Amazon: Where more than half of online shoppers go to search

September 27, 2016 03:53 PM

(Bloomberg)—More than half of U.S. online consumers begin their product searches on Inc.’s website or mobile app, a survey found. That means that heading into the busy holiday season, the company is advancing its lead over major retailers like Wal-Mart Stores Inc. and search engines as the starting point for online shopping.

55% of those surveyed go to Amazon first when searching for products, an increase from 44% a year earlier, according to a Labor Day weekend poll of 2,000 people released by the Internet marketing firm BloomReach Inc. The second annual survey showed search engines, such as Google and Yahoo, and retailers losing ground to Amazon, No. 1 in the Internet Retailer 2016 Top 500 Guide. Search engines were the starting point for 28% of those surveyed, declining from 34% a year earlier. Specific retailers were the starting point for 16%, down from 21%.

“Amazon has become the reference point for shoppers,” said Jason Seeba, head of marketing for BloomReach. “Shoppers will go to Amazon first to find a product and check prices.”

The survey results are bad news for Wal-Mart (No. 4 in the Top 500) and other retailers trying to make headway against Amazon in online shopping. E-commerce sales are expected to increase 13% to $385 billion this year, according to eMarketer. Wal-Mart last month agreed to buy e-commerce startup for $3.3 billion, its biggest attempt yet to catch up.

Amazon Prime, the Seattle-based company’s $99-a-year subscription that includes delivery discounts, video and music streaming and online photo storage, has been key to overshadowing competitors in the minds of consumers, said John Blackledge, an analyst at Cowen & Co. Blackledge estimates Amazon had 49 million prime members in August and subscription growth is accelerating.

Amazon has added free same-day delivery and two-hour delivery to Prime subscriptions, as well as food delivery in many cities, increasing the value of membership.

“Amazon keeps adding layers and is innovating at a faster pace than everyone, especially with Prime,” Blackledge said. “Prime members have the Amazon app on the front screen of their smartphones. That definitely hurts Wal-Mart.”

Alphabet Inc., owner of the Google search engine, can withstand the pressure from Amazon because its advertising revenue is diversified, including video ads on streaming site YouTube, said Ali Mogharabi, an analyst at Morningstar Investment Service.

“This trend has been taking place for the past four or five years and it has still not hurt Google search,” he said.




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