Amazon, a Retailer’s Best Frenemy

Neither friend nor foe

Author: Monica Melton

August 22, 2017

While some retailers see Amazon as a competitor to be battled or at least avoided, many others are embracing it as, if nothing else, a “frenemy.”

A new study from Bluecore, a software company focusing on behavioral data, and research firm NAPCO, investigated retailers’ relationship with Amazon and their responses to the online giant, in particular with regard to investment in technology.

The online survey of retail executives found that more than half felt that Amazon’s presence in their markets had grown in the past two years. Nearly 60% said they now consider Amazon at least something of a competitor.

But that hasn’t necessarily led them to invest in technology. While about one-third of the retailers said they had increased spending in response to competition from Amazon, more than half said they had not done so.

By comparison, Amazon reportedly spends more than $17 billion annually on R&D. Of course, that covers all of Amazon, including Amazon Web Services, its cloud computing operation.

The Bluecore survey found that 42.5% of retailers surveyed did not see Amazon as a competitor, whereas 28.5% called it a “direct competitor.” For the remaining 29%, it is both a partner and a competitor. Selling products via Amazon “may prove a more valuable strategy” than trying to beat it, the report suggested.

According to a June 2017 SLI Systems survey among retail professionals worldwide, 44% said they sell on Amazon. For those that do, the No. 1 reason was to increase sales.