Prime Day 2023 kicks off today and continues through tomorrow. 

Amazon is not the only retailer offering major savings on sundry items from clothing to electronics. A number of other merchants are capitalizing on heavy advertising to compete with their own anti-Prime Day savings. Dozens of retailers such as Target, Walmart, Overstock, Wayfair, Petco, and Best Buy have discounted items to compete with deals being offered to Prime members.

This Christmas-in-July shopping bonanza is a byproduct of a retail revolution spurred on by innovation and competition. 

Free enterprise expands the choices of goods and services customers have to choose from and lowers prices for buyers. It also creates new avenues for entrepreneurs and small businesses to compete with established competitors. Ill-advised policies could hamper this innovation in the future.

A retail revolution

It’s not hyperbole to credit Amazon, a company that started out as an online bookseller, with launching a revolution.

Amazon is not the nation’s largest retailer. Walmart holds the top ranking with nearly double the U.S. sales as Amazon, its next competitor. 

However, case studies have dissected how the tech giant has steadily grown in size, revenue, and influence by innovating, streamlining, and creating value for consumers in ways that brick-and-mortar stores or other online retailers had not prior.

Quartz Technology Correspondent of The Business of Fashion (BoF) Marc Bain explained in February 2020:

Because it was so early to e-commerce and so effective at satisfying its customers while trouncing its competition, Amazon was able to fundamentally shape what consumers would come to expect of online shopping. Concepts such as streamlined purchasing, fast and free shipping, and easy comparisons of reviews and prices across a vast selection of products are central features of e-commerce today in part because Amazon helped make them so.

That influence continues. In April, for instance, when Amazon announced it was upgrading from free two-day shipping to one-day shipping for members of Prime, its perk-loaded subscription deal, a Morgan Stanley analyst predicted it would lead consumers to eventually expect 1-day shipping across online retailers.

This sway over consumer expectations is why no company has been more disruptive to US retail in the past two decades.

“Amazon sets the tables for everyone in terms of what consumer expectations are and they raised the game, and we’ve all got to rise to the challenge of what the expectations are they set broadly for the market,” Josh Silverman, CEO of Etsy, an online marketplace for sellers offering handmade and vintage goods, said at a conference in May.

That said, Amazon hasn’t made an omelet without breaking eggs. Many retailers of all sizes have not fared well as Bain explained.

But the same ingredients that make Amazon appealing to shoppers have also drawn skepticism from companies that feel their identities are lost in its focus on efficiency and its overwhelming flood of products. Shoppers might gain in choice but they lose the joy of discovering and falling in love with products. 

Concerns also linger around issues on its marketplace such as unauthorized resellers and counterfeits, which Amazon recently acknowledged as a risk to its business and has said it’s working to address.

It’s hyperbolic to suggest that Amazon’s dominance spells doom for retail. E-commerce sales in the first quarter of 2023 at $272.6 billion accounted for just 15.1% of total sales. That means a whopping 85% of retail is conducted in person.

U.S. consumers love Amazon and small businesses value the unique selling opportunities it offers. As the third most trusted brand in America, members often point to free two-day delivery as the platform’s best benefit. Nine out of ten users are satisfied with their shopping experience.

Amazon is not alone in the digital retail space and is far from ubiqituous. It’s for this reason that government policies specifically targeting it and a handful of other tech companies seems misplaced and unfair.

Regulators knocking at the door

Lgislative and regulatory efforts are afoot to restrict operations at Amazon and other Big Tech firms in ways that could risk free, two-day shipping.

Federal legislation, namely the American Innovation and Choice Online Act (AICOA), sought to impose restrictions on Amazon’s logistics services as well as a host of other prohibitions on the company engaging in standard retail industry practices. The bill failed to advance to a floor vote in the last Congress and is unlikely to move ahead. Now, antitrust efforts are moving to the regulatory realm.

The Federal Trade Commission is expected to sue Amazon any day now over its logistics services used to guarantee fast and free shipping. Divesting logistics from the rest of its operations could spell the end of this beloved Prime benefit.

New regulations are unwarranted and could be detrimental. Consumers recognize this and oppose such efforts in polling. A measly 8% of Amazon users want the government to impose new restrictions on Amazon Prime or AmazonBasics products. Over half want protection against scams and malware, and the plurality is looking for the expansion of consumer privacy protections.

In response, campaigns such as the Don’t Break What Works campaign have emerged to fight back against these antitrust efforts. 

Bottom Line

If left unchecked, unwarranted government actions could deal a blow to the half a million small businesses which sell on Amazon’s marketplace and to the consumers looking for products–from everyday essentials to rare and exotic items–at a good price and delivered quickly. 

Prime Day and its robust alternatives display that market competition is in action. Policymakers would do well to take notice.