t have to be Amazon.
Bigcommerce CEO Eddie Machaalani says more than 30,000 small and medium-sized business owners are running their online stores via his company’s shopping platform, which has processed more than $1.2 billion in transactions since launching in 2009. Machaalani describes Amazon as a “frenemy” to third-party sellers, who have become an increasingly important part of its strategy.
“Amazon can show they’re a friend to small and medium-sized businesses by offering them a platform that allows them to sell,” he says. “What they don’t do is allow you to control your own brand.”
Machaalani argues that businesses that rely on Amazon as the platform through which they sell their stuff lose their individual identity. No matter who actually provided the inventory, most customers will just think of what they bought as coming from Amazon. His company’s success hinges on businesses building their own strong, unique brand identity to attract shoppers to their own stores. And one of the key places that strong brand becomes visible, he says, is Google.
Big retailers seeking to play that same Google game don’t need online stores, which they already have. They need better online stores that get noticed. Silicon Valley startup Bloomreach does search-engine optimization on what CEO Raj De Datta describes as a big data scale. His company’s analytics engine crawls billions of webpages and parses a similar number of search queries and clicks to learn what webpages draw shoppers seeking particular products — and how Bloomreach’s clients can become those pages. By that measure, success means shoppers clicking through from Google to Bloomreach-powered sites like Williams-Sonoma and Nieman Marcus instead of Amazon, of course assuming they didn’t start out on Amazon in the first place.
“In order to aid that Google experience,” Datta says, “it’s really important that the websites behind Google provide a compelling experience.”
Getting shoppers to those individual retailer sites appears to have helped another Amazon rival. For $79 per year, ShopRunner offers unlimited two-day shipping from dozens of retailers you’d typically find at the mall. It’s a kind of Amazon Prime-in-a-box for stores like Toys”R”Us, PetSmart and Radio Shack. ShopRunner recently said that orders across its network more than doubled last year from the year before.
But the company is wary of giving Google too much credit. Since converting its product search results to all-paid listings last fall, Google appears to be driving a lot more traffic to its advertisers’ sites.
But Google’s bid to become the anti-Amazon destination for online shoppers cuts both ways, says Fiona Dias, ShopRunner’s chief strategy officer.
“Google will likely evolve from a friend of retailers to a foe,” she says. “Google Shopping just needs a ‘buy now’ button to become a retailer rival.”
Amazon May Seem Unstoppable, But Google Is Powering the Counterattack
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Amazon May Seem Unstoppable, But Google Is Powering the Counterattack
