Data: Amazon under pressure

November 8, 2018 12:01 AM

The booming U.S. economy is forecast to drive a record $1 trillion in sales this holiday season, with brisk online and mobile sales expansion outpacing the growth rate at brick-and-mortar stores. Amazon’s dominance is in no danger, but the e-commerce giant is looking over its shoulder as Walmart and other retail powerhouses close in. The fourth quarter could be a tipping point for Amazon, which recently lowered its holiday sales growth forecast.

To fight back, Amazon this week extended free shipping to all customers through the holidays with no minimum order threshold—an offer Target has matched through Dec. 22. Following are some of the key stats and pain points of online shopping entering the crucial holiday selling season.

Amazon is the undisputed online sales king, but pressure is mounting from all directions. Walmart has moved aggressively toward ubiquitous retail coverage with deep e-commerce resources from its Jet.com acquisition and a ground force of more than 5,000 stores where it’s pushing same-day delivery. Other e-commerce platforms — including eBay, Shopify, Magento and BigCommerce — are seeing big gains from targeting subsets of Amazon’s core audience.

Amazon plans to stay in front by getting more Prime users to use Alexa for voice shopping, said Patrick Gauthier, VP-Amazon Payments, in a recent interview. “I believe we’re on the cusp of something radical with voice shopping that will complement and augment everything we do,” he said.

Though online shopping has gained significant momentum over the years, the vast majority of spending still occurs at physical stores. Brick and mortar shops command at least 80 percent of total U.S consumer retail spending, according to numerous sources. In the near term, merchants that artfully blend online and in-person shopping may be the next category to gain ground, data suggests.

Online and mobile channels account for about 20 percent of all U.S. spending, with 12 percent coming from online-only merchants and 8 percent from omnichannel merchants that support both online and in-store sales, according to new data from payment-linked marketing firm Cardlytics. Last year, sales at pure brick-and-mortar retail stores declined by about 2 percent, while sales at online-only stores rose 1.5 percent and omnichannel retailers’ sales increased 0.2 percent, Cardlytics said.

Amazon is the most popular online shopping destination for consumers in the U.S., U.K. and Australia, according to a new survey from e-commerce platform provider BigCommerce. But consumers are extremely fluid in their shopping, which poses a threat to Amazon in the long run.

Seventy-eight percent of global consumers said they have purchased something from Amazon within the last six months, compared with 65 percent who have made a purchase at a physical store in the same timeframe. Less than half, or 45 percent said they’ve bought something from an online-only merchant, with 34 percent going to eBay for online purchases, 11 percent to Facebook, 6 percent to Instagram and 4 percent to Snapchat.

The rise of "social shopping" via social media platforms with payment options like Venmo popping up on Shopify’s e-commerce sites could build to challenge Amazon’s dominance. About a third of consumers saw a product on Amazon before purchasing it elsewhere, and 22 percent of consumers scouted the item on a brand’s website before purchasing it on Amazon, according to BigCommerce’s survey.

“As humans, we’re easily distracted, and merchants need to align their sales strategy with that meandering behavior,” said Jimmy Duvall, BigCommerce’s chief product officer. BigCommerce conducted its survey among 3,000 digital consumers Aug. 2 to Aug. 5, 2018.

Amazon and other online merchants will need to iron out more of the pain points to accelerate growth. The top online shopping complaint according to consumers BigCommerce surveyed is unsurprising: Almost a third of consumers dislike the inability to try products in advance. New technology aims to attack this problem with virtual and augmented reality tools, though it’s very early in development.

Shipping costs are another major pain point that e-commerce merchants are trying to maneuver around with marketing and deals. Waiting to receive merchandise is another top complaint, but merchants are also tackling that by expanding rapid and same-day delivery or in-store pickup.

Payments, surprisingly, are a low-level pain point compared with other online shopping issues. Only 5 percent of consumers in BigCommerce’s survey cited the hassles of entering payment and shipping data, and 3 percent named limited payment options as a problem. Even fraud is a relatively smaller concern, cited by only 7 percent of respondents.

Instant financing for online purchases is a growing trend, with Klarna and other options rapidly spreading across e-commerce sites. Many consumers are comfortable making big-ticket purchases through online merchants. In the U.S., the highest average amount consumers will spend on a single item when shopping online is $922, compared with $798 in the U.K. and $473 in the Australia, according to a recent survey by e-commerce platform BigCommerce.

More than half of consumers—about 60 percent—prefer using a credit card for big-ticket online purchases, but BigCommerce’s survey showed consumers are open to a variety of payment choices.

PayPal is the second most popular payment choice for more expensive items, at 19 percent, followed by 6 percent who said they would use a mobile wallet and 4 percent who would choose an instant financing option to buy now and pay later. Another 9 percent said they don’t make expensive online purchases and the remainder weren’t sure of their payment choice, according to BigCommerce’s survey.