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Amazon

2017 Amazon Shopper Study

Background

Amazon already has a warehouse in Melbourne (Dandenong South) and will build a second warehouse in Sydney (Moorebank). This investment in logistics highlights their substantially growth plans for their business in Australia. For Australian retailers and suppliers to be competitive in the marketplace they need to understand not only how they operate but also how their shoppers shop. The 2017 Amazon Shopper Survey, of 1,500 U.S. Amazon shoppers, undertaken by CPC strategy, gives Australian retailers and suppliers a better understanding of how people shop on Amazon.

The 2017 Amazon Shopper Survey

Brands Amazon shoppers buy

In 2017 80% of shoppers reported that they ‘frequently’ or ‘sometimes’ try new products or brands, up from 50% in 2016. 53.4% of shoppers were more willing to buy a brand they are not familiar with on Amazon than any other store i.e. they trusted the business to only range good products / brands. The shoppers may behave in this way due to the customer first strategy of Amazon. For example, they guarantee a 30 day return policy and have lots of customer reviews on the site that minimises the risks to the shopper. Also, the customer first strategy makes the supplier offer a quality product to minimise the risk of returns / negative customer reviews. These statistics suggest shoppers are not ‘brand loyal’ which creates both opportunities and threats for brands.

Amazon has Earth’s Biggest Selection and historically tended to range a large number of lesser known, niche products / brands. Due to shoppers trusting the platform some of these lesser known brands have been able to partner with Amazon to create well known and trusted brands. In Australia many new brands and also niche product / brands can partner with the platform to grow their business. With Coles and Woolworths focusing on range reduction, only stocking top selling SKUs etc suppliers will have another route to market.

Historically, major brands were concerned that listing on Amazon may damage their brand, so they did not become a vendor. Recently well known brands, such as Nike, have become vendors. By stocking well known brands the business is obviously improving its range / offer so Australian retailers need to consider how their range can compete. Australian suppliers, that may have originally thought that Amazon was not the right business partner for their brand, should re-consider their brand strategy. I am not suggesting all brands should partner with the platform but rather more well known brands should.

A risk to brands sold on Amazon is counterfeit products. Over 70% of shoppers are concerned (replied Yes or Maybe) about counterfeit products on the platform. For example, in 2016 Birkenstock removed their range due to issues with ‘counterfeit’ product being sold on the platform. In some instances ‘counterfeit’ product may be authentic product sold by an unauthorised third party. A similar issue happened in Australia, in 2005, when Aldi sold imported Nescafe Blend 43 in Australia. The obvious point here is that Amazon is a multi national retailer and Australian brands need to engage with the platform to ensure only authentic Australian product is sold to Australians.

How Amazon shoppers shop

67% of shoppers usually buy with a desktop computer or laptop. Mobile phone is second with 24%. Surprisingly the number of desktop shoppers increased in 2017. In the US approx. 50% of internet traffic is mobile but still the desktop / laptop is preferred by shoppers. Not surprisingly if you break the numbers down into age brackets young people (18-24) are approx. 50% use a mobile phone vs 50% desktop / laptop / tablet / other. For people aged 65+ are approx. 5% use a mobile phone vs 95% desktop / laptop / tablet / other. Another interesting fact was that shoppers are more likely to ‘browse’ on a mobile phone but ‘buy’ on a desktop. Almost 70% of shoppers browse Amazon every week without a specific product in mind. For Australian brands you need to ensure you listings and ads are desktop and mobile friendly. With more brands using online video, e.g. explainer videos, brands need to remember that not all regions of Australia have reliable internet coverage. Particularly if your target market includes regional Australia you need to consider if videos can be streamed on mobiles.

Over 14% of consumers purchased with a voice enabled device. Logically the most common device owned was Amazon Echo or Dot (61%), then Google Home (34%) and Apple Homepod (5%). This suggests consumers are now becoming familiar with voice enabled technology and it is becoming more common to use this type of technology vs traditional PCs or mobiles. Google (and others) are aware of this trend and have launched programs like Shopping Actions that allow consumers to shop on Google Home (voice enabled). Increased use of voice enabled devices offers another challenge for brand owners. It is possible for these devices to offer suggestions to users, so forward thinking brand owners are already developing voice marketing strategies to ensure their brand is recommended. In 2017, Amazon Alexa  already had a skill (an app) so you can order pizza by using voice commands. The Pizza Hut skill can suggest popular items (toppings, drinks etc) if you are creating a new order.

Shoppers display similar behaviours to people using other search engines, e.g. Google. Amazon data (not the survey) suggests that 70% of shoppers never click past the first page and 35% of shoppers click on the first product on a search page. The survey found that over 50% of shoppers did not go past the second page. So, brand owners need a plan to rank highly on the first page of results, just like they need a plan to be on the first page of other search engines like Google.

Almost 75% of shoppers compared Amazon prices to other sites (49.6% sometimes, 24.2% frequently). This may be due to the fact that many shoppers are price conscious. 41.9% of shoppers said that price was the biggest factor last time they purchased an item on the platform. Convenience of shipping (24.9%) was second then number of ratings or reviews was third with 14.4%. What is interesting here is that prior experience with the product / brand was only 9.5%. This suggests that shoppers are not brand loyal.

Only 17.4% of shoppers ‘fully trust’ reviews, so over 80% of shoppers don’t entirely trust reviews on Amazon. The largest result with 49.8% was ‘somewhat trust’ reviews. This may be due to the publicity about the Amazon Vine program. In October 2016 the business announced they were changing the program so reviewers could not receive free or discounted products. Some articles, e.g.  Business Insider, claim that vendors now have to pay Amazon to access the program. Logically then 27.5% of shoppers only trust reviews from verified purchasers.

65% of shoppers rarely notice ads. This result may be due to the use of native advertising. According to JP Morgan Amazon’s ad revenue could reach $4.5B in 2018 (+61% vs 2017). The message for brand owners is that native advertising appears to be the current best option for advertising. 25.4% of shoppers noticed the ads and thought the ads were useful and relevant. Only a small percentage (9.6%) did not trust the ads on the platform.

 

The information provided in this blog post was general in nature. If you require more information I offer a free initial consultation by completing a contact us form.

Thank you,

Tim Bowen