Analysis: How Amazon’s Competitors Can Challenge…

Analysis: How Amazon’s Competitors Can Challenge Its Dominance

Amazon just became the world’s second company with a trillion dollar valuation, and their recent annual Prime Day event set Amazon’s global single day sales record. With their ecommerce dominance solidified, is it time for competitive brands and retailers to pack up their bags and go home? Or would an analytical deep dive offer up a lifeline?

Check out the facts and figures behind their Prime Day sales and learn what strategies competitive retailers and brands can adopt to carve out a bigger stake in the online retail space.

Amazon is still the rock star of retail

Amazon’s visit share – the number of people visiting Amazon versus other retail sites – is bigger than the next 14 competitors combined. Further, the giant accounted for 76% of all transactions among the top 50 retailers. Their average conversion rate from August 2017 through July 2018 was 35% higher than the next highest competitor (Shutterfly). It was also 181% higher than the average of the next 14 retailers.

Even with this dominance, they’re still looking to expand. Over the past couple of years, Amazon has gone on a multi-billion dollar acquisition spree, the majority being their nearly $14 billion purchase of Whole Foods. Their goal was to expand their reach into new categories, as well as brick-and-mortar locations.

Further, Hitwise data shows that shoppers are transitioning from an Amazon-first to an Amazon-only mindset. There was a 22% growth in site visits from Dec. ’17 to July ’18 among Amazon-only buyers (shopped on Amazon and not the other top 49 retailers), with the data simultaneously showing precipitous drops in traffic to their four biggest competitors over the same time period.


Looking into the Prime Day numbers

The fourth annual Prime Day event was a major success; its record-setting $3.5 billion in global sales made it more profitable than Cyber Monday and Black Friday combined, and it achieved this despite 1% fewer YoY visits. The conclusion is that Prime Day tends to attract more purchase-focused visitors, rather than those who window shop but buy somewhere else.

Behind the numbers are key insights into what customers want. The two biggest sellers – the Fire Stick TV and Echo Dot – were both Amazon products. In fact, six of the top 10 sellers were Amazon products. They were also tech products, so perhaps customers are waiting until Prime Day’s special pricing to make these purchases.


How competitors are fighting back

Part of Amazon’s recent success is that that they’re no longer just a powerhouse retailer; by developing their own labels and products, they’ve also become a powerhouse brand. But this success doesn’t mean competitors are toast. Internal searches for pets, automotive, and Amazon Fresh products were all down YoY in the week of Prime Day. This means that despite the ubiquitous offerings of Amazon, customers aren’t relying on them for everything.

Further, Prime Day has led to a “halo effect”; transactions among the other top 10 retailers and brands were up 78% compared to the previous week. Retailers are responding to Prime Day with their own sales. Target had a similar single-day promotion, and while sales were smaller by volume, they enjoyed the largest relative increase in visits and transactions.

Looking beyond competitive promotions, the data shows that while consumers flock to Amazon as a retail experience, it’s far from a guarantee that they’re also purchasing their in-house brands. Amazon Basics and Energizer both had a 5.6% transaction share on Amazon, so there are still plenty of consumers who visit the platform with an open mind and open wallet. Additionally, Hanes and Fruit of the Loom both handily beat out Amazon Essentials in the Clothes, Shoes, and Accessories category. While these shoppers might prefer buying on the platform, Amazon’s own labels don’t seem to be dominating right now, so competitive brands should look to determine what consumers’ final purchasing drivers are (such as brand loyalty or pricing).


So yes, Amazon is still winning the online retail wars, but smart brands and retailers who crunch the numbers will see that a playbook starts to appear. While taking a significant share of anything away from Amazon will be tough, the data shows that not only is it possible, but it’s already starting to happen. Sellers just need to be smart and determine, one category and one product at a time, where their biggest opportunities are.

See how Hitwise can help you better identify your customers, analyze what they’re searching for, and strategize how you can better engage them.

Also, check out the full Amazon Analytics 2018 Report here!

Want to use Amazon search data to keep track of what’s hot? Read more about search optimization.

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