Amazon: How U.S. Retailers Got In Trouble – Economy

If a business comes under constant criticism anyway, it’s easy to miss out on something really important. This is the case now with Amazon. In all kinds of forums, there is always an avid debate as to whether the American dealer is not really responsible for littering the oceans with plastic (he is not); It’s easy to miss a powerful new message: for the first time the group has a real problem – globally, but also in Germany, the group’s second largest market.

Amazon has said it itself: Online retail growth will slow down. The peak of online shopping has been reached and the giant has reached its growth limits. It is anything but commonplace. This means that Amazon is just another business. One who has to face ups and downs and now has to open up new areas of growth beyond e-commerce. The share price immediately collapsed.

The news of the peak in online shopping also calls into question a number of forecasts of an increasingly gigantic volume of parcels. The news has what it takes to undo the plans of many companies that have banked on further linear growth in online retail.

The reasons are deeper than it seems at first glance. They don’t just have to do with the fact that it’s summer, Corona has taken a break and people again prefer to shop in the city center than on the internet. On the contrary, there is a lot of fire at Amazon right now. The retailer, which otherwise has a strong grip on the supply chain, is currently struggling with overcrowded warehouses. They are more than busy, not because Amazon has sold too little, but because the company has ordered too many products.

Sometimes the algorithm is just too stupid to figure out the simplest things

Usually an algorithm takes care of the flow of goods at Amazon. Warehouses should never be empty. This time, however, the machine, which has handled itself wonderfully well for years, failed. As always, she extrapolated Corona’s first year with its huge sales growth and ignored the fact that the pandemic has caused a unique and unusual rash in online retail.

Now Amazon has the problem of not having the right items available in the designated warehouses. Slow moving goods block space for coveted items. The technician screwed it up. This is another important discovery that goes beyond Amazon and can be inferred from the giant’s weakness: never rely solely on technology. Sometimes the algorithm is just too stupid to figure out the simplest things.

The group is now trying to get brand manufacturers to sell their items themselves. However, they sometimes lack the logistics infrastructure and know-how for this. And of course, many manufacturers see no reason to sell their products from full warehouses, just to make room for the retail giant – certainly not at dumped prices.

Finally, there is the problem of China. Transport costs have multiplied. Manufacturers therefore have less of a reason to sell their products.

All of this has far-reaching consequences: the last rebate battle called Prime Day in June was not a success. If Amazon were to stage another rebate battle before Christmas – and presumably the company absolutely wants it given the full warehouse – it might have real difficulty this time around implementing it to consumer satisfaction. This is a serious problem, and one which affects the basic competence of the group.

If only that was it! But Amazon is also grappling with political pressure from the EU over possible data protection gaps and reluctance to pay adequate taxes, as well as the product liability obligation already. applicable, especially for goods from China. Not to mention the antitrust problem in the US, the breaking of keywords. The Amazon machine is slowing down enormously.

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