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US The Amazon Effect Market Report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the The Amazon Effect market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

This report will examine the effect that Amazon is having on how consumers shop as well as their expectations of other companies. It will explore how consumers use Amazon as a shopping tool as well as their emotional affiliation with the brand, including trust, loyalty, and affinity. Amazon’s impact on other companies and specific product categories is included but not covered extensively.

Suggested opportunities for how Amazon’s rivals can mitigate its effect are also suggested, but not a key focus of this report. Mintel’s Competing with Amazon – US, June 2018 is an important companion to this report as it more directly and thoroughly covers those areas.

Expert analysis from a specialist in the field

Written by Diana Smith, a leading analyst in the Retail & Apparrel sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Amazon is the world’s second largest retailer behind Walmart, with $120 billion in US sales in 2017, up 71% in two years’ time. This one company accounts for approximately 40% of total US ecommerce sales. Its membership program, Amazon Prime, surpassed the 100 million member mark globally this year, and is viewed as the gold standard of membership programs. On top of that, more than four in 10 adults say that Amazon has redefined what convenience means from a shopping perspective and more than a quarter have higher expectations of other retailers now as a result. Diana Smith
Associate Director - Retail & Apparel

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • Changes in Amazon shopping behavior
            • What you want to know
              • What we see
                • Amazon’s role in the purchase process
                  • What you want to know
                    • What we see
                      • The impact of Prime
                        • What you want to know
                          • What we see
                            • Consumer affinity for Amazon
                              • What you want to know
                                • What we see
                                  • The role of trust
                                    • What you want to know
                                      • What we see
                                        • Amazon’s vulnerabilities
                                          • What you want to know
                                            • What we see
                                              • What’s next?
                                              • Amazon Overview – What You Need to Know

                                                • “My favorite place to shop”
                                                  • Unmatched pace of growth
                                                    • A cut above the rest in nearly all areas
                                                      • Prime is Amazon’s most powerful tool
                                                        • Environmental responsibility and customer service not its strongest assets
                                                          • Never resting on its laurels
                                                          • Defining the Effect

                                                            • What is the “Amazon effect”?
                                                              • The effect on consumer behavior
                                                                • Figure 1: Amazon attitudes and perceptions, October 2018
                                                              • The effect on consumer expectations
                                                                • Figure 2: Shopping expectations and perceptions, October 2018
                                                              • The effect on competitors
                                                                • Where’s the tipping point?
                                                                • Amazon Scale

                                                                  • “Earth’s most consumer-centric company”
                                                                    • Figure 3: Amazon.com US net sales, 2015-17
                                                                  • Amazon = US ecommerce
                                                                    • Where Amazon excels
                                                                      • Overdelivers what online shoppers want
                                                                        • Figure 4: Amazon rating – Select above average attributes, October 2018
                                                                      • Drives loyalty through Amazon Prime
                                                                        • Invests in understanding its customers
                                                                          • Diversifies beyond retail
                                                                            • Figure 5: Amazon.com global net sales by product type, 2017
                                                                        • Amazon Prime Membership

                                                                            • 100 million subscribers and growing
                                                                              • Participation rates
                                                                                • Reasons for membership and benefits used
                                                                                    • Figure 6: Prime membership, October 2018
                                                                                  • High satisfaction keeps consumers loyal
                                                                                    • Figure 7: Prime membership satisfaction, October 2018
                                                                                    • Figure 8: Shopping attitudes, by Prime membership, October 2018
                                                                                  • Nonmembers don’t see value in exchange for fees
                                                                                      • Figure 9: Reasons for non-Prime membership, October 2018
                                                                                  • Opportunity Areas for Competing with Amazon

                                                                                    • Consumers would like Amazon to be more environmentally friendly
                                                                                      • Figure 10: Amazon ratings – Select average/below average attributes, October 2018
                                                                                    • Environmental and other corporate social responsibility
                                                                                      • Quality
                                                                                        • Customer service
                                                                                          • Other considerations
                                                                                            • Figure 11: Frustrations when shopping on Amazon, by heavy Amazon shoppers, April 2018
                                                                                            • Figure 12: Reasons for shopping less on Amazon, October 2018
                                                                                        • Key Initiatives

                                                                                            • Broad-based initiatives
                                                                                              • Physical store expansion
                                                                                                • Echos and “Alexa inside”
                                                                                                  • Delivery improvements
                                                                                                    • HQ2: A second US headquarters
                                                                                                      • Category-specific initiatives
                                                                                                        • Figure 13: Role of Amazon when shopping by category, October 2018
                                                                                                      • Amazon’s effect on toys and games
                                                                                                        • Figure 14: Amazon Toy Catalog, October 2018
                                                                                                      • Amazon’s effect on electronics
                                                                                                        • Amazon’s effect on beauty/personal care
                                                                                                          • Amazon’s effect on grocery
                                                                                                            • Amazon’s effect on apparel
                                                                                                            • The Amazon Shopper – What You Need to Know

                                                                                                              • Flocking to Amazon
                                                                                                                • High consumer favorability
                                                                                                                  • Attract, convert, repeat
                                                                                                                    • Trust is very high, but not implied
                                                                                                                    • Amazon Shopper Profile

                                                                                                                      • Synonymous with online shopping
                                                                                                                        • Figure 15: Shopping frequency, online in general versus on Amazon, October 2018
                                                                                                                      • A lock on young affluents
                                                                                                                        • Figure 16: Amazon shopping frequency, by age and income, October 2018
                                                                                                                      • Much more shopping on Amazon
                                                                                                                        • Figure 17: Shopping level versus a year ago, by Amazon shopping frequency, October 2018
                                                                                                                        • Figure 18: Reasons for shopping more, October 2018
                                                                                                                      • Attrition is low
                                                                                                                        • Figure 19: Reasons for shopping less, October 2018
                                                                                                                    • How Consumers Shop on Amazon

                                                                                                                      • The first stop
                                                                                                                          • Figure 20: Shopping behaviors, by Prime membership, October 2018
                                                                                                                          • Figure 21: Prime-specific shopping behaviors, October 2018
                                                                                                                          • Figure 22: Online shopping starting point for select categories, October 2018
                                                                                                                        • Amazon as personal shopping advisor
                                                                                                                            • Figure 23: Purchasing behaviors, by Amazon shopping frequency, October 2018
                                                                                                                        • Consumer Perceptions

                                                                                                                          • Addicted to Amazon
                                                                                                                              • Figure 24: Perceptions, by Prime membership and Amazon shopping frequency, October 2018
                                                                                                                            • Consumers’ emotional relationship with Amazon is actually mostly functional in nature
                                                                                                                                • Figure 25: Correspondence analysis – Principal map – Attributes, October 2018
                                                                                                                                • Figure 26: Attributes, October 2018
                                                                                                                              • How much is too much?
                                                                                                                                • Figure 27: Perceptions regarding power, by age and income, October 2018
                                                                                                                                • Figure 28: Amazon “Can You Feel It?” holiday TV ad, November 2018
                                                                                                                            • Trust in Amazon

                                                                                                                              • High levels of trust
                                                                                                                                • Figure 29: Trustworthiness, by Amazon shopping frequency and Prime membership, October 2018
                                                                                                                              • Third-party sellers not capturing halo effect
                                                                                                                                  • Figure 30: Trust of Amazon compared to third-party sellers, by Amazon shopping frequency and Prime membership, October 2018
                                                                                                                                  • Figure 31: Amazon storefront of the week featuring Lalabu, October 2018
                                                                                                                                • Trust should not be taken for granted
                                                                                                                                    • Figure 32: Trusted services, October 2018
                                                                                                                                    • Figure 33: Trusted services, by generation, October 2018
                                                                                                                                • Appendix – Data Sources and Abbreviations

                                                                                                                                  • Data sources
                                                                                                                                    • Sales data
                                                                                                                                      • Consumer survey data
                                                                                                                                        • Consumer qualitative research
                                                                                                                                          • Correspondence analysis methodology
                                                                                                                                            • Direct marketing creative
                                                                                                                                              • Abbreviations and terms
                                                                                                                                                • Abbreviations
                                                                                                                                                  • Terms
                                                                                                                                                  • Appendix – The Market

                                                                                                                                                      • Figure 34: Amazon.com, net sales by country, 2015-17
                                                                                                                                                      • Figure 35: Amazon.com, Global net sales by product type, 2015-17