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The arrival of Amazon and its effects in South America

Great expectation has generated in the local industry the next arrival of Amazon to Chile. Certainly today we can not gauge the total scope or the impact that the installation of this American giant will have in our country, however, we can appreciate that it will be positive in employment by boosting the economy and generating hundreds of jobs; while at the local retail level, it will push the big names of the sector such as Paris, Falabella, Ripley and others, to continue professionalizing their entire value chain in order to deliver a better proposal to the final customer. Falabella, with the purchase of Lineo and the investment of more than US $ 100 million in the distribution center of San Bernardo, has already begun to prepare itself before the new scenarios, beyond that Amazon continues with its policy and philosophy of putting its focus on the customer more than its competitors.

Being a global player with operations in many countries, and without a doubt with a rather bulky box, competition between retail providers will increase and will eventually bring various challenges to the banking sector, since between its operations and business model, less in the United States, it considers the financing to companies and SMEs that use their platform and that at the same time face capital problems.

Thanks to the artificial intelligence that they integrate into most of their processes, they identify the products with the highest sales and define which operators to inject resources knowing that they will increase their income, even with a financial cost lower than that traditionally granted by banks. given that even if they did not pay you, they would quickly keep the supplier’s stock of merchandise as part of the payment. All of the above adds another factor of uncertainty and future challenges to the financial and regulatory sector around the FinTech.

The impact that a system of these characteristics can have on the industry and small and medium enterprises, taking into account that its main problems are working capital and financing to grow its operations, would be very positive and would favor in lowering operating costs. and solve, among other things, the market place of these organizations by taking them to the digital channel, which would be a very powerful handicap.

Finally, we can see that in highly professionalized markets and with prevailing technology, the consumer will benefit the most due to the economies of scale and transaction costs that are beginning to be eliminated through the increasingly efficient use of technology. or logistic processes, which translates into a better value proposition in terms of price or service.

Undoubtedly, all the challenges and the global impact that the local industry will have to face in order to face the arrival of Amazon are still to be seen, but in general terms, it is tremendously favorable for the local economy and will increase efficiency and competition. that ultimately results in greater benefits for the final customer.

Also published on Medium.

Published inE-commerce

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