Will Amazon Become Sears?

07.22.2019

We all know that Sears is dying; it’s been dying for the last 25 years. Will Amazon go the way of Sears? People tend to forget how big Sears was in its day. In the ’60s, '70s & ’80s, Sears was dominant in a way Amazon could only hope to be dominant. Those of us over 50 years old all shopped there and most likely ordered our back to school clothes from the Sears catalog. Sears, founded in Chicago in 1893 (yes, 1893!), was well-situated to continue its dominance at the start of the internet era. It had a foothold in all the things you thing of Amazon being dominant at now – a nationwide network of distribution facilities, an extensive customer list from their catalog, suppliers for virtually anything you wanted to buy. Sears should have become Amazon. Fortune recently did an article on this, https://fortune.com/longform/sears-couldve-been-amazon/

All very interesting, but more interesting is the idea of what happens to Amazon in the long-run….will it go the way of Sears? The answer, of course, is yes. There will be a lot of people that would disagree, arguing that Amazon is really a distribution platform, that they are kings of big data, understand what their customers want and will adapt. You can also acknowledge that there are a lot of really smart people at Amazon, from Jeff Bezos on down. It won’t matter. This is the nature of retail over time; creative destruction is the nature of the industry. 

Any number of things could be what starts them on the road to destruction. Amazon could get too big to manage (wouldn’t be the first time that’s happened). They could bite off more than they can chew trying to be all things to all people (think health care or financial services). Third-party sellers could revolt. Their brilliant people could leave. The best guess might be best summed up by our former IT team leader Phil Jackson, “Amazon is really good at logistics. Imagine what could happen if any company could get things to your door just as quickly. Uber is doing that (Uber has its own problems) but the carts that self-drive could. People don't shop Amazon for price. They do it for Convenience. Someone will find a way to make things more convenient. “ 

It’s the same thing that ultimately gets all businesses; someone does it better, someone designs a better technology. And it won’t happen overnight, but it also won’t take the 125 years the way it did with Sears. Change is the nature of our society today, particularly as it relates to technology and retail. And the rate of change is only increasing. I give them 20 years to be at the height of their powers. Then, perhaps, we’ll all have a world-class 3D printer at home, and we’ll just download and print out everything we buy from Amazon now. RIP.