Why Does Amazon Face Little Competition in the West?

From vitamin supplements and repair tape to a jar of mango chutney, these items represent just a fraction of what my family purchased last month through Amazon’s vast online marketplace. Our household also utilizes Whole Foods for groceries, streams original television series, reads on Kindle devices, and browses numerous websites likely supported by Amazon Web Services (AWS)—the company’s highly lucrative cloud-computing division. This interconnected ecosystem of products and services, which helped Amazon surpass US retail giant Walmart earlier this year to become the world’s largest company by annual revenue, originated from a modest garage sale of books launched by Jeff Bezos in 1995. Yet, a pressing question remains: why does Amazon face such limited serious competition in the West within the e-commerce sector? Wouldn’t consumers gain from a more competitive market?

It is important to note that Amazon does have competitors across all its business segments, including online retail. In the United States, major retailers such as Walmart and Target have developed robust, rapidly growing online divisions and introduced their own subscription services similar to Amazon Prime. In the UK, Tesco dominates the online grocery market, while Zalando leads Germany’s online clothing retail sector. Additionally, Chinese platforms Temu and Shein have emerged as significant players in the ultra-low-cost product segment. Meanwhile, eBay, which recently rejected a $55.5 billion (£41 billion) takeover bid from video game retailer GameStop earlier this month, operates on a distinct model focused on auctions, second-hand goods, and collectibles. Although GameStop expressed hopes that eBay could eventually challenge Amazon more effectively, Amazon currently holds a commanding lead in total e-commerce market share. According to recent data, Amazon controls 40.5% of US online retail sales, compared to Walmart’s 9.2% and eBay’s roughly 3%. Amazon also maintains a strong hold in the UK, accounting for approximately 30% of online retail sales.

"Amazon is not an undisputed monopolist in e-commerce, but it is the dominant firm," stated 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 resilience against rivals to a combination of strategic factors. A primary advantage is its "first-mover" status. As one of the earliest companies to scale online retail, driven by a clear vision of how the internet could transform shopping through convenience and speed, Amazon captured market share more rapidly than many competitors. Equally critical was the long-term patience of its shareholders, who permitted the company to operate at a loss by selling items below cost, and later allowed aggressive reinvestment of early profits to fuel expansion. To this day, Amazon has never distributed dividends to shareholders.

"[The strategy] constrained the competition," explained David Yoffie, professor emeritus at Harvard Business School (HBS). He noted that traditional companies pursuing such a strategy would likely have seen their stock prices plummet and faced shareholder backlash. Today, Amazon leverages funds from its most profitable ventures—particularly AWS, its primary engine of profit—to support its lower-margin retail operations and finance new initiatives.

Furthermore, Amazon’s positioning as a technology firm has been instrumental. Algorithms, automation, and data analytics have been central to its scaling capabilities, enhancing efficiency and refining the customer experience. Sunil Gupta, another HBS professor, highlighted the company’s culture of bold experimentation, noting its entry into diverse sectors ranging from cloud computing and consumer hardware to private-label goods, original content creation, and healthcare, with a willingness to exit ventures that fail.

Experts also identify two pivotal business decisions as key to Amazon’s dominance. The first, implemented in 2000, marked the transition from a pure online retailer to an online platform, enabling third-party

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