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Retailers with their greed and forceful tactics has played right into the hands of Amazon. We all know the type of giant retailers I am talking about as there are only a few which dominate in every country. They all have the same business models which are now literally screwed.
I have been helping out the family business over the last few weeks and things are booming. The change of business leaning more towards online happened over a year ago and has now overtaken the conventional business model that had in place for the last 20 years.
Instead of being a buyer supplying their large clients who screw them over for every last drop they have become a competitor. This is not a fair battle as their clients are finding out slowly they are now uncompetitive. The shoe is on the other foot and it is not just this company who is doing this, but many in the market place.
Consumers are buying online and in South Africa this has been a fairly new trend to happen. Shopping malls and the large retailers besides food are in serious trouble. Online has been boosted by the forced Covid lock down and many were thinking it will just go back to what it was, but oh no it hasn't.
I know of two other companies that have taken more than 35% of the market share in their fields which had belonged to retailers. The truth is the retail giants had it all their own way using bully boy tactics forcing prices down so they could make more profit. That greed has come back to bite them as they cannot compete anymore. The business model that they all used to cheat the suppliers and customers is outdated and has been torn up and thrown away.
The squeezing of prices forcing manufacturers to cut corners offering sub standard products was just plain wrong. Hiding the inflated price by adding on a rebate which is actually their profit before mark up is even added is criminal. This is standard practice and why the $1 item sells for $5 and not $2.50. This is why when you see a massive sale on an item they are still making huge profit just not double.
Online businesses have very few overheads yet they only slightly undercut the market price. The profits are huge and the retailers cannot fight back unless they change their business models which obviously they can't. Bricks and mortar plus staff and throw in the buyers and everyone else behind the scenes adds up rather quickly. If they take away the forced rebates then where is the profit so they have to hope for a miracle which won't happen.
Shopping habits have changed and with better deliveries via companies that specialise in warehouse to customer door with a same day delivery they cannot compete. The business giant retailers have been rumbled and will eventually disappear and only the food lines can save them. That hasn't changed at the same rate as everything else as we still enjoy picking and choosing what we are going to eat. That was the one luxury we were allowed during the lock down periods and why it will still be seen as a "treat" by many.
I know our household orders our meat online now saving roughly 20 percent and I am happy with that. This is the same meat I was buying from my "butcher" until I found out who was supplying him. It turns out only a small portion of his business is actually butchering and most comes in pre packed ready prepared by a wholesaling butcher. A very good business as long as your customers don't find out and you don't try and squeeze your wholesaler too much.
A fragile business if you ask me and one I would have considered 10 years ago which reminds me of the retail giants who are now working out their next moves. There are some moves available and any one smart enough could now screw Amazon's business model as it is not so different to the large retailers with their targeted profit margins.
