During that time, they've been building an amazing infrastructure, and that won't be easy for a new competitor to match.
I ordered from a different retailer last Saturday night, and I had forgotten how long it takes to get stuff shipped in the real world: FedEx didn't receive the package until Tuesday at 8pm. With Prime, I'd already have it by Tuesday night.
Shipping speed isn't the most important aspect of online shopping, but I think it's indicative of how Amazon's size is already providing a competitive advantage that is hard to match.
The fact that people are willing to wait a couple of days for Amazon when they can buy exactly the same product immediately for slightly more money at the local Best Buy speaks to how much they're willing to put up with for a marginal cost savings. I think that anyone who expects a "sinister phase II" where Amazon takes advantage of their market share by jacking up prices fundamentally misunderstands Amazon. They are, and always will be, a low-margin retailer.
From my experience, sitting on the couch and ordering something is a whole lot easier than actually going out and getting it. And it comes right to the door. In a day or two. Subscribe and save was even better when the kids were little. Diapers and wipes. Delivered automatically.
I don't find that amazon's prices are that amazingly good. Sometimes they're better, sometimes they're not. I've found small things for half the price in local shops sometimes. Newegg will beat them for anything electronic, but their shipping is really erratic. And since I'm in WA, there's no tax savings.
Maybe I'm a special case. I don't live in a big city, but you can see one from the beach. It's 45 minutes to Walmart, 2x that to Target, Trader Joe's, the Apple Store and other pillars of civilization. Hell, it's 10 minutes to the nearest store (plus whatever time it takes to get the kids into shoes and strapped into the car).
Amazon wins on predictable convenience. They're the biggest store in the world, and they're right here. And whatever I want will be here in 2 days, shipped free. (yeah, we have prime. it's like crack)
I ordered from a different retailer last Saturday night, and I had forgotten how long it takes to get stuff shipped in the real world: FedEx didn't receive the package until Tuesday at 8pm. With Prime, I'd already have it by Tuesday night.
Shipping speed isn't the most important aspect of online shopping, but I think it's indicative of how Amazon's size is already providing a competitive advantage that is hard to match.