Amazon Grabs 55 Percent of First Product Search, Set to Dominate 2016 Holiday Shopping

About nine in 10 consumers check Amazon even if they find a product they want on another retailer's site.

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Ahead of the critical 2016 holiday season, when e-commerce is predicted to grow 13.6 percent, a new study from personalization platform company BloomReach and conducted by Survata found that Amazon grew its lead as the place where consumers first search for products. Now, 55 percent of consumers turn to Amazon first when searching for products online. The second annual "State of Amazon" study, which surveyed 2,000 U.S. consumers over Labor Day weekend, found that search engines and retailers lost almost equal ground, coming in at 28 percent and 16 percent, respectively. Amazon increased its share by 11 percent in one year following BloomReach's inaugural "State of Amazon" study.

The e-commerce giant steadily increased its product-search lead throughout the year. BloomReach also conducted a mid-year survey of 2,000 consumers in April, revealing Amazon had 53 percent of consumers' first product search, with 27 percent for search engines and 19 percent for retailers.

The 2016 "State of Amazon" study also found that Amazon is often involved in almost all online shopping activities. Approximately nine in 10 consumers will check Amazon even if they find a product they want on another retailer's site, with 78 percent of those consumers indicating that happened often or always. However, comparison-shopping also worked against Amazon, as 70 percent of consumers said they'll consult another retailer before purchasing on Amazon. However, only 52 percent indicated they always or often double-checked retailers against Amazon.

"Amazon continues to be the first destination when consumers want to find a product, driven largely by a perceived superior end-to-end experience. Online shopping is all about relevance and convenience, and comparison shopping has never been easier—especially with mobile growth," said Jason Seeba, BloomReach head of marketing. "However, while online retailers increasingly feel the pinch, search engines still play an integral part of an e-commerce strategy. This study highlights that, just because consumers start on Amazon, that doesn't mean they ultimately buy from Amazon. Instead, they're often comparing and researching products on search engines and other retailers."

This year, "The State of Amazon" study also analyzed consumer shopping behaviors on mobile devices, a channel that is driving more than half of all traffic to top sites and grew to 30 percent of all U.S. e-commerce. While Amazon (mobile site or app) still commanded 50 percent of consumers' first stop for products on mobile, search engines fared better with 34 percent, with retailers lagging at 16 percent. BloomReach found that 76 percent of consumers shop on their smartphone, with 90 percent of them reporting that they made a purchase on a smartphone. Other notable findings among those who shop on smartphones included:

  • Nearly 50 percent shop on a smartphone weekly.
  • 92 percent say smartphone shopping can influence a purchase decision.
  • 52 percent say smartphone shopping often or always supports a purchase.
  • 53 percent are more comfortable buying on a smartphone relative to last year.
  • 88 percent use a smartphone to assist shopping in stores.
  • 78 percent have a retailer mobile app, with 82 percent of those having a retailer app that isn't Amazon.

Holiday Shopping Season Gearing Up for Full Swing

With the core of the 2016 holiday shopping season fast approaching—a critical time for retailers—the "State of Amazon" study also provides the first look into holiday shopping behavior. By Labor Day weekend, 42 percent of consumers started gift shopping and, of the remaining majority who didn’t, 61 percent will start on or before Black Friday. A majority plan to do more than 50 percent of their holiday shopping online.

An astonishing 94 percent plan to shop on Amazon this holiday season. In addition, consumers seem to view Amazon not only as a place to buy gifts, but also as a place to get gift ideas:

  • When holiday shoppers know what gift they want, 59 percent will start on Amazon, 24 percent will start on a search engine and 16 percent will start at a retailer that has that product.
  • When holiday shoppers don't know what gift to buy, 49 percent will start on Amazon, 28 percent will start on a search engine and 26 percent will start on a retailer the gift recipient likes.

Amazon's performance relative to other retailers caught the attention of some consumers as well. An overwhelming majority of U.S. consumers recognize Amazon as the dominant player in e-commerce currently and the "State of Amazon" study revealed that nearly one in five consumers was concerned about the company's dominance relative to other retailers.

Factors Driving Amazon's Success and Opportunities for Retailers to Fight Back

Ensuring high-quality site experiences continues to be a prime reason why shoppers pick their retailers of choice. Approximately 58 percent of U.S. consumers noted they left a retailer's site for Amazon after having a poor experience. This stands in stark contrast to the reverse scenario. Only 30 percent of consumers noted a bad site experience on Amazon led them to shop with another retailer. Site-experience issues—especially those related to site search and product discovery—often were the reasons why consumers turned to Amazon:

  • 53 percent felt Amazon had the best site experience overall.
  • One in three cited Amazon's site experience as the main reason they choose Amazon over other retailers.
  • More than 50 percent distinguished Amazon's site search and product filtering capabilities as superior.
  • 41 percent reported a retailer's bad site search experience caused them to shop on Amazon.
  • 50 percent left a retailer's site when they couldn't find a product they knew a retailer carried.

However, the study did highlight some bright spots for retailers and opportunities to gain back market share:

  • Approximately one in five noted counterfeit products are their main concern with Amazon.
  • 41 percent said better personalization would make them more likely to buy from a retailer over Amazon.
  • Only one in three cited Amazon's site personalization and product recommendations as superior.

Fierce Competition in E-Commerce Sparks Some Worry among Retailers

In addition to the consumer survey, BloomReach also surveyed 400 marketing and sales professionals at large retailers to see how they viewed their competition, company performance and the marketing technology landscape. A majority were optimistic about their company's future; however, many expressed worry and uncertainty—especially among those who named Amazon as their top competitor:

  • 40 percent expressed worry about losing their jobs due to their top competitor.
  • Those who named Amazon as their top competitor were nearly twice as likely to fear losing their jobs compared to those who compete against a specific retailer in their space.
  • Approximately one in three felt that their top competitor could put their company out of business. However, those who named Amazon as their top competitor were 67 percent more likely to fear Amazon putting their company out of business.
  • One in three reported turnover rates in management as above average.
  • 40 percent don't think their e-commerce strategy is proactive.
  • 43 percent don't think their opinions are "highly considered."

Marketing and e-commerce technology—a field that exploded to almost 4,000 solutions—was viewed as a top way to compete more effectively, but the crowded space created some confusion among online retailers:

  • 75 percent think superior marketing technology is a significant factor to competing effectively.
  • Only 17 percent think their marketing tech is ahead of their competitors.
  • 78 percent don't think the marketing tech landscape is clearly defined or that they fully understand their choices.
  • Personalization and advertising tech were the top two priorities for online retailers. Integrating social media into e-commerce was the lowest priority.
  • Site experience technology was viewed as the top way to produce a return on investment (ROI) over ad, email, testing/targeting and analytics technology. 
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