Has Amazon fundamentally changed the way Americans shop?

Discussion
Source: Amazon.com
Feb 01, 2017
George Anderson

Many — as yesterday’s RetailWire discussion on Walmart.com’s new free two-day shipping offer demonstrates — see little that other retailers can do to come between Amazon.com and the millions of consumers who shop the site. A new research paper looks at what sets Amazon apart in the minds of consumers and, clearly, the table stakes have been set quite high.

A survey of 1,000 U.S. adults conducted by PowerReviews found 71 percent make at least one purchase a month from Amazon. A variety of factors influence their decision to purchase from the site including:

  • Product variety: 79 percent
  • Free shipping: 64 percent
  • Better deals: 60 percent
  • Customer reviews: 55 percent
  • Search: 54 percent
  • Mobile experience: 29 percent

While other research has indicated that many use Amazon as a de facto search engine for online shopping, PowerReviews found that 70 percent of its respondents use brand or retailer sites before completing a transaction on Amazon.

“Our survey found that consumers’ biggest pain point pre- and post- purchase was not having enough information,” said Matt Moog, CEO of PowerReviews, in a statement. “Amazon provides rich content in the form of product reviews, photos, videos and descriptions to build trust. Consumers have come to not only rely on this information but expect brands and retailers to provide it as well.”

The e-tailer has succeeded with consumers, according to the study’s analysis, because it is viewed as both “consistent” and “trustworthy.” How Amazon, particularly through its Prime program, does business has created high expectations among consumers. Eighty-four percent cited free shipping as important while 62 percent were influenced by free returns. Twenty-nine percent liked being able to reorder items easily.

Delivering products as promised is key to the reputation that Amazon has developed with its customers. Yesterday, Amazon announced it was building its first air cargo hub in Cincinnati/Northern Kentucky Airport in Hebron, KY to support the company’s Prime Air cargo planes. Last year, Amazon reached deals to lease 40 dedicated cargo planes to support its Prime shipping program. Sixteen of the aircraft are currently in service.

DISCUSSION QUESTIONS: What do you see as the key factors that separate Amazon.com from other retailers in the minds of consumers? How will the creation of Prime Air hubs affect the e-tailer’s business going forward? What will it mean for Amazon’s competitors?

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"Amazon's unique value proposition for consumers is that the whole is greater than the sum of the parts. "

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25 Comments on "Has Amazon fundamentally changed the way Americans shop?"


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Ori Marom
Guest

Amazon has created the first ever platform of truly frictionless commerce. This means that sellers who use Amazon cannot expect, in the long-run, to turn positive profits.

While it seems counter-intuitive that a seller would freely enter a business that is expected to make it a loss many businesses (such as Walmart, the hero of yesterday’s discussion) are still myopic about the fact that online sales cannot be profitable. Ever.

In this environment retail businesses have but two choices: either exit or radically re-invent themselves. Re-invention is a wonderful option with vast potential since, just like Amazon, physical stores can become very profitable platforms that loss-taking online sellers can use.

Gene Detroyer
BrainTrust

“Frictionless commerce”! That’s a perfect description of Amazon.

Consider, my grand-daughter slept over this weekend. We wanted to watch a couple of movies — went straight to Amazon. I was with a colleague the other day and she recommended a book — I touched my kindle app and bought it. Yesterday my wife said she would like to have an ice cube tray that makes large ice cubes — the answer was Amazon, it will arrive tomorrow.

Frictionless!

Phil Masiello
BrainTrust
Amazon’s core strength is stated clearly in the above discussion. Amazon has built trust and loyalty with their customers. That is not something that will be easily broken by a competitor changing to free shipping. Amazon provides useful and relevant content to consumers to get them to buy. They only make money when people buy on their site. So they do everything correctly to get users to convert. Content, images, ratings and Prime are the triggers. Third-party sellers, who make up close to 80 percent of the items sold on Amazon.com, are required to provide useful content. 62 percent of consumers begin their product search on Amazon, find what they want and validate their decision by looking at the brand’s website and off-platform information before going back and completing the purchase. So brands need to be aware of this pattern and use their own site to work in conjunction with Amazon. Let’s not lose sight of the fact that Amazon is a technology and logistics company above all else. Building their own air cargo fleet,… Read more »
Max Goldberg
Guest

The survey said it all … consumers trust Amazon. Amazon has consistently been at the forefront of innovation in e-commerce, all to benefit the shopping experience. And Amazon is always looking for ways to make their internal systems better.

Bob Phibbs
BrainTrust

My dad used to say, “Watch out when the chickens come home to roost” meaning you have to face the consequences of your bad decisions. Shoppers are punishing brick-and-mortar retail after decades of neglect, slashed training budgets, diminished hiring standards and expectations, a couple of register pods that shoppers have to find and employees that are expected to run multiple departments. Heck, I was in a Macy’s a few years ago that an employee told me was being run by only three employees.

Retailers separated themselves from their customers long ago. As they are aggressively marching into various areas, Amazon is reaping years of neglect.

Chris Petersen, PhD.
BrainTrust

Amazon’s key differentiator in a word is: ecosystem. Amazon’s unique value proposition for consumers is that the whole is greater than the sum of the parts.

Amazon excels at many individual facets of retailing: selection, rich content, reviews, shipping, ease of returns and customer service every step of the way. Many of those individual areas can be matched by a competitor in some way.

The reason customers keep coming back is that the Amazon ecosystem creates a seamless experience with unmatched service BEFORE, during and AFTER the purchase.

Lyle Bunn (Ph.D. Hon)
Guest

Amazon is basically an online department store that caught eBay and physical retail asleep at the switch. Scalability and order of magnitude growth has supported algorithmic success by Amazon. The question is, what comes after Amazon? I suggest the pendulum will swing to balance with Amazon providing consumer fulfillment and physical retail upping its game to meet consumers’ needs for product discovery, social shopping, immediate ownership and the other elements that make a store visit worthwhile.

Lee Peterson
BrainTrust

Amazon has drastically altered the way we shop for sure, but the real “get” here is that they continue to do so (see also: Alexa/Echo/Dash). What makes them different is their fail-fast mentality but, more importantly, they think about EVERY facet of their customer’s life, not just their own operations.

Most retailers spent decades focusing internally on procurement, logistics, real estate and other operational techniques until Amazon showed up. Most paid only lip service to making the lives of their customers better through ad campaigns and slogans vs. reality. Now they’re caught in a game of catch-up, which is the equivalent of trying to catch Usain Bolt when you’re 20 yards behind!

I believe this is going to be the Amazon century. This is only the beginning.

Dick Seesel
BrainTrust

Amazon’s competitors have it all wrong if they think it’s all about low prices. (And this is the fundamental error behind Walmart’s “brand promise” over the years.) Amazon has always been focused on breadth of assortment and great execution. As the company has entered more categories (starting all the way back when they were in the business of shipping books), it has never lost sight of these key competitive advantages. Customers’ expectations have been scrambled as a result, and everybody else (whether pure play e-commerce or omnichannel) is just trying to keep up.

W. Frank Dell II
BrainTrust

I find the Amazon buzz like AOL of years past. I find Amazon higher in prices most of the time when I am shopping online. The only thing I buy from Amazon is books for my Kindle. Yes they have advanced online shopping, but any company failing to make a consistent profit will fail long-term. Advertising and a fair shopping experience provides short-term separation from competition. Prime Air Hub reminds me of when a major CPG company ask me to determine if they would be profitable operating their own stores that stocked only their products. The Air Hub will likely have questionable profits. All retail business is seasonal and when a retailer invests in infrastructure this be must considered. All online retailers must provide free shipping — period.

Jasmine Glasheen
BrainTrust
Jasmine Glasheen
Principal Writer & Content Strategist, Jasmine Glasheen & Associates
2 years 9 months ago

Amazon has set the precedent for buyers, offering customers the ability to compare prices and prioritize on-site. The customer can choose between free Prime shipping and the lowest price, whether made-in-the-USA is a priority, and whether brand name takes precedent over value. The built-in comparison shopping, online reviews and breakneck shipping offered by Amazon have blown other retailers out of the water.

The question is not whether Amazon is the one to beat, but rather whether Amazon offers a sustainable sales model for retailers. I’ve been seeing big apparel and cosmetic brands offer increasingly flat-line prices on Amazon. Cosmetic brands are instead offering their best deals on Sephora or Ulta websites or in brick-and-mortar department stores. If name-brand retailers continue this pricing exodus, Amazon will eventually become a non-branded off-price channel.

Charles Dimov
Guest

Amazon’s brand is their biggest asset. They have worked at it for a long time as a pure-play, having honed their art into a well-honed process. Amazon has provided fast service and are the go-to spot as a first destination when consumers search online. Part of their success recently has been their continual pace of new developments. As a juggernaut, they have continually pushed boundaries like faster and faster delivery, pickup lockers, cashier-less retailing, etc.

Competitors need to focus on their strengths to counter. Many competitors have a MUCH larger footprint in physical stores (at this point). Leverage omnichannel retail to the max by enticing customers to test the click and collect waters. It starts with great retail technology that gives customers inventory visibility at nearby stores, the ability to pickup orders easily and quickly … and ends with that AMAZING service experience. That’s how today’s retailers can compete.

Shep Hyken
BrainTrust

Amazon is the easiest company on the planet to do business with. They offer selection, competitive pricing, good service, information, confirmation of shipping, fast delivery — and the process, once you are in their system, is … EASY.

Their Prime Air hubs are simply part of the distribution that is getting product to the customer in a more efficient and cost-effective manner. Having their own distribution system at this level and magnitude helps make them more efficient and competitive.

Jeff Sward
BrainTrust

I’ll start with a possible definition of Amazon’s brand promise. Painless, information-rich couch shopping devoid of any sensory input. Mall shopping = see, touch, smell, feel texture, sensory-rich, information-rich shopping. Amazon = left-brain shopping. Malls = right-brain shopping. Both work. Both have a role. If you have a right-brain platform already established for a brand, Amazon shopping works. If you need to develop a right-brain model for a brand, you are headed for the mall. So I think the separation between Amazon and other retailers is pretty simple. One is not better than the other. They have different roles in the range of shopping experiences. Brands and retailers can model accordingly.

David Livingston
Guest
2 years 9 months ago

Amazon for shopping is like having Windows for an operating system on your computer. I don’t know anyone who uses anything else. Shopping Walmart, Target or some other individual retailer is something we all do from time to time, but for quick ordering and quick free delivery, Amazon seems like a no-brainer.

Jerry Gelsomino
Guest

In one word – Trust. Amazon was the first online sales location customers learned to trust. That was a pioneering step all of online sites have benefited from.

Sky Rota
BrainTrust
2 years 9 months ago

Amazon comes up on first page of Google and is in the top three when you search for anything. That is why we click on them. Amazon is not the best priced even with free shipping most of the time. Their sellers are getting outrageous with their prices and we are getting tired of Amazon always changing the prices in our cart. They have some algorithm that must change the prices every so often and that turns us off.

They tried shipping in my my area and it went bad and they shut down three weeks before Christmas. They couldn’t compete with UPS who has been around forever and perfected shipping.

I never send my parents links to get me stuff from Amazon. Just sayin’.

Michael Day
BrainTrust

Add “convenience” and “value” to consistency and trustworthiness and there you may have the story (leaving for another day and discussion the leveraging of data and technology to speak directly to consumers and attempting to deliver directional relevance and drive impulse purchase)

I am counting this week. It is Wednesday and already I have received four different deliveries from Amazon Prime to my home. These are household/family/professional-related purchases that back in the day would have come from Barnes & Noble, Home Depot, Kohl’s, Toys “R” Us, maybe from Costco, Target or Walmart. It is a new retail day. We already look at Amazon Prime as an “inflection point” that changed the retail landscape as we previously knew it. Walmart has their work cut out for them. But considering the brand, their scale and buying power — and now the e-business model benefiting from the acquisition of Jet.com — it will be interesting to watch Doug McMillon and Walmart make their run at Amazon.

Adrien Nussenbaum
Guest

There is no doubt that Amazon has changed the way Americans shop. Look no further than the success of Prime Day. The trust Amazon has built with customers is a huge threat for competitors. The breadth that Amazon can offer through its marketplace of third-party sellers has competitors trying to differentiate in other ways that tend to be less profitable and less compelling for customer experience.

Brian Kelly
Guest
2 years 9 months ago

Key Factors:
Convenience + Low price = Best value
Convenience = long tail assortment + easy order + easy return

Prime Air hubs:
Increase speed to shopper, thereby increasing convenience

The Rest of us:
In certain categories and for certain shoppers, Amazon is best practice. Until someone knocks them off or macro economic conditions radically change the consumer situation. Ergo, more rockets and newspapers for Jeff!

For the flip side of categories and shoppers, brick options will continue to reward based upon a more human experience. Especially in situations when time is tight and you need an optimal solution right away.

As recently hired WaPo newspaper boys say, “retail ain’t for sissies!”

Min-Jee Hwang
Guest

Without a doubt, Amazon has changed shopping habits of Americans. They built up trust with the consumer and offer convenience everyone else is trying to imitate. To this day they are still attempting to innovate the way people shop be it through Amazon Go or Amazon Fresh. Their willingness to try pioneer new delivery methods and face failure fearlessly has been matched by no one.

Vahe Katros
Guest
Vahe Katros
2 years 9 months ago
Has Amazon fundamentally changed the way Americans shop? Yes, remember how we used to find out about items that were long tail? In magazines, newspapers, word of mouth, perhaps by chance. Now, if I imagine a product that might fit a need, chances are I can not only find it on Amazon, I’ll read reviews and be offered complimentary products I would never have imagined I needed via collaborative filtering. So I go to Amazon first. Marc Andreessen wrote an essay years ago called “Why Software Is Eating the World” that’s old hat today. AMZN created the ultimate Commerce Bus. A platform that enables connection to any sub-vertical relating to commerce. They moved retail into the cloud. This reminds me of something Randy Mott, Walmart’s CEO in the ’90s said somewhere back them. He quoted the American Airlines CEO, saying: “I wish I could get out of owning airplanes and just be in the reservation business like Sabre.” Mott said that Walmart felt the same way and that’s what Retail Link aspired to be —… Read more »
gordon arnold
Guest

The internet and home delivery is changing what and how people buy things. Amazon has done a good job of keeping in step with the e-commerce market, but they at far more interested in customer loyalty than in new and innovative use of technology. Maybe because they are running out of profit taking ideas. The next step in e-commerce expansion is creating acceptable answers to where product can be seen and/or tried.

William Passodelis
Guest
2 years 9 months ago
Amazon has changed everything! Much like the Google search engine — you can Amazon it. No one says that but everyone thinks it. Everyone knows that on Amazon, you can buy anything and everything, whatever you want, at a great price and get it in 2 days! The Google site still has huge power in search and Facebook seems to have taken control of (a HUGE amount of) social networking. Amazon seems to be in control of online shopping and is THE answer a lot of the time, if not always for a lot of people. And MOST people are very happy — just ask! And with their collaboration with individual vendors to be able to obtain obscure things, I do not know how you fight that if you are a traditional retailer. Amazon is SO good at so many aspects of the whole experience. Their goal really seems to be service and ease, and they get it so right! And on top of that, it’s a great value proposition. They have “re-set” a very… Read more »
Dave Nixon
BrainTrust
Dave Nixon
Data Analytics Solutions Executive, Teradata
2 years 9 months ago

Amazon’s impact to retailing is already being called the “Amazon Affect.”

So yes, yes it has.

You see a lot of stories about companies who can’t figure out who they are. Amazon has seen itself as a technology company from the beginning. They understood it wasn’t about selling books, it was about building out an ecosystem of connected digital touchpoints.

If you build it well, they will come back, again and again.

From a consumer standpoint, Amazon’s brand sets the bar amazingly high. The company has perfected creating a seamless, personalized shopping experience. The entire process is easy from start to finish, and that’s the new gold standard by which all retailers and retail sites are judged.

The Prime Air hubs are just another innovation that demonstrates Amazon’s ability to meet market needs. Focus, vision, ingenuity and adaptability are Amazon’s strengths, and that’s a tough act for any retailer to follow. But there are certainly lessons traditional retailers need to be learning to stay relevant for the years ahead.

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"Amazon's unique value proposition for consumers is that the whole is greater than the sum of the parts. "

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