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It’s Amazon and Also-Rans in Retailers’ Race for Online Sales

31 December 2015

From The New York Times:

Two decades after Jeffrey P. Bezos started Amazon in his Bellevue, Wash., garage, his e-commerce juggernaut could be forgiven for letting up on its rapid growth.

Not Amazon, though, which steamrolled through 2015, capturing an ever-growing share of United States retail sales. Of every additional $1 Americans spent for items online this year, Amazon captured 51 cents, according to a recent estimate by analysts at Macquarie Research.

And of the expected $94 billion growth in all retail sales this year — both in stores and online — Amazon took a staggering $22 billion, or almost a quarter, Ben Schachter, a retail analyst at Macquarie, calculated.

And this year’s holiday shopping season served to solidify the notion that the Internet is increasingly Jeff Bezos’s world and the rest of us are just shopping in it.

Amazon capped its blockbuster year by reporting what it said was a record-breaking holiday season, shipping 200 million items through its Prime subscription service, which offers free shipping and a host of other benefits.

“It’s remarkable. Amazon is truly in a league of its own,” Mr. Schachter said. “It’s going to be extremely challenging for anyone else to catch up.”

. . . .

“They were just trying to sell more by underpricing everybody,” said Craig Johnson, president of Customer Growth Partners, a retail consulting firm.

“But they realized they would never make any money that way. They evolved,” he said. “It’s much a different company than it was five years ago.”

For one, this year’s surge has made investors increasingly confident that Amazon’s retail business is maturing, following years of heavy investment in infrastructure and logistics. Amazon has blanketed the country with more than 100 warehouses, and is building more, speeding up shipping times.

That investment is now paying off in the steady growth in users of its Prime fast-shipping membership program, which now covers an estimated 25 percent of all American households. Amazon picked up three million new Prime members during the third week of December alone, the retailer said this week. Some analysts estimate that half of all American households will be Prime members by 2020.

. . . .

 “It just keeps raising the bar,” said Traci Gregorski, vice president for marketing at the retail research firm Market Track. “They’re driving people to their Prime service,” she said, “and once they’re hooked, they’re hooked.”

Link to the rest at The New York Times

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16 Comments to “It’s Amazon and Also-Rans in Retailers’ Race for Online Sales”

  1. They lost me at: “From The New York Times”

    Amazon is doing so well that they must be doing something wrooong …

    “It(Amazon) just keeps raising the bar,”

    Is the only thing worthy of note.

    • The only thing that interested me was the 25% figure. That’s a scary number if you are their competitor.

      • Of the ‘expected growth’, or the ‘Prime membership’? Either should cause the competition heartburn, but both should make them reconsider how they do their own business …

        • In my opinion expected growth is usually pretty far(low or high) from the reality and just there to scare or awe people depending on what the author of the article wants.

          If business analysts could predict Amazon and other growth companies then the world would be a far different place now. B&N, Walmart and others would have reacted far differently the last two decades for example.

          • “If business analysts could predict Amazon and other growth companies then the world would be a far different place now. B&N, Walmart and others would have reacted far differently the last two decades for example.”

            Considering how often those so-called ‘business analysts’ are wrong, no one would have listened if any of them had warned of how fast Amazon would grow. Even then, the only way to beat Amazon at its own game would have been to do as Amazon was doing — and the stockholders of B&N, Walmart and the others would never be willing to put that much back into their own companies.

        • I’m on Prime. It’s paid for itself every year I’ve participated. And not once this holiday season did I order anything, but it turned up two days later. Even when I didn’t specify two-day delivery or pay cent-one extra. Other retailers who “don’t have it” or “don’t know when it’ll be in” or other “duhh” moments — you’re right, Allen, if they’re not already getting heartburn, they should.

          • I ordered an item Saturday. It arrived Sunday, via Prime — and was delivered by the post office. Yes, Amazon impresses me.

  2. I’m one of those shoppers adding to Amazon’s bottom line. I know that if I have any problems with what I’ve bought, Amazon will sort it out promptly. Plus they deliver reliably and on time. They may not carry absolutely everything I need, but they do carry almost everything that isn’t groceries. (I know they carry groceries, but I prefer the produce of local farmers to the factory-produced foods of multinational conglomerates.)

    • This is it exactly. Amazon has done what no other online retailer has done (and many brick-and-mortar stores): They’ve convinced me that shopping on Amazon is a no-risk proposition. They’ve proven that if there is a problem, they are willing to make it THEIR problem, not mine. Other online retailers make me nervous. And every single time I’ve dealt with outfits such as Best Buy, Sears, and Walmart online, it’s been a hassle and in one case swore me off from ever shopping with them again–online or in their stores.

      I get the impression that Amazon’s competitors are unaware of or really don’t care about how difficult it is win customer confidence or how easy it is to lose it. Until they do, they aren’t really competitors at all.

  3. ‘They were just trying to sell more by underpricing everybody,’ said Craig Johnson, president of Customer Growth Partners, a retail consulting firm.

    Is that really true? I’ve been a loyal Amazon customer for years due to the convenience, efficiency, and customer service, all of which make it worth buying from them, even if I can get something for a couple of bucks less elsewhere.

    Case in point: when an order of mine recently had delivery issues, they let me cancel it and then order it again with another delivery option. Both shipments showed up. They only charged me for one and haven’t yet asked about getting the first one back. In my experience, they won’t. Banana Republic, on the other hand, shipped me a shirt with a hole in it. On the exchange, they’ve charged my card for the replacement and will only take that off when they receive the damaged shirt back.

    The result of differences like that? I have a very positive feeling about Amazon. The OP, by the way, talks about Walmart’s efforts to catch up, including starting their own subscription-shipping service. But it seems to me that Walmart has always been about low price and nothing else. (However much negative press and sentiment we see Amazon getting, Walmart receives more from a greater variety of places, I think.)

    In RepTrak’s 2015 Global Reputation Pulse, Amazon tops the list. Walmart isn’t even in the top 100, from what I can see. I’m betting Walmart’s low prices will have a tough time catching Amazon’s sentiment and loyalty unless Amazon’s customer service starts falling down.

    • But But BUT! Author’s United destroyed Amazon’s reputation for ever and ever!

      Wasn’t there an article the other day by DBW that Amazon has several bloody noses from battles last year? Shouldn’t that have reduced their reputation with the public? Or maybe the snowflakes overestimate how much people care about their profit margins.

      • No, I didn’t see Amazon with any bloody noses; though AG, AU, ABA and others were swinging away — but they never seemed to hit their mark.

  4. They haven’t changed – they’re just continuing to roll in the pieces as they figure them out, given their core principles.

    Other retailers don’t HAVE the same core principles – and consumers can actually tell the difference.

    They are not perfect, and a retail business model always means you’re leaning on an awful lot of suppliers, each with their own little business empire, to satisfy YOUR customers – the thought boggles my mind. But it seems to be their charism, and I’m glad, because it means when I need something I can get it fairly easily most of the time – at an easy to understand and navigate (compared to everyone else) site.

    For someone who can’t stand, can’t shop, and is exhausted before leaving the house, this is manna.

  5. Seems nobody gives a rip about Hachette or the Preston 900.

  6. And now to the Amazon Pantry. Fabulous, has all the boring, heavy or cumbersome to carry junk like paper and cleaning supplies and brings them to my door. All I have to do is shove the large pantry box into my storeroom.

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