Amazon's War for Online Shoppers

This is the second in our three part series about the dominance of Amazon in online retail. You can find the first, The Rise of Amazon, here, and the third, Amazon Rex, here.

Some companies have a way of injecting themselves so fluidly into our lives that we no longer think of them as a company, but as a commonplace tool. When someone asks you a question that you don’t know the answer, your response is probably, “Did you Google it?” If your answer is, “Did you Bing it?” then you should check out this thing called Google, though “Did you Bing it?” does have a better ring to it.

When my wife asks me where to find a potential gift, household item, etc., my response is always, “Did you check Amazon?” In a chipper voice, not condescending. Condescending would be, “Did you check Amazon? Because ‘over 50% of product searches begin on Amazon’ according to One Click Retail.” while using air quotes to cite a market analytics firm during a casual conversation. That’s some next level mansplaining.

But that type of search behavior is a primary reason Amazon amassed an astounding 44% market share of e-commerce in the U.S. last year. A lot of online buyers are starting their product searches on and it’s really easy for them to buy while there. Take into account that there are roughly 90 million Amazon Prime members in the U.S., according to Consumer Intelligence Research Partners (CIRP), and that those Prime member are spending around $1,300 each year. You can quickly see how Amazon is able to achieve their e-commerce market dominance.

Bezos isn’t resting on his laurels at just 44% of the market. He wants all the market. Amazon’s creation of Prime Day was a stroke of marketing genius that hopefully earned someone a big promotion. According to a statement from Amazon, on Prime Day in 2017 the company signed up more new Prime members than any other single day in company history. Tens of millions of Prime members made purchases on Prime Day, a 50% increase over the year before. Think of the audacity it takes to create your own shopping holiday.

Now of course a lot of those new members from Prime Day signed up for the 30 day free trial. But, "once consumers try Prime, 73% become paid members. And after that first year, retention rates stay in the 90%-range," per Lindsay Bloom, senior marketing manager at SessionM.

Jump forward a few months to holiday season circa 2017, and you see Amazon outperform it’s July (Prime Day) numbers by adding over four million new Prime members in one week. And a lot of those members were making mobile purchases on the Amazon App, which saw an almost 70% increase in use and accounted for over 1,400 purchases of electronic products per second during the holiday season.

While Amazon has performed well in North America, it’s been looking to increase its presence overseas. The latest battleground for online buyers is taking place in India, where Bezos has invested five and half billion dollars to help Amazon shoulder its way into the Indian e-commerce market. Competing against the likes of Alibaba and Flipkart, Amazon has taken control on an estimated 31% of India’s e-commerce market, according to Rich Duprey at the Motley Fool.

“This is how much market share you’ll have when Amazon is done with you.”

And big retailers are taking notice of the threat Amazon poses to their bottom line, and potentially their existence. To stave off the threat, Walmart purchased a 77% stake in Amazon’s biggest rival in India, Flipkart, for $16 billion dollars, making it Walmart’s largest acquisition ever.

Only time will tell if Walmart’s big move into India’s e-commerce market will bear fruit, or prove to be an ineffective counter to Amazon’s e-commerce success. But as the war for online shoppers goes global, you can count on Bezos always being on the front line.

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