In its Prime: almost 40% of online spend goes through Amazon

In Industry Comment, Industry News On

As Amazon Prime Day lands later tonight, global ecommerce consultancy Salmon reveals 37% of online spend is done through Amazon. This spend is only set to rise, as 73% of consumers say they will increase their use of digital shopping channels in the future, the company adds.

Amazon has fashioned a model that is now setting the expectation of customers’ for all retailers. In fact, over half (53%) of all international consumers surveyed say they are more likely to buy from Prime than a retailer’s online store. This highlights the increased adoption of subscription services in retail and the risk to brands and their direct to consumer (D2C) online business models. Owing to the high expectations Amazon has now set, 60% of consumers surveyed said they feel same day delivery should be offered by all online retailers.

Consumers believe Amazon is the most digitally powerful brand out there, ranking considerably higher than its nearest competitor. The vast majority (72%) of US consumers said that Amazon is “leading the way in digital retail”, with the UK and Belgium also ranking them as the market leader in ecommerce (57%).

Its innovative products could also play a part in that fact: over four in ten (42%) say they would love to shop with Amazon Echo, and are currently using or planning to use Amazon Dash in the next year. This emphasises the need for retailers to invest in new technology to harness this demand themselves. 60% also say if a retailer was more digitally innovative, they would be likely to spend more.

The American company seems to be more popular with men, as 43% of male consumers do all their online shopping with the retail company compared to 32% of women in the US, UK, Belgium and Netherlands.

Salmon global head of consultancy and innovation Hugh Fletcher said: “Retailers need to consider a balanced strategy on how they compete or collaborate with Amazon. Amazon has seized the day. Put simply, they fulfil their customers’ expectations better than most other retailers in the market. As consumers increasingly look to service, speed and convenience – rather than brand – Amazon sets the standard that others must follow or risk being locked out. The whole Prime premise is built around providing a same-day or next-day delivery. Amazon has even created its own market peaks with its Amazon Prime Day. We call this “proactive peak formation”. Its purpose is to encourage Prime membership and keep customers ordering exclusively through Amazon and away from other brands. With companies like Tesco launching their own one-hour delivery service, we’re seeing other retailers looking to halt Amazon’s dominance.

“While many retailers are still struggling with establishing omni-channel strategies, Amazon is taking omni-channel innovations to the next level through its partnerships, delivery options and multiple interfaces, which is what retailers must do if they’re to survive.”

He added: “These findings unveil the harsh reality for retailers that need to wise up to the threat of Amazon and create strong digital services both quickly and to a high standard. Amazon is seemingly always ten steps ahead of other retailers, and its continued expansion into other markets demonstrates its intent to sew up every industry in sight. Retailers must ask themselves, are they happy to give up their interface, their data, their customer, and their future, and become just another brand consigned to history? Or will retailers revolutionise their own offerings to combat the likes of Amazon and secure their futures?”

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