Amazon Losing Stranglehold on Consumer Spending
Though Amazon said its second Prime Big Deal Days was its biggest one yet, new data suggests that consumers are growing wary of the digital juggernaut.
According to a Criteo consumer survey, some shoppers are starting to sour on Amazon. Today, 33 percent of survey respondents are concerned about the cost of a Prime membership, up from 28 percent a year ago, the online advertising platform company found. The volume of people worried about how much they spend on Amazon rose from 20 to 22 percent.
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“One in five shoppers said they’re now buying products from other retailers and brands that they used to buy from Amazon,” Criteo said on Friday. Another three in five said they price-check Prime Day deals against what rival retailers offers. “More consumers were willing to choose another retailer over Amazon if offer better discounts and free shipping,” Criteo added.
Criteo analyzed 24 million products sold online from 4,000-plus U.S. retailers that held sales during the two-day Prime event this week. It found a 21 percent increase in the number of retailers holding their own sales events when compared with July’s Prime sale.
This week’s event attracted “more Prime members” than “last year’s holiday kick-off,” said Doug Herrington, CEO of Worldwide Amazon Stores.
“Millions of Prime packages in the U.S. have already been delivered, and we’ll continue to offer fast, free delivery across our wide selection throughout the holidays,” he added.
On the first day of the 48-hours event, Prime members in the U.S. bought more than 25 million items eligible for next or same-day shipping, “hundreds of thousands” of which arrived at their customer destination in less than four hours. One Ohio order was delivered in just 54 minutes.
Early holiday shopping trends placed apparel and home among Amazon’s best-selling categories. That confirmed Numerator’s report early Thursday that ranked apparel as the top-selling Prime Big Deal Days category and home in second place, tied with household essentials.
Amazon is advancing the idea that its delivery approach can make holiday shopping more sustainable. Shipping in product packaging avoids extra materials, and Rivian’s more than 5,000 electric delivery vehicles cut carbon emissions. Customers can choose their delivery day to bundle multiple orders than arrive on one day with less packaging.
But Numerator’s data found that consumers were hunting for bargains, checking Amazon and looking for better deals elsewhere. And since it’s the second year Amazon’s held the event, retailers were better prepared to compete with deals of their own.
Telsey Advisory Group’s retail analyst Joseph Feldman said that while “Amazon executed well” on the event, the consumer spending environment “clouded [Amazon’s] performance” as shoppers are now more selective with their spending.
UBS retail analyst Jay Sole expects a slowdown in soft goods spending, which includes apparel, as inflation pressures consumers into tapping the brakes on discretionary buys. More than one-quarter, or 27 percent, of consumers plan to spend less on holiday gifts, up from 18.3 percent in the July UBS study.
Bain & Co. forecasts just 3.0 percent growth for November and December to nearly $915 billion, the lowest holiday growth rate since 2018. The National Retail Federation, an industry trade organization, hasn’t yet disclosed its 2023 holiday sales forecast and probably won’t until mid-November.
