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strategy2.docx - Is Amazon Riding the Wheel of Retailing...

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Is Amazon “Riding” the Wheel of Retailing? Controversy concerning the “wheel of retailing” concept continues. Whether or not it applies to Amazon is a subject of some debate. Whether or not Amazon has stopped the wheel, will be a future victim of it, or is riding it, are questions posed by respondents to this month’s column. The wheel of retailing is a concept that has been used to describe phenomena in which retailers use low-price strategies to build market share, to the point where the goal shifts from attracting new customers to building margins and profits through higher prices. This creates room for retailers with new low-price business models to create a further turn of the wheel. Most of this month’s respondents at least implicitly appeared to accept the validity of the concept. However, there was healthy skepticism. For example, Scott Hessell commented, “I think the notion of entering a market as a low price player to gain market share and then progressing through this wheel of retailing is in the past. Smaller retailers are gaining influence by playing in very special niches where they don’t have to win with low prices …” Nick C said: “Perhaps it is a function of expanding consumer power and flexibility in fulfillment that has changed the so called cycle, and new games and new rules have overtaken this model? Not sure we can describe this (as a) … new wheel of retailing; rather the new wheels of ecosystems.” Edwin Lambregts added, “In Europe the retail industry is more and more moving towards omnichannel and blurring concepts… To conclude the notion of one ‘wheel’ could be a thing of the past, because there are many wheels turning at the same time.” The general consensus among those commenting on the question was that Amazon, even with its newly-acquired might, will not be able to stop the wheel. “Waves of technological change bring
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