As of today, Packaged Facts estimates that Amazon makes up ~43% of all U.S. e-commerce sales, which is dramatically higher than its ~28% share just four years ago. Continuing its growth trajectory, by 2022 Amazon is expected to make up nearly half of all U.S. e-commerce sales.
That degree of concentration will make it bigger than Walmart — even considering the latter’s huge brick-and-mortar presence which Amazon lacks.
Of course, Walmart continues to possess additional advantages that Amazon cannot match, despite the latter’s acquisition of supermarket chain Whole Foods in 2017. Not only does Walmart have a huge physical footprint in retail, it also offers a wide range of in-store services which entice foot traffic — things like an onsite pharmacy, financial services, and photo processing.
Also working in Walmart’s favor is its dominance in so-called “click-and-collect” shopping orders. According to recent surveys, ~43% of respondents identified Walmart as the pickup location for their last click-and-collect order — three times the share percentage of runner-up Target.
Still, the emergence of Amazon atop the retail industry heap says volumes about the seismic shifts brought about by online retail. The channel hasn’t been around all that long in the grand scheme of things, but its impact has been nothing short of seismic.
How have your shopping habits changed during this time? Do they reflect what has happened in the larger market? Please share your thoughts with other readers here.
One has to assume it’s a citation Facebook CEO Mark Zuckerberg has tried mightily to avoid receiving. But with a massive data breach last year and poor marketing decision-making accompanied by a wave of bad publicity, it shouldn’t come as a major shock that Facebook is now considered the least trusted major technology brand by consumers.
The real surprise is by how much it outscores everyone else. Really, Facebook’s in a class by itself.
Recently, online survey research firm Toluna conducted a poll of ~1,000 adults age 18 or older in which it asked respondents to identify their “least trusted” technology company.
The results of the survey show the degree to which Facebook has become the “face” of everything that’s wrong with trust in the world of technology.
Here’s what Toluna’s found when it asked consumers to name the technology company they trusted least with their personal information:
Facebook: ~40% of respondents trust least
Google (Gmail): ~6%
The yawning gap between Facebook’s unflattering perch at the top of the listing and the next most-cited companies — Amazon and Twitter — says everything anyone needs to know about the changing fortunes of company image and how fast public opinion can turn against it.
About the only thing worse is not showing up on the Top 10 list at all – which is the case for Oath (the parent of Yahoo and AOL). That entity has become so inconsequential, it doesn’t even enter into the conversation anymore. That’s a “diss” on a completely different level, of course. As Oscar Wilde once said, “The only thing worse than being talked about is … not being talked about.”
What about you? Do you think that Facebook should be tops on this list? Let us know your opinion below.
If you speak with small businesses that sell products online, many will tell you that they chafe under the strong-arm tactics of Amazon and its seller policies.
On the other hand, what’s their alternative?
The reality is that it takes about the same amount of time and effort to run a Walmart or eBay store as it does to run a store at Amazon.
The difference? The sales revenue of a Walmart or eBay store is typically less than 10% of what businesses would generate on Amazon for that same amount of work. That interesting informational nugget comes from James Thompson, a partner at the Buy Box Experts e-tailing consultancy.
(And for small retailers attempting to run their own e-commerce sites, the revenue stream is even lower.)
But even with Amazon’s ascendancy in the world of online commerce, its retail platform remains a frustration to small sellers due to its level of responsiveness to questions and concerns (low) and its sudden, sometimes inexplicable policy changes.
Consumer advocates would counter-argue that Amazon’s seller policies are focused in the right place: looking out for the end-user customer. But others contend that Amazon’s actions aren’t even-handed, nor applied equally.
Take Amazon’s policies on dealing with product shipments and defects. When a seller’s defect order rate goes as high as 1%, Amazon deactivates the vendor’s account automatically. To be reinstated, a seller has to go through an arduous vetting process, during which time Amazon holds all monies due to the seller until every order is shipped and received – even orders that are in dispute.
To make matters even more onerous, the customer service phone number of the seller disappears, making it next-to-impossible for the vendor to clear up any misunderstandings with an end-customer other than by going through the Amazon portal.
Here’s another example: Without prior notification, last month Amazon instituted a new “Pay by Invoice” policy that allows corporate customers a pay period of 30 days.
While this is a great move from the customer’s point of view, most small businesses are used to being paid in two weeks. The new invoice payment policy squeezes the resources of smaller sellers, which often operate under tighter cashflow conditions than larger retailers.
It is true that bigger brands make up an increasing share of volume in the world of Amazon sellers. Those brands bring in the most money, but small businesses round out the portfolio and remain an important component of realizing Amazon’s aims of becoming the big behemoth with an “always and everywhere” presence in the world of retail.
Considering everything, it would seem that Amazon and its sellers should recognize each other’s worth and how much they mean to each other. Amidst everything, there has to be a win-win position that can be reached to the benefit of everyone.
When it comes to online retailing in the United States, Amazon’s been cleaning up for years. And now we have new data from comScore that reveals that Amazon is as dominant online today as it’s ever been.
This chart illustrates it well:
The chart shows that when comparing actual time spent by Americans at each of the Top 10 online retailers, Amazon attracts more viewing time than the other nine entities combined.
Even when considering only mobile minutes, where so much of the growth is happening for digital retailers, Amazon’s mobile viewing time exceeds the combined total digital traffic across eBay, Walmart, Wish, Kohl’s and Etsy.
Pertaining to the mobile sphere, there is an interesting twist that comScore has found in consumer behavior. It turns out, there’s a considerable disparity between the amount of time spent with mobile compared to its share of dollars spent – to the tune of a 40% gap:
In essence, the data show that whereas mobile represents nearly two-thirds of the time spent with online retail, it accounts for only one-fourth of the dollars spent on goods and services.
But this difference is easy to explain: As the largest player in the field, Amazon fulfills a role similar to what Expedia or Trivago do in the travel industry.
Amazon gives consumers a way to scan the marketplace not only for product details but also for prevailing prices, giving them a sense of the expected price ranges for products or services — even if they ultimately choose to purchase elsewhere.
I doubt I know a single person under the age of 75 who hasn’t purchased at least one item of merchandise from Amazon over the years. And I know quite a few people whose only shopping experience for the holidays is a date with the Amazon website.
Still, some of the breathless stories and statistics that are put forward about Amazon and its business model seem almost too impressive to be true.
I’m not just talking about news reports of drone deliveries (a whole lot of “hat” and far less “cattle” there) or the idea that fully-robotic warehouses are just around the corner – although these stories do make for attention-grabbing headlines. (Despite the continued need for human involvement, the way that robots are being used inside Amazon warehouses is still quite impressive.)
Moreover, a study published recently by BloomReach based on a survey of ~2,200 U.S. online consumers finds that Amazon is involved in most online shopping excursions, with nine out of ten online shoppers reporting that they check Amazon’s site even if they end up finding the product they want via another e-commerce resource.
More than half of the BloomReach survey respondents reports that they check on the Amazon site first — which is a new high for the company.
But are all of the reports about Amazon as credible?
Recently Doug Garnett, CEO of advertising agency Atomic Direct, penned a piece that was published in the December 2016 edition of Response Magazine. In it, he threw a dose of cold-water reality on some of the narratives surrounding Amazon and its business accomplishments.
Here are several of them that seem to contradict some of the commonly held perceptions:
“Amazon is a $100 billion retailer.”
Garnett notes that once subtracting Amazon’s non-retail revenue for 2015 (the last year for which financial data is available), the worldwide figure is more like half of that.
In the United States, Amazon’s retail sales are closer to $25 billion, which means it makes up approximately 6% of total retail sales.
That’s still very significant, but it isn’t the dominating presence as it might seem from all of the press hype.
“Amazon is profitable now.”
Yes, it is – and that’s after many years when the company wasn’t. However, approximately three-fourths of Amazon’s profits are due to selling cloud-based services, and the vast majority of the remaining profit dollars come from content delivery such as e-books plus music and video downloads. So traditional retail hard-goods still aren’t generating profits for Amazon.
It turns out, just as retailers like Wal-Mart, Target and K-Mart have discovered, that replicating a retail store online is almost always a money-losing proposition.
To underscore this point, Garnett references this example of a merchandising campaign in 2016 as typical:
“When one unit was sold on Amazon, eight were sold at the retailer’s website and 80 were sold in the brick-and-mortar stores. The profit is in the store.
For mass-market products, brick-and-mortar still dominates. Amazon is a nice incremental revenue stream, [but] not a valid alternative when you’re playing in the big game.”
It also means that companies that are looking to Amazon as a way to push their products into the marketplace should probably think twice.
At the very least, they should keep their expectations realistically modest.
In my own region, the opening of Amazon distribution centers in Maryland and Delaware were met with accolades by local business development officials, who figured that new employment opportunities for entry level workers would soon follow.
And they have … to a degree. But what many people might not have expected was the rapid rise of robotics usage in warehouse operations.
In just the past few years, Amazon has quietly gone about purchasing and introducing more than 30,000 Kiva robots for many of its warehouses, where the equipment has reduced operating expenses by approximately 20%, according to Dave Clark, Amazon’s senior vice president of worldwide operations and customer service.
An analysis by Deutsche Bank estimates that adding robots to a new Amazon warehouse saves approximately $22 million in fulfillment expenses, which is why Amazon is moving ahead with plans to introduce robots in the remaining 100 or so of its distribution centers that are still without them.
Once in place, it’s estimated that Amazon will save an additional $2.5 billion in operating expenses at these 100 facilities.
Of course, robots aren’t exactly inexpensive pieces of equipment. But with the operational savings involved, it’s clear that adding this kind of automation to warehousing is kind of a slam-dunk decision.
Because Kiva was pretty much the only game in town when it came to robotics designed for warehouse pick-and-ship functions, Amazon’s move put all other warehouse operations at a serious disadvantage.
That in turn created a stampede to develop alternative sources of supply for robots. It’s taken about four years, but today there are credible alternatives to Kiva brand robots now entering the market. Amazon’s uneven playing field is getting ready to become a lot more level now.
But the other result of this “robotics arms race” is the sudden plenteous availability of new robot equipment, which companies like Macy’s, Target and Wal-Mart are set to exploit.
The people who are slated to be the odd people out are … warehouse workers.
The impact could well be dramatic. According to the Bureau of Labor Statistics, there are nearly 860,000 warehouse workers in the United States today, and they earn an average wage of approximately $12 per hour.
Not only is the rise of robot usage threatening these jobs, thanks to the sharp increase of minimum wage rates in areas near to some major urban centers is putting the squeeze on hiring from a wholly different direction. It’s a perfect storm the seems destined to blow a hole in warehouse employment levels in the coming years.
Thinking back to what happened to manufacturing jobs in this country, it’s seems we’ve seen this movie before …
The new change will shift away from paying authors based on each book accessed, and instead pay based on each page that readers access (and that remains on the screen long enough to be parsed).
Who will be the winners and losers in this new approach to compensation? Certainly, some people have criticized the current payment scheme for benefiting authors of smaller books more than those who write longer tomes. The change may improve matters for the latter because of the additional pages that make up their e-books.
But is that really the case? Many large volumes are reference-oriented book or fall into other non-fiction categories, such that a reader may be interested in accessing only a few pages within the books in any case.
But on the fiction side, authors may find themselves attracted to writing the kind of “cliffhanger” story lines that keep readers turning the pages.
However it shakes out, one thing seems destined to change. The old saw that “it doesn’t matter how many people read a book — only how many purchase it” may well be on the way out.
What are your thoughts about Amazon’s new remuneration policy? On balance, is it good for authors — or for the world of books in general? Feel free to share your comments with other readers.