Amazon is now the fifth biggest player in UK retail – accounting for more than £4 in every £100 spent on line in retail in 2017. Only the ‘Big Four’ grocery chains are doing better.
So finds GlobalData, a leading data and analytics company, which says that Amazon’s growth is not coming just from stealing market share of its retail competitors, but also from online pure play growth outstripping retail growth generally.
According to its figures, pure play growth in the UK online channel are estimated to have risen by 22.5% in 2017, in comparison to total online spend rising 8.4%. And if that isn’t worrying enough, Amazon is forecast to be accounting for 33.5% of all UK spend online in 2017 versus 29.6% in 2016.
“Amazon is soaring up the ranks of UK retail with the online behemoth only held off the top spot by the big four grocers in 2017. Its dominance in the retail market considering it primarily sells non-essential items in comparison to the grocers who benefit from selling indispensable, everyday goods, and that it does not have any physical stores in the UK, is evidence of how Amazon has continually innovated and succeeded in meeting consumer needs, in terms of both product range and shopping experience.”
-Sofie Willmott, Senior Retail Analyst, GlobalData
Given Amazon’s phenomenal performance and the limited growth forecast in retail spend over the next five years, it is no surprise that retailers are eager to get on board and ramp up their online sales in an attempt to drive incremental sales via a new sales channel.
Part of this strategy has to involve tapping into Amazon’s growth and using the marketplace to sell their own goods.
It is also going to see other platforms such as social media outlets looking to become more like marketplaces – offering not only the marketing reach of its social users, but multiplying this by the need for shoppers to see and hear about goods before they buy them.
This is the philosophy that lies behind moves by Instagram and Pinterest to ramp up their sales tools for merchants before they start to push themselves as sales platforms to consumers.
But retailers still need their own sites.
“It is imperative that retailers continue to give shoppers a reason to visit and purchase from their own sites, such as exclusive products or loyalty rewards, to maximise profits and consolidate their place in the market.”
-Sofie Willmott, Senior Retail Analyst, GlobalData
3 Responses
The reason Amazon is now doing well in the U.I is because of Prime which has free shipping, movies, music and unlimited photo storage. The free shipping with prime is the game changer as other retailers are unable to compete with that. The more people that subscribe to prime the better Amazon will do.
Well we have not sold anything on Amazon since the 1st of Jan 18, we sold out after peak and canx our actual subscription, (am not naive enough to say we will not go back, or be forced to go back)….but right now we are not missing them in the slightest. Our account is in excellent order so we could just go again if required.
We have made up for the loss Amazon sales with a combination of delivering more digital sales without the need of any marketplace, use of retailer marketplaces which have been very successful overseas (less so within the UK), and working with now two ebay stores better., we have actually dropped 1000 products from eBay but grew our sales and most important increased “our margins”. We are targeting specific products and keeping away from areas we clearly cannot compete in, better “research”.
Sales was never the issue with Amazon, it is the margins in our sector anyway. they increased our fees last August so made it pointless, and they are actually pretty expensive compared to many other places now for 3rd party retailers, again in our sector.
I think any retailer worth it’s weight in stone should have their own e-commerce option.
As far as the social options go, we get these updates etc on Pinterest just more pay us for coverage they are still a long way off, but saying that we are building that all up on the side, they might actually stop tinkering at the edges and get on and do it properly.
I gave up selling on Amazon (sadly), it became too difficulty and costly for us.