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More Consumers Turn to Amazon for Product Research
Online leader strengthens its position but still faces roadblocks.
For the rest of the October 2012 issue of CRM magazine please click here
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While Google might reign supreme in the realm of search engines, Amazon could soon outpace the Internet giant when it comes to consumer research.

According to a recent Forrester Research study, "Why Amazon Matters Now More Than Ever," 30 percent of consumers say they researched their last online purchases using Amazon, as opposed to the 13 percent who tapped Google for prepurchase information.

Amazon, lauded for its technological savvy and personalization, has popularized the act of "showrooming"—when a shopper looks at a product in the store, then purchases it online to take advantage of lower price points and free shipping.

Brick-and-mortar stores are not the only businesses losing ground to e-commerce ingenuity.

"Google has lost share because its algorithm has been getting less and less relevant," comments Sucharita Mulpuru, vice president and principal analyst at Forrester Research, and author of the report. "Amazon, on the other hand, is able to deliver really relevant products, and the marketplace helps you see things very cleanly, making the shopping experience…effortless with transparency, or at least the illusion of transparency."

E-retailers are also keeping a steady eye on Amazon; 86 percent of consumers who have purchased from online stores say they have shopped with Amazon at some point in the past. Amazon accounted for 9 percent of total e-commerce revenue in the United States in 2001, which has more than doubled in the past 10 years, to 19 percent in 2011, the Forrester study indicates.

Even more telling is that international sales now make up nearly half (44 percent) of Amazon's overall business. That number has doubled since 2001, when global markets accounted for only 21 percent of total sales. This is credited to the company's e-commerce presence and global distribution centers that span China, Germany, France, and the United Kingdom. Amazon is also in the early stages of building out a consumer-direct business in India, strengthening its footprint outside the U.S.

Although Amazon appears to be "indomitable," both from the search and e-commerce perspective, Mulpuru points out that it, too, could falter if "someone else comes up with a much better mobile solution. We don't know what's possible because we haven't seen it yet."

It is not out of the question for Amazon to try out physical storefronts where it can sell its Kindle tablets and e-readers, similar to Apple. The company is also experimenting in-store by installing lockers in convenience stores like 7-Eleven, where customers can pick up orders they've made on the Web after receiving a text message or email code for the locker. This could be akin to Amazon's international growth plans, the Forrester study indicates.

While Amazon might pose a competitive threat to Best Buy when it comes to showrooming, and Google in the area of consumer search, there is evidence of a growing distrust in the third-party marketplace; Target this spring announced it would stop selling the Kindle because of showrooming practices.

"[Amazon] alienated their biggest partners, Target and Walmart, so now they are left to figure out how to demo their products on their own," Mulpuru explains. "I think the jury is still very much out on Kindle Fire."They had a great holiday release and timed it well, but all of the numbers I've seen are that it is losing share to the iPad. It's not a beloved product, the ecosystem of content [apps] is smaller, and it hasn't generated any traffic to other sites the way the iPad has."

Secrets to Amazon's Success

Forrester Research identified the following as some of Amazon's strategies that work to its competitive advantage.

  • A focus on technology: Amazon employs more than 10,000 full-time developers, a significantly higher number than other retailers.
  • Investment in logistics: Thoroughly automated fulfillment centers are outfitted with proprietary order and warehouse management software.
  • Customer acquisition and retention: Amazon drives customer loyalty through initiatives like Lending Library, Amazon Prime, and Amazon Mom.
  • Customer centricity: Amazon has deployed technology and processes focused on reducing errors and improving customer self-service.

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To contact the editors, please email editor@destinationCRM.com
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