Is Amazon.com taking over the retail world?

My son was telling me about something called Amazon Prime. He said that for 80 dollars a year he could do more what he wanted with online entertainment than at Netflix. I presently am a netflix member but at the 17 dollar level which allows me to have one DVD through the mail at a time. However, after talking to my son I may drop to an 8 dollar netflix level to get all the older TV and movies streamed to me that I want all the time and then with the money for the price difference I can join Amazon Prime which streams movies according to slightly different rules. For exmple, if it is a new movie I think you can stream it for about 2 bucks or buy an electronic copy for I think 4 dollars or more. So, you actually wouldn't have a physical DVD that you own. Or you can buy through the mail a DVD of whatever you want to watch. Or if it is an older TV episode or movie you can stream it for free as an amazon prime member. So, Amazon prime gives you more choices in this way.

But, here is the thing that blows my mind concerning Amazon. By paying 80 dollars a year for Amazon Prime you are given permanent (as long as you are a member of Amazon Prime) Free shipping on anything you buy at Amazon.com . So, when you buy things from Amazon.com(even food and electronics) you pay no shipping ever because you are an Amazon Prime member. So, for example, the computer that my son is building as a Christmas gift for my wife's friend since childhood, would have cost about 1000 dollars in components to build. But because he didn't have to pay either sales tax or shipping for any of the parts it only cost around 700 dollars to get all the parts here for a savings of about 300 dollars. How can other companies compete with this once people find out about it?

And not only that, the computer he is building will be better than anything you can buy at any store because he can infinitely customize the computer in the way that he builds it like one could when buying parts to build a customized race car or customized 4 wheel drive vehicle.