Why it is only a matter of time before the funeral

In 1994, Amazon started as a way to sell books online. Twenty-three years later, Amazon is eating retail.

This might be an unpopular opinion (especially during the holiday season) when everyone is rushing to the stores to buy presents but I urge you to take a look at the larger picture.

E-commerce as a percentage of total retail sales

Retail is struggling. If the acquisition of Jet by Walmart is any indication, the major players will be acquiring e-commerce platforms left and right before they become obsolete. Players like Dollar Shave Club can gain significant market share from entrenched businesses like Gillette because their online platforms are much more nimble and demand based. There’s no need for out-sized real estate investments or additional overhead.

In addition, with the shift to automation and robotics, soon the cost of delivering a package will drop precipitously. Amazon is already investing in technology to solve that “last mile” problem, where packages go from a warehouse into a consumer’s hands.

With ideas like Amazon Go and automated drone delivery, pretty soon on average it won’t be cost-effective to open a retail location, most companies will just use Amazon for all their shipping, handling and retail needs.

Take a look at this video for a good breakdown on Amazon’s approach to rolling out new technology:

Sure there’s a long tail before retail dies, but I’d rather invest in skills and infrastructure for e-commerce now rather than go the way of the dinosaur.

For that reason Spira is focusing on a direct-to-consumer business model. This also enables us to leverage digital marketing tools and get in direct contact with customers to move more quickly to solve their needs.