Amazon has a great point of difference. They offer free shipping with a guarantee of 48 hour delivery on every purchase if you join their annual $79 flat rate Prime shipping service. This bit of marketing genius is estimated to contribute at least 20% of Amazon’s sales. What makes it so great? Once customers have paid for the service, they feel like they have to make use of it and therefore make up to 100% more purchases from Amazon than they would have otherwise.
The Prime shipping service seems like it could easily become a point of parity, and other companies are trying to cash in on this phenomenon. ShopRunner is the biggest culprit, a collaboration of over 20 companies who have joined together to offer the same shipping policy as Amazon. So it would seem Amazon has lost their edge…
Luckily, Amazon has another point of difference up their sleeve that supports the Prime membership. They sell everything. Amazon is convenient; you only have to go to one website. Order absolutely anything you want from Amazon and you get free shipping! Now these 20 companies represent a large assortment of retailers, but they just can’t provide the same variety and convenience as Amazon. For that reason, Amazon won’t be losing control of its point of difference any time soon.
Point of difference: Everything you need is available on one convienient site
Reference: Bloomberg Businessweek (Nov 29-Dec 5)