The thing about the internet is that it has opened up retail globally.
Whereas once corner shop competed with corner shop, and national supermarket competed with national supermarket, now national supermarkets compete with global internet retailers.
So it is not just a case of a battle between the UK supermarkets. It is also now a case of Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US) vs Amazon (NASDAQ: AMZN.US) vs eBay (NASDAQ: EBAY.US).
Internet retailers may soon compete head-on with the supermarkets
If you have checked out Amazon’s website recently, you may have noticed that this company has expanded the range of products it sells beyond CDs, books and electronics to groceries, home ware and health and beauty products — the type of thing your local supermarket would normally sell.
Amazon at the moment is just building the infrastructure for what I think will be a big move into the grocery market. I think it is only a matter of time before Amazon broadens its range of products to really compete head-on with the supermarkets. We are seeing the collision of the worlds of the internet and supermarkets and the High Street.
But there was some interesting news last week which I think has opened up some new avenues of possibility in retail.
Win-win, not war, war
Internet retailer eBay formed an alliance with High Street retailer Argos (which is part of Home Retail Group). So soon we may see eBay products being sold not just on the internet, but on the High Street as well.
As soon as I heard about the deal, I could see the logic. It is win-win for both companies: Argos gains access to eBay’s unrivalled product range, while eBay gains access to Argos’ extensive network of stores.
Instead of the retail giants fighting with each other, there is much to be gained from working together. What could be next? An alliance of Amazon with Tesco? How about an alliance of eBay with Walmart?
Instead of spending billions on establishing a global internet retail network of its own, why couldn’t Tesco piggy-back on the Amazon infrastructure? And if Amazon were to sell in Tesco stores, it would gain access to millions of new customers.
Of course, this is pure speculation at the moment. But already we are seeing alliances being built, and companies are beginning to step across the boundaries. Now that Tesco has launched its own tablet, it seems anything is possible. What is sure is that the world of retail will evolve quickly over the next few years.