Amazon: Creating an Ecosystem - UK - January 2020

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
Amazon: The business
The ‘trillion’ dollar business
Figure 1: Amazon, total net sales, 2014-19
The largest non-food retailer in the UK
Figure 2: Top 10 leading UK retailers as a % of all retail sales (ex-VAT, ex-fuel), 2018
Amazon’s adspend reaches record highs in 2019
Figure 3: Total above-the-line, online display and direct mail advertising expenditure by Amazon, 2015-19
Amazon’s brand image in a strong position
Figure 4: Key metrics for selected brands, November 2019
Amazon continues to innovate, from smart rings to Premier League football
Figure 5: Amazon Echo Loop, September 2019
Amazon: The consumer
Nearly nine in 10 shop with Amazon
Figure 6: Frequency of Amazon shopping, October 2019
Nearly half have access to Amazon Prime
Figure 7: Amazon Prime membership, October 2019
Younger shoppers far more likely to shop via mobile
Figure 8: Devices used to shop with Amazon in the past year, by age, October 2019
Hard-copy media still the most popular purchase
Figure 9: Products purchased via Amazon in the past year, October 2018 and 2019
Delivery perks are key but Prime Video is increasingly important
Figure 10: Amazon Prime services regularly used, by access to Amazon Prime, October 2019
Half of UK households have an Amazon device
Figure 11: Ownership of Amazon devices, October 2019
Reviews crucial to purchasing on Amazon
Figure 12: Behaviours of Amazon shoppers, October 2019
Marketplace is a differentiator but some question the quality
Figure 13: Attitudes towards Amazon Marketplace, October 2019
What we think
ISSUES AND INSIGHTS
Amazon: the ecosystem
The facts
The implications
Nike ditches Amazon, a one-off or a significant trend?
The facts
The implications
Amazon: setting the foundations for ‘frictionless retail’
The facts
The implications
AMAZON: STRUCTURE AND INNOVATIONS – WHAT YOU NEED TO KNOW
The ‘trillion’ dollar business
The largest non-food retailer in the UK
Amazon’s adspend reaches record highs in 2019
Amazon’s brand image in a strong position
Amazon continues to innovate, from smart rings to Premier League football
AMAZON: AN OVERVIEW 
The ‘trillion’ dollar business
Figure 14: Amazon, total net sales, 2014-19
Consumer-facing operations still the majority of Amazon’s business
Figure 15: Amazon net sales breakdown, 2018
AWS is becoming the driver of investment
Figure 16: Breakdown of Amazon net sales, as a percentage, by business segment, 2016-18
Amazon turns the profit screw
Figure 17: Amazon profits, 2014-18
Figure 18: Amazon, net cash provided by (used in) operating activities), 2014-18
AMAZON: IN THE UK MARKET 
The UK accounts for just 6% of Amazon’s revenue
Figure 19: Geographic breakdown of Amazon revenues, 2016-18
The dominant online market leader
Figure 20: Online retailing market shares, 2018
Figure 21: Amazon reported sales and gross transactional revenues as a % of all online retail sales, 2016-19
Electricals still the key category for the business
Figure 22: Estimated Amazon UK sales, by product, 2018
How big is Amazon in the context of the wider sector?
Figure 23: Top 10 leading UK retailers as a % of all retail sales (ex-VAT, ex-fuel), 2018
AMAZON: BRAND RESEARCH
Amazon: brand overview
Brand map
Figure 24: Attitudes towards and usage of selected brands, November 2019
Key brand metrics
Figure 25: Key metrics for selected brands, November 2019
Brand attitudes: Amazon, logically, stands out as providing a great online service
Figure 26: Attitudes, by brand, November 2019
Brand personality: Amazon has cultivated a ‘fun’ brand image
Figure 27: Brand personality – macro image, November 2019
Reliability key to the appeal of the Amazon brand
Figure 28: Brand personality – micro image, November 2019
Brand analysis
Figure 29: User profile of Amazon, November 2019
AMAZON: LAUNCH ACTIVITY AND INNOVATION 
Refreshing the Amazon device line-up
Figure 30: Amazon Smart Oven, September 2019
Figure 31: Amazon Echo Loop, September 2019
Figure 32: Amazon Echo Auto, September 2019
Figure 33: Amazon Kids edition, October 2019
It’s not all about consumer electronics…
Figure 34: Amazon Belei, November 2019
Expanding the streaming line up
Refining delivery, collection and payment
Prove it (sustainable)
Celebrating its two biggest days
Figure 35: Amazon Home of Black Friday 2019 pop-up, November 2019
AMAZON: ADVERTISING AND MARKETING ACTIVITY 
Amazon’s adspend hits record highs in 2019
Figure 36: Total above-the-line, online display and direct mail advertising expenditure by Amazon, 2015-19
Growth in spending on Prime and services
Figure 37: Total above-the-line, online display and direct mail advertising expenditure by Amazon, by advertising category, 2015-19
The majority is spent on TV
Figure 38: Total above-the-line, online display and direct mail advertising expenditure by Amazon, by media type, 2015-19
Nielsen Ad Intel coverage
THE CONSUMER – WHAT YOU NEED TO KNOW
Nearly nine in 10 shop with Amazon
Nearly half have access to Amazon Prime
Younger shoppers far more likely to shop via mobile
Hard-copy media still the most popular purchase
Delivery perks are key but Prime Video is increasingly important
Half of UK households have an Amazon device
Reviews crucial to purchasing on Amazon
Marketplace is a differentiator but some question the quality
WHO SHOPS AND HOW FREQUENTLY WITH AMAZON? 
Almost nine in 10 shop with Amazon
Half of Amazon shoppers use the retailer once a month or less
Figure 39: Frequency of Amazon shopping, October 2019
25-34s most frequent Amazon shoppers
Figure 40: Frequency of Amazon shopping, by age, October 2019
More have increased their level of Amazon use than decreased it
Figure 41: Changes in Amazon use in the past year, October 2019
AMAZON PRIME MEMBERSHIP 
Nearly half have access to Amazon Prime
Figure 42: Amazon Prime membership, October 2019
Younger consumers more likely to have access to Prime
Figure 43: Amazon Prime membership, by age, October 2019
A quarter have joined Prime in the past year
Figure 44: Length of Amazon prime membership, October 2019
DEVICES USED TO SHOP WITH AMAZON 
Most shop via laptop/desktop
Figure 45: Devices used to shop with Amazon in the past year, October 2019
Younger shoppers far more likely to shop via mobile
Figure 46: Devices used to shop with Amazon in the past year, by age, October 2019
Younger shoppers more likely to shop via multiple devices
Figure 47: Repertoire of devices used to shop with Amazon in the past year, by age, October 2019
WHAT THEY BUY VIA AMAZON  
Hard-copy media still the most popular purchase via Amazon
Figure 48: Products purchased via Amazon in the past year, October 2018 and 2019
Prime members more likely to buy across all categories…
Figure 49: Purchases made via Amazon in the past year, by Prime membership status, October 2019
…and have a wider repertoire of purchasing
Figure 50: Repertoire of categories shopped via Amazon in the past year, by Prime membership status, October 2019
AMAZON SERVICES USED
Delivery still key but Prime Video is growing in importance
Figure 51: Amazon Prime services regularly used, by access to Amazon Prime, October 2019
So big it has its own day
Figure 52: Purchasing during Amazon Prime Day 2019, October 2019
Figure 53: Attitudes towards Amazon sales events, October 2019
Will more live sport encourage more Prime Video sign-ups?
Figure 54: Attitudes towards sport on Prime Video, by gender and age, October 2019
Most use multiple services
Figure 55: Repertoire of Prime services used, by Prime services regularly used, October 2019
OWNERSHIP OF AMAZON DEVICES
Half of UK households have an Amazon device
Figure 56: Ownership of Amazon devices, October 2019
Prime members significantly more likely to own Amazon devices
Figure 57: Ownership of Amazon devices, by membership of Amazon Prime, October 2019
The majority purchased their products via Amazon
Figure 58: Where Amazon products were purchased, October 2019
BEHAVIOURS OF AMAZON SHOPPERS
For most Amazon is the first port of call online
Figure 59: Behaviours of Amazon shoppers, October 2019
Amazon’s influence is not limited to online
Figure 60: Behaviours of Amazon shoppers, by age, October 2019
ATTITUDES TOWARDS MARKETPLACE 
Over a third think Marketplace is what makes Amazon unique
Figure 61: Attitudes towards Amazon Marketplace, October 2019
One in five Amazon shoppers believe they have received counterfeit products
Figure 62: Attitudes towards shopping with Amazon, by age, October 2019
Half of 16-34s say it is hard to trust the quality of Marketplace products
Figure 63: Agreement with attitudes towards Amazon Marketplace, by age, October 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data sources
VAT
Financial definitions
Abbreviations
Consumer research methodology