Writer: Miriam Klaczynska | Editor: Emily Vu
Infamous Amazon founder and former CEO, Jeffrey Bezos, has long dabbled in prophecy. In a 2020 final letter to Amazon’s shareholders, he wrote his concerns over the future of the e-commerce giant, emphasizing the need to “not become typical” and innovate to maintain relevance in a changing world. He especially spoke about shielding the company from potential demise, including a quote from Richard Dawkins: “Staving off death is a thing that you have to work at. Left to itself – and that is what it is when it dies – the body tends to revert to a state of equilibrium with its environment.”
At a 2018 team meeting in Seattle, an Amazon employee asked Bezos what he foresaw in the company’s future, referencing bankruptcies of other retail giants. The then-CEO replied “I predict one day Amazon will fail. Amazon will go bankrupt,” which was recorded by CNBC.
Currently, Amazon is the largest online retailer — by far. In 2023, the company enjoyed a 37.6 percent share of the e-commerce market, followed by Walmart with a 6.4 percent share. Since its founding on July 5, 1994, Amazon’s revenue has well-surpassed $604 billion. Despite a slight dip in Amazon’s share prices in early August, the retail platform appears to still be on the rise, and there seems to be considerable time left before Bezos’ fears materialize.
However, the concerns shared in Bezos’ modern-day Farewell Address and at the 2018 meeting have merit. Though currently at the top of the world, tides have a way of changing, and the introduction of new players in the e-commerce world poses risks to Amazon’s dominance. Founded in July 2022, Temu, the online marketplace of Chinese company PDD Holdings, has taken the world by storm. Offering goods at concerningly discounted rates, the platform has found a steady groove, with its customer retention rate even overtaking Walmart’s as an online mass retailer. Amazon first gained popularity due to its competitive pricing model and the convenience of online shopping. Previously, online shopping came with an automatic association with exorbitant delivery, service, or seller fees. Amazon’s Prime Subscription, however, offers overnight delivery and surprisingly competitive pricing, which, for the most part, is free of exorbitant fees. That model now, however, has been almost completely overshadowed by Temu.
Though not quite matching the speed of Prime, Temu’s shipping options are quite competitive, especially when compared to AliExpress, an online retail service that offers similar pricing. The company has strategically welcomed explosive growth since its founding, largely attributed to Temu’s loud advertising strategy. PDD Holdings budgeted nearly $2 billion for online advertising on Meta and Google in 2023 and purchased a 30-second, $7 million Superbowl ad. As Temu offers more competitive pricing, similar quality, and boasts shipping times that are getting better and more reliable, customers initially drawn to Amazon for similar reasons may be ready to transition over to a new platform. Additionally, in 2022, Amazon raised the cost of their annual Prime membership from $119 to $139, which discourages customers motivated by affordability.
The introduction of social media shopping platforms, such as TikTok Shop, has further pushed Amazon toward Bezos’ prophesied downfall. TikTok Shop, an e-commerce platform users can access directly through the app, has especially gained traction. In February 2024, 68.1 Increasingly powerful competitors, with company pitches and clever strategies that rival the e-commerce powerhouse, we are beginning to bear witness to the first cracks in the company’s dominance. TikTok Shop as well as retail giant Shein have even tapped into Amazon’s talent pool, attempting to recruit their employees.
As e-commerce continues to establish itself as the new market standard, Amazon has to adapt to changing consumer profiles and tastes in order to maintain relevance. Temu and TikTok Shop, two examples of key competitors, have found particular success through social media, and have begun to push Amazon out of the sphere. Though still setting the curve, Amazon finds itself in a precarious position, holding up the world on shaky footing.
Featured image by Amazon
