It should be noted that the market of e-commerce services is a perfect example of an oligopoly. This market structure is “characterized by high barriers that make entry by new firms into the industry difficult”. Large corporations such as Google and Amazon have significant market power. However, if these giant enterprises enter into uncompromised competition, less powerful market players will benefit, as seen in the e-commerce market. There are two main factors related to the competition between Google and Amazon that can be beneficial for smaller e-commerce companies: (1) the innovative race and (2) the specificity of the oligopolists’ differentiation strategy.
For years Google was considered the most frequently used search engine. Nevertheless, Amazon is now considered as the leader of online marketing, which has few serious opponents. In order to attract more customers than the competitor, Google creates new online marketing service. Meanwhile, smaller e-commerce companies may benefit from the innovative race of oligopolists. Until recently, such firms were not able to effectively integrate into Google’s and especially Amazon search engines “due to stiff competition and a proliferation of knock-offs”.
Nevertheless, in order to compete with Amazon, Google has begun to develop specific innovative solutions. It launched Google Shopping, which aims to “allow users to search and then click ‘buy now’ directly from Google”. Small and medium-sized businesses have found it rather easy and convenient to integrate into Google Shopping, unlike the service of Amazon. This means they get the opportunity to participate in this market. Thus, the innovative struggle of oligopolists may create the ground to reduce barriers to entry for less prominent market participants.
The second factor is the differentiation strategy of large companies based on the brand of oligopolists. Patel states that Amazon has no product niche of its own, and it is willing to “sell to everyone”. Modern smaller e-commerce companies can take advantage of Google and Amazon, promoting their brands, and promoting their unique products that correspond to the e-commerce sales trends.
For instance, Alecia is successfully marketing a commercial streaming service, and BrickHouse Security focuses on high-quality security and surveillance services. These brands, in contrast to Google and Amazon, attract consumers by offering products from a specific niche, which favorably distinguishes them from oligopolists seeking to attract the majority through competition.