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What Comes After Amazon In CE Retailing?

The TWICE Top 100 CE Retailers Report, based on 2015 calendar year sales, is available today, and while the list is not surprising – Best Buy is the perennial No. 1 CE merchant and retains the top spot — the news is in the Nos. 2 and 3 rankings.

Walmart, the perennial No. 2 to Best Buy, has slipped to No. 3 with 2.6 percent of year-on-year sales growth.

The new No. 2 is Amazon, with a whopping 28.1 percent gain in CE sales year-on-year to just over $23 billion, falling short of No. 1 Best Buy by $7 billion and change.

Even though that sales increase is 28 percent, it is not a shock. Amazon has been on a roll in CE for the past decade and it is no longer a surprise for CE retailers of all types, or CE suppliers.

The fears of specialty CE and CE/appliance retailers, as voiced by founding executive director of the NATM Buying Corp. Saul Gold at the turn of the century, when Amazon entered the category, have been realized.

The sales tax situation (at least initially); the convenience of online shopping; improved consumer knowledge of tech products; and the cooperation of many CE suppliers – both current and deceased – have enabled the mammoth company to carve out a massive chunk of the U.S. CE retail market.

Looking at Amazon from an historical perspective, I have to wonder — what’s next?

What I mean is, when NATM was formed in 1970 the big fear among the regional CE/appliance chains that formed the organization was that a new type of retailer — mass merchants — were going to take over CE retailing.

Many of their suppliers — RCA, Zenith, Magnavox and others — brands they championed in the post-World War II economic boom, began to sell to mass merchants like Sears, Kmart and Montgomery Ward, and later on Walmart.

NATM was formed along with other buying groups. Today’s independent retailers are fewer, but as a retail channel they have survived and done well. (Best Buy was a former NATM member when it was a private company, as well as the departed Circuit City.) Sears and Kmart, now owned by the same company, are still around but have hit hard times.

Remember, the TWICE Top 100 CE Retailers Report tracks sales of the entire spectrum of CE products — from blank media, USB drives and batteries all the way to 4K TVs and home automation systems. And the market will be even wider in the next few years when IoT takes hold.

Amazon should still be in the forefront and challenge Best Buy for the No. 1 spot in the next few years.

Still, any MBA or business analyst can tell you about the historical arc of brands and companies: they have a great idea and take off; they peak; and then slowly die off for a variety of reasons.

In CE we’ve seen plenty of companies — retailers and manufacturers — that would “never” die go bankrupt or become a licensed property.

Again, I am talking about Amazon as a CE retailer. It will probably be the next Sears or Walmart and be the place to shop for CE for the next couple of generations.

It sounds ridiculous now but every business loses its edge and eventually it will happen to Amazon in CE retailing at the very least. It will be fascinating to see how it will happen, but the way it is going it will take a long, long time to occur.

Steve Smith is editor at large of TWICE and was its longtime editor in chief.