Salmon commissioned research to gauge just how much of an impact Amazon has had – from the viewpoint of the consumers being targeted. How often do we shop with Amazon, why is this, how important is digital innovation and what do we, as consumers, value most.
The study suggests that as much as two-fifths (37%) of the total online spend is now made through Amazon, rising even higher amongst those in the US (57%). This could be higher still – these figures are skewed heavily by the large number of Dutch shoppers (58%) who say that they don’t spend any money with Amazon (You can only buy books from Amazon in the Netherlands).
“Amazon is fast approaching a position in which it could control as much of half of online consumer spending in the West – and all this is before its grocery offering, recently boosted by the acquisition of Whole Foods, has truly matured.”
– Salmon ‘King of the Jungle’ report
Over half (almost 3/4 in the US) those surveyed for the report said that Amazon Prime is the key differentiator. While issues like price and quality also have a role to play, Amazon’s success is being driven by much more than just its ability to compete on ‘pure’ retail terms alone.
It’s also worth noting that 60% of respondents say that they’re more likely to shop with a digitally innovative retailer and Amazon excel here with Dash buttons and Amazon Alexa for ordering without webpage or even a screen.
How do you maximise the Amazon effect?
For brands and retailers it’s hard to ignore marketplaces. We’ve moved way beyond the notion that every retailer should have their own mobile app (It turned out that consumers don’t want dozens of retail apps) and indeed are now starting to move beyond mobile itself. Certainly for the foreseeable future a mobile might be the window into a Virtual Reality or Augmented Reality world, but supporting this technology is out of the reach of all bar the largest retailers.
For most brands and retailers the only answer is to make your goods available on the platform that shoppers choose to access and that is increasingly Amazon. It’s not enough just to list your products on the platform however, they need to be made available under the Amazon Prime program which retailers can access in one of three ways:
- Put your products into Amazon FBA
- Access Seller Fulfilled FBA
- Use a partner (e.g. Trojan) who can access Seller Fulfilled FBA on your behalf
As a retailer you might not want to be reliant on Amazon, you might not want to pay for FBA and have your stock in Amazon’s warehouses, but a 37% and growing fast share of online spend suggests that it is almost compulsory if you want to maximise sales.
4 Responses
Scary … getting to the time when Amazon needs to be broken up. Isn’t it 50% in the USA?
We don’t even bother with seller fulfilled with Amazon it is pointless. We only ever use FBA products. I can see the benefits to to the customer, next day delivery, sometimes a little perk from Amazon if you take slow mail, instant returns blah blah. However prices are getting higher you can see it now in media it is not the lowest price anymore, the fees are far to high, it is the only saving grace the rest have.
Not so good for merchants now they have everyone hooked service is worse than eBay and Ryan Air combined. Fees are HUGE now, margins suck now, constant issues with stranded inventory, slow at getting stock live. Amazon themselves competing direct with you, the amount of sellers who avoid VAT etc. It is a cheapest WINS marketplace so not a great place to do business.
Plus they let some right dodgers trade, one seller we know (tons of NEG feedback for it) has been passing “used” off as “new” for years now, same on GAME nothing is ever done.
Remember reading a statement from the CEO of Ebay Australia “saying sellers and buyers wont turn to Amazon in Australia but stay loyal to eBay, clearly the man is in total denial of what is really happening out there”.
We are so careful the stock we send to Amazon you really need to research it, if they have it half the time just forget it.
Amazon is leagues above anything else, there is RMG away to start striking so eBay is already done for this Christmas, they were done anyway they just do not know it yet, they got the logistics right and invested while the rest sat on their hands.
Anyway I expect that figure to be at 50% next year. What is the overall cost however????…..
As with so many things, ebay vs Amazon depends on what you sell and who to.
We put a small number of products on Amazon, at the same price as they’re on ebay. Get a few decent sales now and then, but overall like for like sales are a pretty poor ratio compared to ebay. This is for the same products, at the same price. They’re almost unique products, as in, there is no-one else selling the exact same thing, so it’s not like Amazon or other sellers are getting all the sales on there. It’s just people don’t go on there to buy them. They go on ebay.
I’m not even sure the sales would pick up if we went FBA, but I’ve got a warehouse anyway thanks very much and don’t need to be paying Amazon to use theirs.
The only thing that makes me think about FBA is, sales seem to come through in patches, then dry up, then we get the “hey why not use FBA” emails for about a week. But that makes me think perhaps Amazon are playing games, turning visibilty on and off to get try and get us to use FBA. And that makes me more likely to decline it.
“Amazon playing games”, of course…
They claim you make more sales if you use FBA, you also seem to get the buy box more often, regardless of the price, Amazon is all about the money, making money from you and money from buyers, it does not matter to them if buyers pay more for something.
But I would rather not….