the westminster news
Published by the students of Westminster School
By Shui Se Phoe ’21
(Image Credit: Business Insider)
After governments imposed nationwide lockdowns in response to COVID-19, people in countries that have normally resisted Amazon are now succumbing to the e-commerce giant. Italy, one of the first countries to be hit hard by the virus, was the most noticeably transformed as Italians shifted to buying items online in record numbers. And now that it’s started, the trend toward online shopping in Italy has yet to slow down despite the Italian government’s relatively successful response to the pandemic and current reopening of retail stores. Small and midsize businesses, an integral part of society and the economy in Italy, were forced to sell on Amazon during the lockdown and have expressed fear that they may lose out against the monopoly that Amazon is beginning to gain.
During the lockdown, customers still had needs and demands to be fulfilled, and businesses still had to make money. Despite being a country without much of tech culture, Italy was incentivized to adapt to the lockdown by shifting to online shopping and selling (incentives essentially influence the decisions of consumers and producers and determine the production and consumption of goods and services).
Poor roads, lack of widespread broadband connectivity, and Italians’ general wariness of online banking security gave Amazon rather scarce success when it first entered Italy in 2010. But as the pandemic counteracted these prices for Italians, Amazon’s marketing campaigns to show its investment in reaching even the most isolated places in Italy cemented Amazon as a substitute. Italians, especially after experiencing the convenience of online shopping, began to favor online shopping, shifting the demand curve for the e-commerce giant to the right. Because consumer preferences shifted toward favoring online shopping, especially since the health cost for in-person shopping increased, the demand for the substitute for in-person shopping (i.e., Amazon) increased.
Amazon has also provided Italian parents another incentive to shop on Amazon through a program that can contribute a percentage of their purchases to their children’s school. Furthermore, in response to the increasing demand in Italy, Amazon has invested in expanding in Italy with more fulfillment centers, delivery stations and hiring more workers. Amazon’s investment in expansion in Italy illustrates an outward shift in the supply curve, and an increase in output. As the total online sales in Italy has grown by 26%, Amazon has been given an incentive to produce and supply more because it will now be more guaranteed to cover its opportunity cost (forgone benefit derived from the next best alternative).
All in all, Italian communities are slowly embracing Amazon, yet many shop owners have protested to caution Italians that Amazon, in the next decade, may be the only business standing in Italy if this trend continues. The culture many revere Italy for, including but not limited to its traditions and quaint neighborhoods, will be forever altered by this pandemic and Amazon. Some may say that it’s about time Italy caught up with the rest of the world, but for others, the possibility of Italian neighborhoods losing their shops and sense of community they’re known and loved is saddening.