55% of U.S. Online Shoppers Start in Jeff’s Kingdom – Who Is Challenging Amazon?

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Recode:

Fifty-five percent of people in the U.S. now start their online shopping trips on Amazon.com, according to results from a 2,000-person survey commissioned by the e-commerce startup BloomReach. That stat marks a 25 percent increase from the same survey last year, when 44 percent of online shoppers said they turned to Amazon first.

Over the same time, the percentage of shoppers who start product searches on search engines like Google dropped from 34 percent to 28 percent. The number of online shoppers who check out a retailer’s website (other than Amazon) first also shrunk, from 21 percent to 16 percent.

Amazon Prime is The First Prequisite

This is almost certainly one direct consequence of Amazon Prime’s popularity in the U.S. (Being a Prime subscriber changes the default behavior, starting a product search at Amazon rather than at, say, Google or a more specialized online retailer.)

Amazon Marketplace is The Second Prequisite

This is also shows the importance of Amazon Marketplace. Besides slowly taking over retail revenues at Amazon (already an obviously huge argument for the marketplace), the long-tail capacity, common for marketplaces, makes it feasable for Amazon to not just be an online retailer and a marketplace but also the search engine where it all starts.

This is not only cutting out Google but is also the main argument for Amazon’s insane P/E ratio over the last decade: Once big enough, Amazon can essentially leverage its scale to extract value at every level of commercial transactions. Scale effects here, eventually, lead to market-defining abilities.

This is not ‘just’ a problem for Google or other U.S. online retailers, or Walmart and Target for that matter, but also a growing challenge for brands. Manufacturers will increasingly feel Amazon’s market power in negotiations with the online retailer. If they don’t already, that is. (Don’t be mistaken: A lot of brands do already; the pain will only be growing, the way it looks right now.)

To put it in simple terms: Amazon Marketplace is slowly becoming the U.S. ecommerce market.

(As always, eBay could have and should have turned into this, not Amazon. But alas, a lot less competition as eBay has lost its way.)

A Silver Lining

But there is a silver lining: So, Amazon is the Google of online retail, yes. But we already know what broke Google’s dominance: Facebook.

The question, especially for the U.S. market, thus becomes: who will be the Facebook of online retail?

Product search, after all, is not the only way of discovery.

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3 comments

  1. […] Speaking of brands and Amazon: Alexander Graf, a leading German e-commerce expert and the CEO of shoptech startup Spryker, has published an excerpt from the English version of his book, “The E-Commerce Book: About a channel that became an industry”, at Medium: […]

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  2. […] 55% of U.S. Online Shoppers Start in Jeff’s Kingdom – Who Is Challenging Amazon? […]

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  3. […] 55% of U.S. Online Shoppers Start in Jeff’s Kingdom – Who Is Challenging Amazon? […]

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