Online Superstores: What They Are and Amazon’s Play to Be King of the Pile

a. Online superstores offer shoppers a unique set of features

124. An online superstore offers an extensive breadth and depth of product selection accessible through an online storefront. "Breadth" refers to product offerings across multiple categories, such as sporting goods, kitchen goods, apparel, and consumer electronics. “Depth” refers to product selection within a given product category, such as a range of different brands of a product with different price points, levels of quality, sizes, and colors.

125. Consumers incur shopping costs beyond the prices paid for purchased items. For example, when considering a purchase, shoppers must determine which stores carry specific items. Shoppers then often conduct research, including learning about the items’ prices and features, reading consumer reviews, and comparing similar items. Shoppers value stores that reduce search costs and the ability to discover new items that they may not have been initially searching for while shopping. Many consumers also value shopping for different types of goods at a single store to reduce overall shopping costs.

126. Online superstores provide shoppers a unique offering: 24/7 access to a broad and deep product selection accompanied by a distinct set of features that meaningfully reduce the time and effort shoppers expend online. These features include tools to help shoppers quickly search for and identify their desired items, compare different items, and purchase and receive items, all from a single website or app. Online superstores provide these features to develop long-term relationships with shoppers, entice shoppers to buy more products during a single shopping trip, and encourage them to come back again.

127. Several characteristics distinguish online superstores from other forms of retail, including brick-and-mortar stores and online stores with comparatively limited selection.

128. First, online superstores offer a single destination for shoppers to browse a large and diverse selection of goods from multiple brands across a wide range of categories, reducing consumers’ shopping costs and encouraging customers to make an online superstore a preferred destination for a variety of shopping needs.

129. By offering a broad selection, online superstores reduce the shopping costs of visiting multiple stores for goods spanning multiple categories. By offering a deep selection within any given category, online superstores decrease the shopping costs of visiting multiple category-specific or brand-specific stores to identify the best options.

130. The breadth and depth of selection available at online superstores encourages shoppers to return to and shop at those stores more regularly. Shopping regularly at the same online superstore leads to reduced shopping costs by increasing shoppers’ familiarity with an online superstore’s format, features, offerings, and customer service process. Repeated use of an online superstore can also provide confidence about its reputation and quality. Increased familiarity, a positive reputation, and perceived high quality all make it more likely that a shopper will choose an online superstore as a preferred destination for purchasing retail goods online.

131. Industry participants, including Amazon, have long recognized an online superstore’s unique ability to leverage a broad and deep selection of goods to compete for repeat customers. For example, Mr. Bezos explained in his 1999 letter to Amazon shareholders that “[e]ach new product and service we offer makes us more relevant to a wider group of customers and can increase the frequency with which they visit our store. . . . The more frequently customers visit our store, the less time, energy, and marketing investment is required to get them to come back again.”

132. Second, online superstores are not limited to traditional operating hours that constrain brick-and-mortar retailers. Instead, online superstores offer a quick, on-demand shopping experience at all times of the day or night. Online superstores allow shoppers to browse and buy across a wide variety of goods 24 hours a day, 7 days a week, 365 days a year. Shoppers can also pause and resume their shopping session on an online superstore at any time.

133. Third, shoppers can make purchases on online superstores anywhere they have internet access, through a website or an app on a desktop, tablet, or smart phone.

134. Fourth, online superstores offer sophisticated filtering and discovery tools, allowing shoppers to browse and sift through the store's entire catalog quickly and efficiently.

135. Online superstores also have access to data on items consumers have previously searched for and purchased. Online superstores may use this data to offer repeat visitors tailored and personalized shopping experiences that can, for example, include recommendations for future purchases based on past search or purchase behavior.

136. Fifth, online superstores offer research tools, including detailed information on a given item and a large volume of authentic, customer-generated ratings and reviews. Online superstores give shoppers a single point of access to these research tools, including text descriptions, photos, videos, and user reviews. The product detail pages available on online superstores often include far more information than physical packaging can accommodate. For example, a product detail page can include links to user guides and product documentation that would otherwise only be accessible inside of a product’s packaging.

137. Sixth, online superstores provide shoppers a familiar and convenient checkout experience, Online superstores reduce shopping costs by allowing customers to store personal information like payment details, home addresses, passwords, and other sensitive information. For example, Mr. Bezos (redacted)

138. Seventh, online superstores offer shoppers a convenient and consolidated post purchase experience. Shoppers who buy multiple items from an online superstore can often schedule them to be delivered together, limiting the need to keep track of multiple delivery times and decreasing packaging. Mr. Bezos (redacted)

139. This combination of features distinguishes online superstores from brick-and-mortar stores and from other online stores with comparatively limited selection. Even though such stores may price certain items comparably with online superstores, shoppers do not seriously consider those stores as reasonable alternatives to online superstores for a significant portion of their shopping needs. Online superstores differentiate themselves by offers in a particular shopping experience to the sizeable group of consumers who view that experience as distinct and prefer to shop at online superstores.