Amazon’s dominance of the digital commerce industry is no longer news. It has long since become an established fact, a condition of existence that, to a certain extent, the rest of the industry has to accept and work with.
However, that does not stop us being on the constant look out for chinks in the Amazon armour, for indications of where Amazon’s power is not quite so irresistible and where opportunities for other players still exist. We look, for example, at specific categories where retailer sites, brand sites and also physical stores are still able to go toe-to-toe with the marketplace behemoth.
We also look at demographics and at consumer attitudes, trying to gain a sense of which groups of shoppers Amazon appeals to most, and which are still open to other offers. It has long been accepted, for example, that shoppers over a certain age are less likely to spend through Amazon and are less likely to show the levels of loyalty some of their younger counterparts display.
According to our latest Future Shopper consumer survey, there may be another age group we can add to this group of Amazon non-comformists. While Amazon has long been depicted as a young person’s channel, 25 years on it is no babe-in-arms of the commercial world anymore. As a platform and as a global enterprise, Amazon has very much reached maturity, and many of its most loyal customers have grown with it. But what of those ‘digital natives’, the 16 to 24 year old members of Generation Z who have been born and raised in an Amazon world? Our latest survey findings suggest this group might, just might, be drifting away – or at least open to moving away - from the once usurper turned king.
One of the key things we aim to do with our Future Shopper survey is get a detailed picture of trends in online shopping behaviour. At the core of this, we want to know where participants are most likely to spend their money online, how they search for products they want to buy and where they go to get inspiration for potential purchases.
In terms of where they spend their money online, we didn’t find a great deal of differentiation between age groups. Overall, 36% of respondents said most of their online spend went to Amazon. The highest figures were for the 25 to 34 year old ‘Millennial’ group and for 35 to 44 year olds, both 38%. The lowest were for the over 55s (33%) and for 16 to 24 year old ‘Generation Zers’ (34%).
This is admittedly too small a variation to read too much into - Gen Zers are still spending more of their money through Amazon any other channel. But what is interesting is that this age group was the second least likely to spend at other marketplaces (20%) and the least likely to spend through retailer sites (17%) also, contrasting with the fact that they were the group that said they spent the most through brand websites (20%). Perhaps we can at least conclude that there is a trend for younger shoppers to go straight to source when buying online.
Similar results were repeated when we asked how shoppers searched for products online. Again, Gen Z were the second least inclined to use Amazon after the over 55s (51% and 50% respectively). This compares to an average of 56%, with highs of 59% and 60% for Millennials and 35 to 44 year olds. The youngest group also showed the least interest in using search engines (44% compared to an average of 49%), while again reporting the highest use of brand websites to search directly for products (39% versus an average of 29%).
Finally, although Amazon wasn’t one of the options when we asked about where shoppers find inspiration for purchases, it does add further context to the idea that Gen Zers like to do things differently. Their use of search engines for inspiration is even lower than the norm than for product search, 36% as opposed to an average of 51%. Again, they came out as the most likely group to go straight to brand sites for inspiration, but this time only by a one percent margin above the average. But what was even more telling was that 49% said they used social media for inspiration - way above the 32% average.
On their own, these insights into the online behaviours of Gen Z shoppers would not be enough to conclude that Amazon could be losing its lustre for the youngest shoppers. But what gives them more weight is the fact that, when quizzed on their opinions of online channels and services, our youngest respondents were clearly less impressed with Amazon than other age groups.
For example, we asked our survey participants to rank different online shopping channels on their performance in 12 different areas. In every case, the number of Gen Zers ranking Amazon as the best option was below the survey average. The figures were the lowest of all five age groups in 10 out of 12 categories; on the other two, they were second lowest. Examples include the fact that 33% of Gen Zers ranked Amazon as best for stock availability, compared to 40% overall; 29% rated it best for customer service, versus an average of 35%; and 35% said Amazon made finding products easiest, compared to 42% overall.
In the majority of cases, Amazon still scored the best out of all channels amongst 16 to 24 year olds, just with less of a lead. But there were some exceptions. Asked about access to the brands they want, for example, 29% of Gen Zers rated brands’ own sites as the best option, compared to just 26% who said Amazon. Every other age group rated Amazon as the best, with upwards of 35% of the vote. Gen Zers also rated brand sites marginally better than Amazon on accuracy of product descriptions.
Digging into the possible reasons why younger shoppers are less impressed with the Amazon offer than other age groups, we got some intriguing insights. Not surprising given their preference for using social media for shopping inspiration, 49% of Gen Z said they actively recommend products online to friends and contacts, through the likes of tagging and sending links in direct messages. This compares to 38% of all shoppers we surveyed. What we might call the social aspects of shopping online - peer recommendations, the role of influencers, interacting directly with favourite brands - may well be an important reason younger shoppers are looking beyond Amazon for fresh experiences.
DIRECT BRAND EXPERIENCES STILL COUNT - AT LEAST FOR GEN Z
Another interesting finding was that 53% of 16 to 24 year olds said they preferred to shop with brands that have physical stores as well as an online presence - again, the highest proportion of all age groups. While bricks-and-mortar retail sometimes gets talked about some kind of commercial fossil that has had its day, this is a finding that should grab the attention of all brands and retailers. Perhaps driven by the same desire to connect directly with brands that sees younger shoppers use D2C sites more and spend more on them than any other age group, Gen Zers are showing a renewed interest in the kind of direct brand experiences you can only get in stores.
To complete this picture of brand becoming more and more of a factor amongst the ‘digital native’ generation, when we asked our survey respondents what would tempt them away from using Amazon, price was noticeably less important to Gen Zers than the other age groups - it was mentioned by just 49%, compared to an average of 61%. Instead, more 16 to 24 year olds than all the other age groups talked about better product range and better personalisation (both 20%), better brand ethics (18%), better environmental practices (12%) and channels having a better-looking website (13%).
Clearly Amazon is still a huge factor in the online shopping habits of under 25s. But when we look at the bigger picture - the higher preference for finding inspiration, searching and spending on brand websites, the role of social media, the lower ratings for Amazon services, the attitude towards stores and the tendency to put brand reputation and engagement higher than factors like price when considering what would tempt them not to use Amazon - we can conclude that Gen Zers are open to alternatives to Amazon domination. The fact that brand experiences are right at the forefront of their tastes should be right at the forefront of everyone’s minds when considering ways to grab market share back from the king of ecommerce.
You'd be forgiven for thinking we're living in an Amazon-centric world. Not a day goes by without a story of a new innovation set to revolutionise how we buy and receive goods from the eCommerce Goliath. Yet, for brands there are opportunities to thrive where Amazon is weak, unloved, or simply inactive. In a two-blog series, we look at the key areas that brands and retailers can focus on.
Written by Hugh Fletcher
Head of Thought Leadership (EMEA) and Head of Marketing (UK)
Hugh is a go-to spokesperson for tech trends impacting eCommerce, and one of Wunderman Thompson Commerce's most prominent thought-leaders on digital innovation and change.
A note about the Future Shopper 2019 survey
Research for this Future Shopper 2019 report was conducted by independent research consultancy Censuswide. A total of 15,188 consumers, who shop online at least once a month were surveyed, across 8 international markets, led by UK and US.