Thirty percent of all online shoppers start at Amazon to research products, according to a recent report published by Forrester. It’s great news for the retail giant but more strain on most ecommerce retailers as the number one retailer now makes up more than 19 percent of all U.S. ecommerce revenue, compared to 9 percent in 2001.
Eighty-six percent of Americans who have bought something online said they’ve purchased from Amazon before.
Google attracted only 13 percent of potential buyers as the first stop shop for product research. This is noteworthy change from 2009, when Google led Amazon among consumers 24 percent to 18 percent.
Amazon: An eBay Replica in Motion?
One thing that often skews these reports is the misunderstanding that Amazon created all of that sales revenue alone. They didn’t. It was with the help of the thousands of merchants who sell on Amazon’s marketplace and benefit from it as a result.
But with Amazon’s incredibly stark customer standards, often where retailers get the short stick and an unfair chance at retribution.
There have been reports of sellers going into extreme pricing wars to win buy boxes (competing against other sellers and Amazon themselves). On top of that, there have been multiple retailer reports of Amazon reaching out direct to manufacturers that sellers on Amazon use (since retailers give up rights to all sales data that takes place on Amazon, Amazon can easily look at the big picture of their sales data and pick and choose where to expand their own fulfill by Amazon product line).
Amazon may soon feel the pain as more retailers leave to list their product elsewhere.
More Trouble On The Horizon?
Amazon’s recent technology developments have been less than quality with the Kindle Fire and now reports of an Amazon phone on the way (sounds terrible) it may be a cash pit that sucks Amazon under.
Many analysts look at these devices as loss leaders and ways to help push forward Amazon’s digital and physical goods by syncing the devices directly with Amazon.com. But my feeling is that if you create crappy products, people will view you as a crappy company.
My opinion: If Amazon can’t create technology products that are on par with their online shopping experience, don’t release them. You’re just diminishing the value of your brand and long-term ability to generate revenue.
Finally, Google Shopping becoming a paid sales channel and new sales tax laws are two other big fish that will impact Amazon now and in the near future. Amazon is already paying Google a pretty penny (I’d estimate millions per quarter if they’re paying market rate) for all the Google shopping traffic sent their way.
In any event, Amazon will be on the top of the ecommerce mountain for a while. With low prices, excellent shipping services, consistency, and (my favorite) easy to access product and seller reviews, Amazon leads the pack in terms of service and price.
Amazon’s revenue numbers and Forrester’s report show how their customer-centric mentality pays off. I just wonder why there aren’t more retailers out there imitating their style and making it better.
What do you think?