Impacting eCommerce: The Amazon Effect: Incl Impact of COVID-19 - US - April 2020

OVERVIEW
What you need to know
Key issues covered in this Report
Definition
EXECUTIVE SUMMARY 
Overview
The impact of COVID-19 on Amazon
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
What you need to know
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
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
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
Figure 5: Higher priority on Leisure and entertainment spending due to COVID-19, by generation, April 2020
Figure 6: Amazon Prime Facebook ads featuring various benefits, October-November 2019
Amazon works to open windows for online grocery shoppers
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
Figure 8: Limiting spending as a result of COVID-19, by age and income, April 2020
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 
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 
Multidimensional and widescale impact 
The effect on consumer shopping behavior
The effect on consumer expectations
Figure 11: Amazon scorecard, select above average attributes, January 2020
The effect on competitors
Figure 12: Associations with innovation and influence, by select retailer, January 2020
AMAZON SCALE 
Amazon is still king
Figure 13: Amazon's US net sales, at current prices, 2014-19
Amazon is ecommerce
An ecosystem, not just an online retailer 
Figure 14: Amazon's global net sales, by retail type, 2017 and 2019
Figure 15: Percentage of global sales segmented by category, 2012-19
Figure 16: Amazon portfolio, March 2020
AMAZON PRIME MEMBERSHIP
Overview
Prime membership shows no upward boundary
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
Figure 19: Prime benefits used, January 2020
Figure 20: Repertoire analysis - Prime benefits used, by select demographics, January 2020
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?
Figure 23: Willingness to pay more for Prime membership, January 2020
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? 
Figure 25: Intent to switch to another retailer’s comparable membership program, by select demographics, January 2020
Anti-Prime, not Anti-Amazon
Figure 26: Reasons for non-Prime membership, January 2020
COVID-19’s impact on Prime 
STRENGTHS AND VULNERABILITIES
Overview
Strengths
Ecosystem mentality
Strengthening the brand through Prime Day 
Hard to beat the A student
Figure 27: Amazon scorecard, January 2020
Prime members have a greater impression of Amazon
Figure 28: Amazon scorecard – Above average (Net), by Prime membership, January 2020
Vulnerabilities
Key driver analysis reveals opportunities for improvement
Figure 29: Key drivers of satisfaction with overall shopping experience, January 2020
Consumers want Amazon to do more to protect the environment
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?
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
Managing the pandemic
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
Figure 33: Amazon 4-Star store, November 2018
Advertising
THE AMAZON SHOPPER – WHAT YOU NEED TO KNOW 
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 
Most Amazon customers shop at least monthly
Figure 34: Total online shopper frequency versus Amazon shopper frequency, January 2020
Figure 35: Total online shopper frequency versus Amazon shopper frequency – nets, January 2020
Figure 36: Amazon shopper frequency – nets, by age, January 2020
Capturing the low-income consumer
Figure 37: Amazon shopper frequency – nets, by household income, January 2020
Figure 38: Light online shoppers – all versus Amazon, by household income, January 2020
Figure 39: Amazon shopper frequency – nets, by race and Hispanic origin, January 2020
More than one third of Prime members shop weekly 
Figure 40: Amazon shopping frequency, by Prime membership, January 2020
PERCEPTIONS OF AMAZON VERSUS COMPETITORS
Amazon isn’t seen as going much “beyond the transaction”
Figure 41: Company Attributes, January 2020
Time versus savings: what’s more important?
Prime members have a stronger emotional bond 
Figure 42: Attributes, by Prime membership, January 2020
HOW CONSUMERS SHOP ON AMAZON 
No category immune to the Amazon effect 
Figure 43: Role of Amazon when shopping by category, January 2020
Amazon preferred
Figure 44: Amazon’s place in path to purchase, January 2020
Amazon’s advice is helpful, but other shoppers’ word is gospel
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
Figure 46: Shopping behaviors among Prime members, January 2020
AMAZON INFLUENCE ON BRANDS
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
Overview
Where people currently shop
Figure 47: Grocery retailers shopped, by generation, January 2020
Whole Foods purchase has had no significant impact on shopping behavior yet
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 
Figure 49: Willingness to switch from Walmart to Amazon for groceries, by generation, January 2020
Amazon will have its own physical grocery store
Figure 50: Interest in branded Amazon grocery store, by generation – part one, January 2020
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 
Figure 52: Amazon Go Grocery, February 2020
THE EFFECT ON APPAREL
Growing into its place in apparel
Figure 53: Apparel purchase incidence, by key demographics, January 2020
Figure 54: Orolay coat sold on Amazon, November 2019
How it made headway
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
Figure 57: Attitudes toward Amazon’s fashion assortment, by gender and age, January 2020
Luxury is next
Figure 58: Example of winning look from Amazon’s “Making the Cut” fashion show, April 2020
ATTITUDES TOWARD AMAZON
Power + influence = the “effect” in action 
Figure 59: Positive attitudes regarding Amazon’s influence, January 2020
Figure 60: Positive attitudes regarding Amazon’s influence, by Prime membership, January 2020
Figure 61: Positive attitudes regarding Amazon’s influence, by generation, January 2020
Naysayers could lead Amazon backlash efforts in the future
Figure 62: Negative attitudes regarding Amazon, January 2020
Figure 63: Negative attitudes regarding Amazon, by Prime membership, January 2020
Figure 64: Negative attitudes regarding Amazon, by generation, January 2020
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 
Figure 66: Attitudes regarding Amazon’s corporate social responsibility efforts, January 2020
Figure 67: Attitudes regarding Amazon’s corporate social responsibility efforts, by generation, January 2020
TRUST IN AMAZON
Trust earned by walking the talk
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?
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
Data sources
Sales data
Consumer survey data
Consumer qualitative research
Key driver analysis methodology
Abbreviations and terms
Abbreviations
Terms
APPENDIX – THE MARKET 
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
APPENDIX – THE CONSUMER 
Key driver analysis
Interpretation of results
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