Amazon's Biggest Threat in E-Commerce

Amazon (NASDAQ:AMZN), the e-commerce king, has been around for over two decades. It's been able create a simple shopping experience with an almost unlimited number of products and it's been able do so for more than 20 years. This incredible growth stock has outperformed any brick-and-mortar retailer or online.With the rise of Square (NYSE.SQ) and Etsy (NASDAQ.ETSY), the shopping landscape has changed dramatically in recent years. The biggest threat to Amazon's long-term success is Alphabet (NASDAQ;GOOG) (NASDAQ.GOOGL), a subsidiary of Google that specializes in shopping. Here are the reasons why Google could be Amazon's biggest threat.Google takes shopping seriouslyGoogle has had a shopping tab on its search bar for some time. It sometimes displays shopping results above links but shopping has not been a key part of the company's business. This may change as Google, as a company, wants to answer users' questions and not just provide blue links that lead people to its website. This is why snippets appear after many searches. The company is also developing tools to help people answer their questions within Google.Google is a popular choice for first shopping inquiries so it has incentive to provide customers with exactly what they need. It's now doing this on its website through recent partnerships with Shopify, Square and Square. Shopify and Square sellers can use the Google Merchant Center with their Shopify backend to promote products on Google. Google is the head of the shopping funnel and directs users to the most relevant products. This includes those that are specific to niche buyers or sellers.This change is in contrast to the way Google has treated shopping searches for years. Google was once a channel to Amazon, with Amazon ads appearing on nearly every search. This helped Amazon to become the preferred location for shoppers, particularly with Prime shipping. It effectively eliminated Google from the equation when shoppers began using Amazon as their first search engine.The combination of Amazon's continuing squeeze on third-party sellers and the growth of niche shops has created a new selling environment. Buyers are looking for niche products and different products online, even if they aren't in the Amazon system.Google rips off Amazon's integrationAmazon's 20-year history was all about integrating shopping experiences in the name convenience. Amazon began by owning the website, warehouse and payment processing. Now it has planes, trucks and computers servers all over the globe. It grew and incorporated third-party sellers, which allowed them to sell their products through Amazon. This was a huge win for sellers who couldn't reach customers in other ways.In recent years, Amazon has begun to squeeze third-party sellers. While there are fees for shipping products and other services to Amazon, Amazon is looking for ways to charge more for advertising on the Amazon platform to reach customers. Sponsored ads will be the most common way customers search Amazon's app or website. These ads are paid for by retailers. In an interview with Ben Thompson, Brad Stone from Amazon Unbound called this "pay to play" against Amazon's brands. Amazon's increased revenue from advertising has made it more profitable. However, this leaves third-party sellers with no choice but to either eat the costs, increase prices to keep margins or find another platform.Shopify, Square, and Google are all trying to get sellers out of Amazon's system. This network of companies allows produce sellers and retailers to sell directly to customers. They can collect information such as names and email addresses and build a long-term relationship with qualified customers.Amazon created an integrated ecosystem that was platform, search tool and payment platform. It also served as a warehouse, shipper, shipper, and other services for third-party sellers. Google is tearing that integration apart as part of its strategy to disrupt Amazon. My opinion is that the proliferation of simplified checkout options by Apple, Shopify, Square and Paypal (NASDAQ :PYPL) is the key to this disruption. They save your shipping address, credit card information, and allow you to checkout easily. However, the retailer can still collect valuable customer data. This growing list of services is a serious threat to Amazon's retail business.Amazon's greatest advantageAmazon has Prime and its inherent momentum on the market as its main assets. Prime and all its ancillary benefits lock consumers in the Amazon ecosystem. Customers pay upfront for shipping "free", so they might as well shop on Amazon.Momentum is equally important as shoppers tend to stick with their preferred shopping method for long periods of time. This happens even when there are better, cheaper, or faster options. Amazon could just ride the momentum of growth for the next ten years, but it seems clear that Google and its partners will take market share.Future retailAmazon was a major player in e-commerce. However, online shopping is changing once more. It's now easier than ever to create an online store, check out quickly, securely and market to a specific audience. This transformation from integrated ecommerce to an increasingly diverse model has been possible thanks to services like Shopify, Apple and Square.Google's role in facilitating discovery for customers could be the key to Amazon's disruption. Square and Shopify aren't designed to be discovery tools. Companies need to find ways for qualified customers to reach them. Google is the best company to help you find that match. If the strategy succeeds and Google is the first place people shop for shopping, then it may be able to challenge Amazon's long-term dominance in e-commerce.