Amazon has followed an extremely similar path. Jeff Bezos’ critical insight when he founded Amazon was that the Internet allowed a retailer to have both (effectively) infinite selection AND lower prices (because you didn’t need to maintain a limited-in-size-yet-expensive-due-to-location retail space). In other words, Amazon was founded on the premise of there being a dominant strategy: better selection AND better prices – the exact same as Sears.
Yup! That's the insight that a lot of people fail to get.
The only additional thing that I will add is this - there is always a cycle in the world. Amazon has yet another dominant strategy up its sleeve. The secret to successful long term companies is to also continuously innovate not only in technology, but also business.
This is where the current crop of companies - Amazon, Apple and Google are miles ahead compared to the rest.
Amazon - FCF focus on running the business; comfort in low margin, high volume scalable businesses Apple - extreme vertical integration in a world that was otherwise not Google - Revolutionizing the ads business using the ability to get letters together to scale fast.
The one entrant that I am keeping a close eye on is facebook and the business model innovation would be crucial for its long term success.