Amazon is both the owner of the most successful and widely used marketplace, as well as a competitor of the merchants in that marketplace.
Having access to all of the transactional and user data, Amazon has an unarguable advantage over the rest of the merchants in it's market. They can beat anyone on price, placement, or delivery speed.
Barrier to entry into running a competitor market is effectively controlled by network effect. Simply running a competent customer service system and keeping prices within a certain range close to lowest provides an effective license to eternal profit.
Adding competing products when successful volumes are proven by their merchants gives them a very effective way to widen that profit on demand at the expense of their merchants and ultimately to the detriment of their customers who wind up paying more with less available selection.
This has nothing special to do with amazon.
Well.. except for OEMs.
I go to Amazon when I know what I want. I go to a store when I need staff to tell me what I want.
One day Amazon will finally learn to curate their products in some vaguely coherent sense of order instead of an infinite pile of semi-differentiated search results and then Best Buy is really screwed.
The niche doesn't even really matter here. It could be car stereos, music, books, alcohol, grocery, whatever. I definitely think the path to survival for small retail shops going forward is going to be expert level knowledge and customer service. The days of people patronizing your store just because its physically nearby are numbered.
edit: Also, and this is totally anecdotal, but I personally shop at several places that aren't quite the cheapest (though none are TOO relatively high priced) but I continue to shop because the staff are far more knowledgeable than I and their assistance is well worth the extra ~10% in price.
This is the general trend in most of America. Many now fall into one of three categories. Highly rewarded entrepreneur / chief officer, educated and well paid but fiercely worked salary, or minimum wage serf. The bands are also becoming more defined and logarithmically separated. ~$16000 (2^14) [serf], ~$90000 (2^16.5) [educated salary], $500000+(2^19) [wealthy / gentry]
Further, the middle section is mostly bleeding downward due to factors like the above mentioned layoffs (Sam's Club did similar), the increasing relative cost of education / health care / other barriers to entry, and the inflation adjusted erosion of buying power.
Its an argument to say the path is towards expert service, yet with the range of social review / recommendation pages / boards available now (much of which Amazon itself cultivates), even newcomers can quickly become informed if they are so inclined. No wonder many now prefer to use automated isles rather than human checkouts. The staff provide little and often just push annoying suggestive sells.
In the end I just bought from a uk chess specific supplier and all my questions where answered on the page.
Now that's a niche I acknowledge that but still with all their data and product ranges a small online retailer beat them.
This part is probably going to be Amazon's undoing if they don't change their ways. If I'm buying a charger and know what I want, I really cannot safely buy from Amazon. It is much safer to buy from a Best Buy in that situation.
I always go to Ace first because of that guy. It's one trip to Ace vs the two+ trips to Lowe's when I'm doing something new.
Amazon can sell the parts cheaper, but the knowhow they can't provide is invaluable.
Bring your smartphone with you when you go to the store. That way after the staff tells you what you want, you can order it from amazon without leaving the store.
Don't rely on altruism for change. Expect the worst out of people.
Or eventually, you and everyone will skip the store trip by asking Alexa on the Amazon Echo in your smart home.
There's a balance between convenience and being subservient l or redundant to them long term.
People have found that the convenient (no pun intended) store that sold everything at nice prices also ended up killing local businesses, and eventually their own livelihood, even if not related to retail.
Not to mention the power the private interests behind those stores get in the country's politics or even globally.
"yes, that's how capitalism is designed to work. the window in which you can make outsized profits is meant to be temporary so companies can't just rest on their laurels.
it's beautiful when it works."
walmart has been smart enough over decades to never rest on its laurels, so it's competing fiercely (and successfully) with amazon.
barnes and noble and k-mart on the other hand are dying a slow painful death because all the pointy-haireds rushed in for their personal payday and didn't build a competitive business. both are probably hoping a white knight private equity deal will raise them from their ashes, as happened with target (don't think the brand equity is there, but who knows).
walmart and amazon have been setting the pace for competitors in retail. you can't use a low price strategy against those large players, but you can take a differentiation strategy (e.g., better, more knowledgeable service, as others have pointed to).
another area of pressure on large companies is on the labor side of the equation. walmart and amazon have squeezed labor to the bone and governments have done little to level that playing field (skills-based programs preferred there).
One way in which Amazon is different is that they were able to loose boatloads of investor money to get to where they are today. That is not true for your father (who I empathize with) or even with Walmart or Barnes and Noble who have traditional investors who were not willing to allow the type of pie in the sky losses that Amazon got their investors to go along with. For one thing Amazon was a new (internet) business and those others were existing businesses. So this is not a case of simply 'work smarter and harder' or even close. Amazon is a special case. And despite what anyone thinks it was not assured in any way that they would get to the dominant position they are today. Honestly it defied many of the traditional rules of business. And only worked because Bezos (like Musk, Jobs) was able to be both a celebrity, visionary and have the type of control that they had. Not the same as what your Dad can do no matter how smart and driven he might be. [1]
[1] Back in the day there was a tv show about a blind man that made it through medical school. I believe it was based on a real situation (man became a psychiatrist). In any case an outlier like that does not prove 'it's possible' at least on any repeat basis.
For example:
If you started your own car rental company, at a glance it might be tough to compete with the 10 or so large companies that exist today. There's no way you're going to compete with them when it comes to advertising. They have an army and seemingly infinite funds for raising their brand awareness and you don't have that.
Let all of those 10 popular rental services race to the bottom on price and deal with razor thin margins (which works for them because their volume is a lot higher). You can't compete there.
You need to win on things like customer experience, support and maybe even go after a different target audience. Niche down, create a really good service and crush just that segment of the industry.
Justify your higher prices with your own uniqueness and value.
Now this isn't a poor us, feel bad for us statement. Like I said my opinion of them is vastly different. I want them around. I need them around. They make logistics for us a 1000 times easier. In 3 clicks I can get items ordered that we need and not have to worry about it. (Need a new storage rack? BAM! Be here on Tuesday? We need a new printer ribbon? Phone camera + Amazon app = I have the exact one I need to replace.)
I hear retailers largely complain about them, because they are taking away business that they have come to rely on. That's not Amazon's fault; that's the business' fault. This is no different than the Walmart's, Barnes and Nobles (remember when there were small bookstores?), etc. of the world. Amazon is different, because it's threatening them too. Amazon is making people realize that they need to be constantly searching for new products and new sources of revenue, but the truth is that they should have been doing this all along. Literally every time I walk into the store, I talk to the manager and ask, "What are we doing to move forward?" Amazon isn't what should be scaring people, it should be the fact that they've been asleep at the wheel not realizing they are driving of the road.
My point is that competing directly with Amazon is stupid, but so is competing with any other large dominant company. They don't have a monopoly on anything, it's just that their presence is more widely felt by a larger number of people at the same time.