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Amazon's new nemesis: Brick-and-mortar stores

It wasn't supposed to happen this way. Cyber Monday, the big online shopping day after Thanksgiving, was supposed to let Amazon (AMZN) shine. After all, the online retailer is a master of the Web.

And yet, Monday belonged to Walmart (WMT), which saw a record number of online orders. Plus, 70 percent of its online traffic Thanksgiving weekend came from mobile devices, a highly desirable customer segment. To add insult to injury, on Monday, ratings firm Moody's Investors Service lowered its outlook on Amazon, citing concerns about increasing debt.

Amazon has many opportunities owing to its aggressive strategy of investing in new services, products and business lines.

Cyber Monday is the biggest sales day of the ... 01:43

It also has problems. Some new devices have done abysmally. In general, continued growth strategies require heavy investment that keeps the company's results in the red. And investors have become less forgiving of the lack of progress toward sustained profits by a company that's well into its second decade of existence.

But a growing threat facing Amazon comes from the traditional retailers it was supposed to supplant. That wasn't quite what most people envisioned, but the old-line companies with stores eventually moved successfully into e-commerce. Now, Amazon is contending with significant competition from companies with deep pockets, vast retailing and merchandising expertise, and enough time to have pulled close.

The reason many thought e-commerce would overtake traditional retail is a combination of convenience and competitive price that's hard to beat. And the proponents were largely correct. Online shopping and merchandising offer some significant benefits to consumers. Comparison shopping is a snap, and you don't have to leave home or work if you don't want to. editor Nicholas Thompson discus... 03:01

But traditional retailers, after their slow start, kept building their own systems and hatched some powerful benefits. Consumers can, ideally, buy online and return to a store, or see something at a store and have it shipped home. Stores are places where consumers can handle merchandise and offer retailers more opportunity to market and promote.

The traditional retailers have understood that even a profound change like online commerce takes years to come into its own, allowing them to follow what works best on the Web and develop their own virtual presence. Even more important, these companies have incomes that often equal or surpass that of Amazon, and they manage to make some profit, giving them a financial advantage. It lets Walmart price-match online sellers in its stores and Macy's offer a same-day delivery service.

Ironically, Amazon could soon open its first storefront. But it's unclear whether investors will wait long enough for the company to integrate both online and physical presences to counter the surprising challenge from traditional retailers.

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