There are 2 ways retailers can fight off the retail apocalypse and counter the Amazon threat

  • Retailers must offer differentiated product and a unique customer experience to fend off the threat of Amazon.
  • Even then its tough to compete with Amazon because of its scale.
  • Retailers won't ever be able to compete with Amazon on price.

Retailers have watched Amazon uproot established industries with trepidation, but they can still compete with the ecommerce behemoth by offering items and services that it doesn't have or can't provide. That's according to Keith Jelinek, the managing director at Berkeley Research Group's retail and consumer practice unit.

He sees retailers developing private labels and private brands that the consumers can't find on Amazon. Target has seen some success with its private label brands, for example.

7 shock-worthy facts about Amazon:

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7 shock-worthy facts about Amazon
7.5 percent of Seattle's working-age population are Amazon employees

Amazon has more than 300,000 employees worldwide, and 40,000 in Seattle alone.

As a portion of the city's working-age population — roughly 528,000 — that comes out to 7.5% of the city working at Amazon.

For perspective, if the same portion of New York City's adults worked for one company, that company would have about 488,000 locals on staff.

Amazon accounts for 43% of all online sales

Amazon used to be a way to buy books online; today, it's the default buying site for just about everything, especially for people who have Amazon Prime.

An analysis by Slice Intelligence released in February found that 43% of all US online retail sales were done through Amazon in 2016.

That's up from 33% in 2015 and 25% in 2012.

1 out of every 4 US adults has Amazon Prime.

Speaking of Amazon Prime, the company now counts approximately 63 million people among its subscriber base, or about 25% of the total US adult population.

That number may underestimate the true coverage, however, since it doesn't account for multiple adults in one household all sharing the same Prime account.

Amazon ships 1.6 million packages a day

Amazon fulfillment is a beast of its own.

A report from 2013 (the latest year for which data are available) found Amazon shipped 608 million packages that year, or 1.6 million packages a day.

As of 2015, Amazon estimated its fulfillment centers were within 20 miles of 31% of the US population, and within 20 miles of 50-65% of its core, same-day-accessible market.

That's enough cardboard to span all of West Virginia

A back-of-the-envelope calculation reveals all those packages (not including padded envelopes) yield roughly 26,400 square miles of cardboard.

The total land area of West Virginia, meanwhile, is just north of 24,000 square miles.

Given the speed of Amazon's shipments, the company could blanket the whole US in cardboard in about five months.

45,000 robots roam the floors of Amazon's warehouses

To help those shipments leave the warehouses on time, Amazon relies on a growing fleet of autonomous robots that fetch packages from their shelves and bring them to human employees.

The 45,000 robots live across 20 fulfillment centers in the US. In 2016, the company increased the fleet 50% from its prior head count of 30,000.

Amazon is more valuable than all major brick-and-mortar retailers combined

The sum total of those investments in infrastructure and supply chain management have made Amazon by far the most valuable retailer in the United States.

Amazon's $356 billion valuation is so big, it's larger than Wal-Mart, Target, Best Buy, Macy's, Kohl's, JCPenney, and Sears combined.

With the recent acquisition of Whole Foods, there are no signs the retailer has any plans of slowing down.

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Retailers can also bank on the customer experience, particularly at brick-and-mortar locations. Jelinek said that the way the product is presented or the way trained staff can help a customer brings them into the store, and gives them more incentive to keep returning.

Walmart is doing a good job of this by creating spaces in its stores dedicated to trying out toys and a whole area for gifting and picking up. The big-box retailer is also increasing its online assortment and offering free two-day shipping for purchases valued over $35. Target has followed suit with its Shipt acquisition, a same-day delivery service aimed helping fend off the Amazon-Whole Foods merger. 

While some of the big box retailers are doing their best to stay afloat and remain relevant, there has been a wave of companies this year who just could not hold its weight against Amazon. Toys R Us filed for Chapter 11 bankruptcy in September, even after announcing a partnership with the ecommerce giant. Payless and RadioShack have filed their own Chapter 11 bankruptcies, prompting hundreds of store closings.

Yet Jelinek said that it will still be hard for retailers to compete because of Amazon's scale. "There's only one game that you're never going to win and that's price," Jelinek said.

To read about how you can bet on the retail apocalypse and probably win, click here.

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