Table of Contents
Executive Summary
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- Overview
- The impact of COVID-19 on Amazon
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- Figure 1: Short, medium and longer term impact of COVID-19 on Amazon, April 2020
- Key findings, opportunities and threats
- Size and scale
- Amazon Prime
- Consumer demographics
- Consumer perceptions
- Amazon in grocery
- Amazon in fashion
- What it means
Impact of COVID-19 on Amazon
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- What you need to know
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- Figure 2: Short, medium and longer term impact of COVID-19 on Amazon, April 2020
- Opportunities and Threats
- Unavailable items and delivery delays open door for competition
- Despite initial inventory issues, Amazon can provide support for sellers and vendors
- Employee welfare a top priority
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- Figure 3: Amazon Support of employee welfare in Light of COVID-19, April 2020
- Amazon looks to improve online grocery offering
- Impact on Amazon
- Amazon expected to see increase in sales
- A delayed Prime Day could still see record sales
- A return to stores
- DTC brands may need Amazon to survive
- Reprioritization of initiatives
- Amazon’s relief efforts can improve consumer perceptions
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- Figure 4: Amazon Support of Local Community in Light of COVID-19, April 2020
- How the crisis will affect Amazon’s key consumer segments
- A prime opportunity to highlight Prime benefits with all shoppers
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- Figure 5: Higher priority on Leisure and entertainment spending due to COVID-19, by generation, April 2020
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- Figure 6: Amazon Prime Facebook ads featuring various benefits, October-November 2019
- Amazon works to open windows for online grocery shoppers
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- Figure 7: Shopping changes after COVID-19 outbreak, by generation, April 2020
- How a COVID-19 recession will reshape Amazon’s effect
- Financial uncertainties lead to limited, prioritized spending
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- Figure 8: Limiting spending as a result of COVID-19, by age and income, April 2020
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- Figure 9: Unemployment, April 2000-April 2020
- Figure 10: Monthly Unemployment Rate, seasonally adjusted, January – April 2020
- COVID-19: US context
Amazon Overview – What You Need to Know
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- A change agent
- Onward, upward and outward bound
- Prime is pure gold
- High marks in nearly all aspects of retailing but one
- Never a dull day
Defining the Effect
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- Multidimensional and widescale impact
- The effect on consumer shopping behavior
- The effect on consumer expectations
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- Figure 11: Amazon scorecard, select above average attributes, January 2020
- The effect on competitors
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- Figure 12: Associations with innovation and influence, by select retailer, January 2020
Amazon Scale
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- Amazon is still king
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- Figure 13: Amazon's US net sales, at current prices, 2014-19
- Amazon is ecommerce
- An ecosystem, not just an online retailer
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- Figure 14: Amazon's global net sales, by retail type, 2017 and 2019
- Figure 15: Percentage of global sales segmented by category, 2012-19
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- Figure 16: Amazon portfolio, March 2020
Amazon Prime Membership
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- Overview
- Prime membership shows no upward boundary
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- Figure 17: Amazon Fresh Facebook ad, October 2019
- Figure 18: Prime membership & Prime member demographics, January 2020
- Delivery, Video and Music services seen as most valuable
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- Figure 19: Prime benefits used, January 2020
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- Figure 20: Repertoire analysis - Prime benefits used, by select demographics, January 2020
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- Figure 21: Amazon Prime Facebook ads featuring various benefits, October-November 2019
- Figure 22: Amazon Prime Facebook post featuring Kindle Reading App, April 2020
- What do consumers have to say about their Prime benefits?
- What Prime benefits would members like to be added?
- The future of Prime: what-if scenarios
- What if the cost of Prime increases again?
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- Figure 23: Willingness to pay more for Prime membership, January 2020
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- Figure 24: Amount of increase willing to pay for Prime membership, January 2020
- What if there was a tiered pricing structure?
- What if a competitor (read: Walmart) introduces a comparable program to Prime?
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- Figure 25: Intent to switch to another retailer’s comparable membership program, by select demographics, January 2020
- Anti-Prime, not Anti-Amazon
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- Figure 26: Reasons for non-Prime membership, January 2020
- COVID-19’s impact on Prime
Strengths and Vulnerabilities
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- Overview
- Strengths
- Ecosystem mentality
- Strengthening the brand through Prime Day
- Hard to beat the A student
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- Figure 27: Amazon scorecard, January 2020
- Prime members have a greater impression of Amazon
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- Figure 28: Amazon scorecard – Above average (Net), by Prime membership, January 2020
- Vulnerabilities
- Key driver analysis reveals opportunities for improvement
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- Figure 29: Key drivers of satisfaction with overall shopping experience, January 2020
- Consumers want Amazon to do more to protect the environment
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- Figure 30: Attitude regarding Amazon’s environmental efforts, by generation, January 2020
- What do consumers want Amazon to do more of when it comes to sustainability?
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- Figure 31: Desired packaging information, January 2020
- Consumers want reassurance about quality
- Consumers want Amazon to be more human
- Not immune to competition
Key Initiatives
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- Managing the pandemic
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- Figure 32: Whole Foods COVID-19 pandemic actions, Facebook post, March 2020
- Cashierless technology
- What do consumers think about cashierless technology?
- Voice technology
- What do consumers think about using voice technology to shop?
- Brick and mortar expansion
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- Figure 33: Amazon 4-Star store, November 2018
- Advertising
The Amazon Shopper – What You Need to Know
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- Calling all low-income families
- Amazon is the dependable friend, not the mushy friend
- Amazon shoppers are the real influencers
- Brands should use Amazon to help them grow, not rely on it for growth
- Brick and mortar expansion next up for Amazon in grocery
- Amazon effect extends to luxury fashion
- Big and powerful, yes, but still a fan favorite
- Amazon can be doing more with its power and influence
- Third-party sellers threaten Amazon’s reputation
- Healthcare likely the next industry to be disrupted
Amazon Shopper Profile
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- Most Amazon customers shop at least monthly
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- Figure 34: Total online shopper frequency versus Amazon shopper frequency, January 2020
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- Figure 35: Total online shopper frequency versus Amazon shopper frequency – nets, January 2020
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- Figure 36: Amazon shopper frequency – nets, by age, January 2020
- Capturing the low-income consumer
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- Figure 37: Amazon shopper frequency – nets, by household income, January 2020
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- Figure 38: Light online shoppers – all versus Amazon, by household income, January 2020
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- Figure 39: Amazon shopper frequency – nets, by race and Hispanic origin, January 2020
- More than one third of Prime members shop weekly
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- Figure 40: Amazon shopping frequency, by Prime membership, January 2020
Perceptions of Amazon versus Competitors
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- Amazon isn’t seen as going much “beyond the transaction”
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- Figure 41: Company Attributes, January 2020
- Time versus savings: what’s more important?
- Prime members have a stronger emotional bond
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- Figure 42: Attributes, by Prime membership, January 2020
How Consumers Shop on Amazon
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- No category immune to the Amazon effect
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- Figure 43: Role of Amazon when shopping by category, January 2020
- Amazon preferred
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- Figure 44: Amazon’s place in path to purchase, January 2020
- Amazon’s advice is helpful, but other shoppers’ word is gospel
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- Figure 45: Purchase influencers, January 2020
- How much do consumers pay attention to Amazon’s recommendations?
- What do consumers really think about Amazon’s user reviews?
- Spotlight on Prime shoppers
- More purchases, more loyalty…with exceptions
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- Figure 46: Shopping behaviors among Prime members, January 2020
Amazon Influence on Brands
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- No big deal if consumers can’t find their favorite brands on Amazon
- Do consumers form brand impressions based on whether or not brands sell on Amazon?
- Do consumers trust unfamiliar brands more if they see them on Amazon?
The Effect on Grocery
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- Overview
- Where people currently shop
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- Figure 47: Grocery retailers shopped, by generation, January 2020
- Whole Foods purchase has had no significant impact on shopping behavior yet
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- Figure 48: Impact of Amazon’s purchase of Whole Foods, by generation, January 2020
- Why aren’t consumers shopping more at Whole Foods?
- Amazon’s future in grocery
- Walmart shoppers willing to switch to Amazon for the right price
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- Figure 49: Willingness to switch from Walmart to Amazon for groceries, by generation, January 2020
- Amazon will have its own physical grocery store
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- Figure 50: Interest in branded Amazon grocery store, by generation – part one, January 2020
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- Figure 51: Interest in branded Amazon grocery store, by generation – part two, January 2020
- What do consumers say is important besides price?
- What’s the biggest reason some consumers don’t want to shop at Amazon’s new grocery store?
- Grocery option with cashierless technology an option too
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- Figure 52: Amazon Go Grocery, February 2020
The Effect on Apparel
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- Growing into its place in apparel
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- Figure 53: Apparel purchase incidence, by key demographics, January 2020
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- Figure 54: Orolay coat sold on Amazon, November 2019
- How it made headway
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- Figure 55: Awareness and usage of Prime wardrobe, by gender and age, January 2020
- Figure 56: Amazon Prime Wardrobe Facebook post, August 2019
- Consumers like the improvements
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- Figure 57: Attitudes toward Amazon’s fashion assortment, by gender and age, January 2020
- Luxury is next
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- Figure 58: Example of winning look from Amazon’s “Making the Cut” fashion show, April 2020
Attitudes toward Amazon
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- Power + influence = the “effect” in action
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- Figure 59: Positive attitudes regarding Amazon’s influence, January 2020
- Figure 60: Positive attitudes regarding Amazon’s influence, by Prime membership, January 2020
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- Figure 61: Positive attitudes regarding Amazon’s influence, by generation, January 2020
- Naysayers could lead Amazon backlash efforts in the future
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- Figure 62: Negative attitudes regarding Amazon, January 2020
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- Figure 63: Negative attitudes regarding Amazon, by Prime membership, January 2020
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- Figure 64: Negative attitudes regarding Amazon, by generation, January 2020
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- Figure 65: Percentage who are actively trying to shop less at Amazon, by weekly shopping frequency, by key demographics, January 2020
- What do consumers have to say about Amazon’s power and influence?
- The good
- The bad
- The ugly
- CSR efforts can help to mitigate future attrition
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- Figure 66: Attitudes regarding Amazon’s corporate social responsibility efforts, January 2020
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- Figure 67: Attitudes regarding Amazon’s corporate social responsibility efforts, by generation, January 2020
Trust in Amazon
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- Trust earned by walking the talk
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- Figure 68: Associations with trustworthiness, by select retailers, January 2020
- Why do consumers trust Amazon?
- Why don’t consumers trust Amazon?
- Trust has limits
- Third-party vendors are a rose and a thorn
What’s Next?
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- Amazon’s been quiet on the acquisition front…it is time for another big purchase?
- Healthcare likely up next to experience the full “Amazon effect”
- Paying with and without hands
- Consumer predictions
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Consumer survey data
- Consumer qualitative research
- Key driver analysis methodology
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – The Market
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- Figure 69: Amazon's US net sales, at inflation-adjusted prices, 2014-19
- Figure 70: Amazon's global net sales, by country, at current prices, 2014-19
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Appendix – The Consumer
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- Key driver analysis
- Interpretation of results
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- Figure 71: Level of satisfaction with overall online shopping experience – key driver output, January 2020
- Additional qualitative responses
- Amazon Prime Membership
- Cashierless technology
- User reviews
- Amazon influence on brands
- Interest in Amazon’s own grocery store
- Trust in Amazon
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