| Hey y'all, it's Austin, on day 73 of my self-isolation. During this interminable quarantine, e-commerce is soaring as shoppers hunker down indoors. Meanwhile, the physical retail industry has crashed, with a string of bankruptcies slamming once-august brick-and-mortar institutions. It might seem like the perfect crisis for Amazon.com Inc. But in recent months, the company most primed to capitalize on a surge in online shopping is losing ground to its rivals. What's going wrong? Since the Covid-19 pandemic began, many offline retail channels have temporarily shuttered or have struggled to keep up with demand. The resulting influx of web sales has overwhelmed Amazon's warehouses, leaving room for digital competitors to take advantage of the company's unusual inventory crunch and delivery delays. Instacart Inc., the newer-age grocery app, has been booming, but so too have old-school players such as Target Corp. and Walmart Inc. Does this mark a permanent shift in consumer behavior? Or is it a mere ephemeral uptick in customers looking beyond the Everything Store? When Amazon rolled out its Prime subscription service 15 years ago, the goal was not only to attract more consumers away from traditional retail, but also to make it so seamless, so delightful, that they'd never go back. Chief Executive Officer Jeff Bezos introduced deep discounts, a bottomless selection and two-day shipping for Prime members. "It was really about changing people's mentality so they wouldn't shop anywhere else," Vijay Ravindran, the former director of Amazon's ordering systems, told my colleague Brad Stone. It worked. In the following years, Amazon became one of the world's most valuable companies, creating not so much a moat—with more than 150 million Prime subscribers by 2020—but an ocean of customer loyalty. Physical retailers around the country rushed out digital store offerings to keep pace, but why would people buy stuff from those sites when they were already shelling out $119 per year for the privilege of shopping on Amazon? During the pandemic, though, Amazon's famously reliable logistics empire faltered. And millions of people were reminded that there are still other retailers out there—and that some of them have even caught up to Amazon in terms of efficiency. After running into small shipment setbacks with Amazon Prime, I, for one, have found myself increasingly ordering items from Walmart, Target, Bed Bath & Beyond Inc., and Barnes & Noble Inc.—all of which have been impressively fast and inexpensive. I'm not alone. Walmart, which reports earnings this Tuesday, reportedly saw online sales shoot up 30% in February and March. Target's digital sales spiked 275% last month. And both companies have narrowed the gap with Amazon in terms of average delivery speed, according to third-party researchers. But Amazon's primacy isn't exactly at risk. Its market share is still dramatically larger than any other online retailer in the U.S. It's hired 175,000 people since the pandemic's start. In an email, a spokeswoman said that Prime "remains very important" to customers who use it for music and video streaming, as well as deliveries. And the company told Bloomberg News last week that its normal one- and two-day shipment times will return soon, which will likely mitigate further subscriber frustrations. So will Prime members rush back to Amazon? Or are Walmart, Target and their curbside-pickup ilk going to gobble up more of Bezos's e-commerce market share? One preview of what's ahead may be in China, which is just now emerging from its own virus lockdowns. JD.com Inc., the country's second-largest online retailer, reported first-quarter revenue up 21% on Friday. The company's success weathering China's coronavirus woes has made it an increasingly viable alternative to its bigger arch-rival Alibaba Group Holding Ltd. And JD expects its gains to multiply going forward: The company forecast that revenue will rise as much as 30% next quarter. "JD.com has been able to remain fully operational throughout the Covid-19 outbreak," founder Richard Liu said in a statement. "Strong user growth during the first quarter reflects consumers' increasing reliance on JD.com to support every aspect of their lives." It's a sign that competition with the biggest player is possible. But the best news right now for companies like JD, Walmart and Target is also good news for incumbents Alibaba and Amazon: The world's e-commerce pie is getting bigger. —Austin Carr | 
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