Why Does Amazon Face So Little Competition in the West?

Vitamins, repair tape, and a jar of mango chutney are just a few of the items my household purchased last month through Amazon’s vast online marketplace. Our engagement with the company extends far beyond simple retail; we also shop at its Whole Foods supermarkets, stream its television productions, read on Kindle devices, and likely utilize websites powered by Amazon Web Services (AWS), its highly lucrative cloud-computing division. This interconnected ecosystem is only part of what the global giant offers, a status it solidified earlier this year by surpassing US superstore titan Walmart to become the world’s largest company by annual revenue.

Yet, the question remains: why does Amazon, which Jeff Bezos launched in 1995 as an online bookstore from a rented garage, have so few serious competitors in the West? Wouldn’t consumers benefit from a more competitive landscape?

First, it is important to note that Amazon does face competition in every segment it operates within, including e-commerce. In the United States, major retailers like Walmart and Target have developed broad, rapidly expanding online retail operations and have introduced their own versions of Amazon’s Prime subscription service. In the UK, Tesco leads the online grocery sector, while Zalando holds the title of Germany’s largest internet clothing retailer. Furthermore, ultra-low-cost platforms like Temu and Shein have emerged as significant forces in the cheap goods market.

There is also eBay, which recently rejected a $55.5 billion (£41 billion) takeover bid from video game retailer GameStop earlier this month. Although GameStop expressed hopes that eBay could eventually challenge Amazon more effectively, the two operate on different models. eBay focuses on auctions, second-hand items, and collectibles. Despite these efforts, Amazon currently dwarfs all competitors in total e-commerce market share. According to data from last month, Amazon commands 40.5% of US online retail sales, compared to 9.2% for nearest rival Walmart and roughly 3% for eBay. The US is not an anomaly; Amazon also dominates the UK market, accounting for approximately 30% of online sales there.

"Amazon is not an undisputed monopolist in e-commerce, but it is the dominant firm," states Annabelle Gawer, director of the University of Surrey’s Centre of Digital Economy. "And the scope of what it sells is unparalleled."

Experts attribute Amazon’s unrivaled position to a combination of strategic factors. One key element is its "first-mover" advantage. As one of the earliest companies to scale online retail, with a clear vision of how the internet could transform shopping through convenience and speed, it captured market share rapidly. Equally critical was the long-term patience of its shareholders, who allowed the company to operate at a loss by selling products below cost. Later, they supported the aggressive reinvestment of early profits back into the business to drive growth. To this day, Amazon has never paid a dividend to shareholders.

"[The strategy] constrained the competition," explains David Yoffie, professor emeritus at Harvard Business School (HBS). He notes that traditional companies pursuing such a strategy would have seen their stock prices plummet and shareholders become angry. Today, Amazon leverages funds from its most profitable divisions—primarily AWS, its main profit engine—to sustain its lower-margin retail operations and fund new ventures.

Its positioning as a technology firm has also been instrumental. Algorithms, automation, and data analytics are central to Amazon’s scaling capabilities, driving efficiency and shaping the customer experience. Additionally, Sunil Gupta, also a professor at HBS, highlights the company’s culture of bold experimentation. Amazon has entered diverse sectors ranging from cloud computing and consumer devices to private-label products, original content production, and healthcare, exiting ventures if they fail to succeed.

Experts also point to two pivotal business decisions as crucial to its dominance. The first, implemented in 2000, marked the shift from being merely an online retailer to becoming an online platform, allowing third-party

Source: BBC News Generated at: 2026-05-18 07:25:14 UTC