Blog: The Amazon Effect: How Amazon Supply Chain Technology Broke Retail

The term “retail apocalypse” may sound a bit dramatic, but there’s no denying the competitive struggles traditional retailers are facing in today’s post-digital era. The term “retail apocalypse” may sound a bit dramatic, but there’s no denying the pressure traditional retailers are still facing. Coresight Research tracked 7,325 U.S. store closures in 2024.

The fact is, increasing competition from Amazon continues to challenge traditional brick-and-mortar retailers, and the ripple effect of eCommerce and omnichannel retail strategies is crippling brands that aren’t prepared. But given the Sears bankruptcy filing and the longtime retail staple’s fall from grace, even the strong aren’t always surviving.

Here is everything you need to know about the Amazon Effect:

• How Amazon Has Changed the Way We Shop
• What is the Amazon Effect?
• The Amazon Prime Effect by the Numbers
• How Amazon Changed eCommerce
• The Other Side of the Amazon Effect
• Walmart vs Amazon – a quick history
• Omni-Channel Retail and the Digital Supply Chain
• How Amazon Continues to Adapt
• How to Be Like Amazon

How Amazon Has Changed the Way We Shop

Amazon's impact on the retail industry affected how consumers consume and how businesses serve their clients, it’s no wonder the “Amazon effect” has become a phenomenon business school will analyze for years to come.

Everywhere you look, the behemoth is around. One of your friends probably just used Amazon to buy a new book. Maybe your significant other researched and eventually purchased new sneakers. Perhaps you’ve downloaded a movie or TV show on your phone, tablet, or laptop for a long airplane ride.

But as much as the simplicity of Amazon has changed the game for consumers, it’s drastically changed the retail and eCommerce landscapes and shifted what it means to have a modern, agile supply chain.

What is the Amazon Effect?

The Amazon effect is the disruption of brick and mortar stores in the retail market, caused by a dramatic increase in online sales.

It has its own name because of how Amazon changed eCommerce to transform the customer experience and the omnichannel business model, as well as the downstream effects it’s had on a variety of market segments.

Online shopping enables a fast and efficient shopping experience at affordable rates. With just a few button clicks, a consumer can purchase via an eCommerce site and expect that item to be delivered in a matter of days, if not hours. 

The Amazon Prime Effect by the Numbers

Amazon’s influence on retail isn’t just about convenience—it’s about how quickly customer expectations reset when speed, selection, and visibility become the default.

2025: eCommerce is big, and still accelerating:

• U.S. retail e-commerce sales hit $310.3B in Q3 2025
• In that same quarter, eCommerce represented 16.4% of total U.S. retail sales.
• NRF forecasts online and other non-store sales in 2025 will land between $1.5T and $1.60T (with 7%–9% YoY growth).

2025: Amazon is still the gravity well:

• EMARKETER projects Amazon will account for 40.5% of U.S. e-commerce sales in 2025.
• J.P. Morgan expects Amazon’s U.S. gross merchandise value to reach $593B in 2025, which would put it ahead of Walmart as the largest U.S. retailer.
• Amazon reported 200M+ paid Prime members worldwide, reinforcing how membership economics keep shoppers locked into faster delivery and repeat purchasing.

2025: “Fast” is no longer a perk—it’s the baseline:

• Amazon says it offers 300M+ items with free Prime shipping in the U.S., including tens of millions available with Same-Day or One-Day delivery.
• Amazon’s same-day/next-day footprint is expanding beyond major cities: rural communities with access to same-day and next-day delivery jumped 60% in four months, and Amazon planned to expand free same-day grocery delivery to 2,300+ communities by the end of 2025.

The takeaway isn’t just faster shipping. It’s that Amazon has trained customers to expect speed, accuracy, and transparency as the baseline—and retailers can’t meet that consistently with siloed systems and manual handoffs. 

That’s why they need supply chain orchestration: strategic synchronization across a multi-enterprise network that turns real-time data into coordinated action. It enables end-to-end automation, faster issue resolution (increasingly with AI), and performance governance through SLA tracking and scorecarding, so retailers can keep promises at scale and compete on speed and experience, not just price.

How Amazon Changed eCommerce

Because of Amazon, consumers not only demand but now expect their online shopping experience to feature all of these things at once:

1. Competitive pricing
2. Highly available inventory
3. Lightning-fast fulfillment (and the ability to change orders)
4. Real-time tracking information
5. Mobile support
6. An easy return process

Rather than mostly brick-and-mortar experiences, customers are now accustomed to a dependable online and mobile experience. The idea of Amazon even getting an order wrong is almost shocking; anything less than 100 percent accuracy for customers is almost laughable, and we have the Amazon supply chain to thank for that.

Additionally, for its loyal customers, Amazon features additional membership levels, each with its own benefits. Amazon Prime has free two-day shipping, access to a video streaming service, and other perks. Prime Now is only available in certain areas to Prime members but offers a two-hour shipping option in an effort to further blow our collective minds.

It’s nearly impossible to beat Amazon as a retailer on pricing, selection, and service, so the question becomes, how do companies adapt to the Amazon effect on retail – and its game-changing disruption inevitably threatening other segments – and position themselves to take advantage?

As Amazon has proven, the name of the game is service. The ability to find anything at any time and have it in your hands in a couple of days is now possible. In order to adapt, companies must utilize modern technology designed to run in real-time that enables your company to provide customers the services that they now expect. If anything, the really amazing thing Amazon does is it reinforces the importance of a frictionless customer experience.

The Other Side of the Amazon Effect

As Amazon and the supply chain become synonymous, and the company continues its push to gain an even larger footprint into the world of physical retail, one of, if not its biggest competitor, recently made an acquisition that will have ripple effects for years to come.

Walmart buys Flipkart

In 2018, Walmart acquired a majority stake in Flipkart for about $16 billion (roughly 77%), making it the largest acquisition in Walmart’s history and a clear signal that eCommerce would be central to its long-term strategy.

Walmart has continued to double down since then. In 2023, it invested $1.4 billion to increase its stake further, in a deal that valued Flipkart at around $35 billion—reinforcing Flipkart’s role as a cornerstone of Walmart’s international growth plans.

The logic behind the deal has only strengthened as India’s digital customer base has surged. The IAMAI/Kantar Internet in India 2024 report estimates 886 million active internet users in 2024 and projects India will cross 900 million+ by 2025, with much of the growth coming from rural regions.

Flipkart is also positioning for its next chapter, with reporting pointing to IPO preparations and a timeline often framed as late 2025 or early 2026.

3 quick Flipkart facts 

• Flipkart’s model spans marketplace + logistics, which matters in India where delivery reliability is a competitive differentiator.
• Growth is increasingly driven by rural internet adoption, expanding the addressable customer base beyond major metros.
• IPO prep signals a push toward the next phase: scaling efficiently while competing with Amazon and local players. 

Walmart has made it very clear how much it wants to continue to grow its digital business. And the importance of Walmart banking on major eCommerce acquisitions in order to gain an even larger digital presence is interesting for a couple of reasons.

Walmart vs Amazon – a quick history

Walmart grew to become the most successful traditional retailer in history. Its immense success came from a counter-intuitive strategy around where it chose to locate stores.

Rather than pursuing highly-sought-after, expensive, and competitive urban spaces – where large populations of consumers lived and shopped, Walmart focused on opening large footprint stores outside of dense population areas.

They decided on large footprint stores where the people and the competition weren’t – in or near small towns. The strategy worked and not only allowed Walmart to monopolize large swaths of rural America, but it also created a new type of big box store – one place that carried everything, providing one destination for all shopping needs.

Amazon followed a slightly different approach when it opened its “store” digitally. However, it benefitted from similar conditions. Like Walmart tapping into a low-competition market, Amazon was at the forefront of online retail and was thus able to capitalize on the “there first” factor and through diversification, grow to the company it is today – a website providing one destination for all shopping needs.

Now let’s get to the reasons why the Flipkart purchase seems like a good move, starting with number 1:

Omni-Channel Retail and the Digital Supply Chain

The current disruption across the retail industry shows the ramification the Amazon effect is having. On one hand, it is driving companies like Walmart to evolve into eCommerce participants, and on the other digitally native companies are walking backward into physical stores.

The predicate is any organization that evolves and participates in online and brick-and-mortar will therefore be able to survive. But this is extremely flawed.

So, what is the Walmart/Amazon difference?

Why, as a brick-and-mortar retailer, has Walmart seen such success while a litany of high-profile failures from RadioShack to Sears, to Toys R Us, been making headlines?

How has Amazon so far seen a great deal of success in investing in physical retail, an industry that for many companies is seeming going the way of the dinosaurs?

The recipe for success and one that is observable in both the Walmart and Amazon models is an omnichannel approach to customer engagement.

Here’s a quick definition: Omni-channel is a truly modern approach to retail in that it aims to provide a seamless shopping experience to the consumer across every touchpoint or channel, including digital stores, mobile devices, and physical locations.

According to the National Retail Federation, other important customer expectation considerations in an omnichannel experience are cost and convenience factors such as:

• Free shipping
• Flexible in-store pick-up and return
• Accurate inventory across channels

In a nutshell, omnichannel adds a high degree of supply chain complexity to a modern retail environment that many companies have had a hard time dealing with.

To deal with the complexity of an omnichannel retail presence necessitates a world-class supply chain. Both subjects of this blog are indicative of the most robust and efficient retail supply chains on earth. Here are two metrics to provide a measure of perspective:

• Approximately 90% of the U.S. population lives within 10 miles of a Walmart or Sam’s Club.
• Amazon planned to expand Same-Day and Next-Day Delivery to tens of millions of customers in 4,000+ smaller cities, towns, and rural communities by the end of 2025

Walmart has automated pick-up centers, which makes it easier to shop online at Walmart.com than ever before. Another modern approach Walmart has taken came after its purchase last year of Parcel, a company that specializes in last-minute delivery services. This aims to cut shipping times and delivery costs for customers by also incentivizing its employees to make the deliveries and gain some extra income after their shifts.

World-class supply chains have world-class digital underpinnings. While Amazon – a tech company – gets a lot of recognition for this trait, Walmart is often given short shrift given where they stand today.

Previously, Walmart’s online business was a completely separate entity from its physical stores, but has now fully integrated both components with a digital data mesh for fully- unified and accurate inventory management across the multichannel supply chain optimized for the omnichannel customer experience.

In essence, Walmart’s strategy of digital growth through acquisition is continually dependent on the quality of its underlying digital infrastructure. It is the technological backbone of Walmart that truly makes it a viable competitor against one of the most dominant and disruptive entities on the planet – Amazon. And it is also the greatest weapon Walmart has against the Amazon effect.

How Amazon Continues to Adapt

While brick-and-mortar retailers are attempting to reverse the trend of losing market share to the quick-growing eCommerce crowd, Amazon is interestingly facing the unique challenge of trying to open the door and successfully establish a niche in the physical shopping realm. In order to be competitive in the offline world, Amazon needs to face off with Walmart and a select number of other traditional retailers that have bridged the digital gap while remaining dominant players.

This is the other side of the coin to what is commonly referred to as the Amazon effect. While Walmart has taken the fight to Amazon from a digital perspective through acquisition, Amazon is doing the same by establishing its presence in physical stores with flashy buyouts of well-known retailers as evidenced by its $13.7 billion purchase of Whole Foods.

How to Be Like Amazon

Companies must operationalize technology infrastructures that connect eCommerce applications, back-end systems, and partner networks—then apply supply chain orchestration to turn real-time data into automated action across suppliers, carriers, 3PLs, and marketplaces.

An integrated supply chain that’s responsive and reliable will continue to be the fundamental difference that separates businesses from the competition, and without an effective supply chain integration strategy in place, the idea of competing in today’s Amazon-effected world is a broken pipe dream.

Organizations today require a comprehensive technology solution that enables multi-enterprise, application, and data lake integration to improve service levels and enhance the customer experience into a predictable, repeatable process.

In other words: integration gets data moving, but supply chain orchestration is what coordinates the response—automating processes end to end, resolving issues faster using artificial intelligence, and governing performance through SLA tracking and trading partner scorecarding.

• Multi-enterprise integration provides the ability to rapidly integrate with new customers and onboard trading partners, provide audit trails, automate data mapping, and make better analytical decisions via increased visibility throughout your entire supply chain.
• Application integration eliminates manually intensive file transfer processes, enables modernization and a way to migrate off legacy systems, and ends process disruptions via comprehensive monitoring features.
• EDI software integration enables businesses to secure and encrypt EDI and non-EDI file transfers

Learn how advanced integration solutions deliver the cutting-edge amazon supply chain technology that enables companies to not only limit the Amazon effect on their businesses but embrace the brave, new world it’s brought forth. It’s time to become a fully-optimized organization that’s prepared to deliver the thing that matters most – a seamless interaction delivering an enhanced, predictable customer experience.