The Amazon backlash continues apace

Is the e-commerce giant’s novelty factor wearing off? Five reasons Amazon could be headed for choppy waters.
13 November 2019 | 15 Shares

Amazon shopping application icon on Apple iPhone X screen. Source: Shutterstock

The frequency of people buying items on Amazon six times or more per month has dropped to 40 percent this year from 80 percent in 2017, according to research by First Insight.

The retail analytics firm conducted three surveys of 1,000 consumers each in December 2017, September 2018 and September 2019. This included shoppers with and without Prime membership.

55 percent said they prefer to shop at Walmart versus Amazon, up from about 47 percent a year earlier. The percentage of people who favor the latter has dropped to 45 percent from about 53 percent in 2018.

Also, Prime signups are dropping. First Insight found that 52 percent of survey respondents were members in 2019, down from 59 percent a year earlier.

Here are five reasons why the Amazon tanker could be headed for troubled waters.

# 1 | Not all news is good news

Amazon is no stranger to criticism, with the ethics of its business and labor practices frequently drawn into question over the years. And that criticism has intensified over the past year or so.

In the UK, for instance, accusations persist that Amazon is subsidized by the taxes of its rivals, along with complaints from major chains that, far from boosting bricks and mortar outfits, it has actually contributed to the crisis engulfing the High Street.

Meanwhile, head honcho Jeff Bezos remains a divisive figure. Some laud him as a business genius, whilst others label him a money-obsessed robot.

“Do you know how much Amazon paid in income taxes last year?” Bernie Sanders asked a crowd earlier this year, prompting cries of “Zero!”

“I talk about it all of the time,” he continued, “and then I wonder why the Washington Post, which is owned by Bezos who owns Amazon, doesn’t write particularly good articles about me.”

# 2 | Its competitors have caught up with it

Ten years ago, Amazon was riding high, while the likes of Walmart and Target were struggling. But the latter two have fought back, with significant investments in digital transformation projects that are beginning to produce tangible results.

Target, for instance, has invested over US$7 billion in a turnaround strategy that includes remodeling stores (and opening smaller ones in urban areas) and enhancing its online shopping experience. It recently reported a strong second-quarter performance.

# 3 | It doesn’t always deliver the goods

Amazon is leading the way in drone delivery and same-day options. However, it has been criticized for not consistently doing reliable delivery.

Many other retailers have also been making considerable strides in this area. In the UK, Argos, which uses its network of stores to offer same-day delivery, is arguably currently much better established than Amazon’s one-hour Prime Now promise.

In the US, Walmart’s raft of innovations includes InHome Delivery, which sees items delivered directly to customers’ kitchen or garage fridges. It has now launched the service in Pittsburgh, Kansas City (Missouri and Kansas) and Vero Beach.

Customers can head to InHome.Walmart.com and see if their address is eligible. It’s $49.95 for a smart device, with installation included. Once the lock is installed, they’ll receive unlimited deliveries for the introductory price of $19.95 per month ($30 min per basket), with the first month free.

Associates will use smart entry technology and a proprietary, wearable camera to access the customer’s home, giving them the ability to watch deliveries remotely.

# 4 | Physical retail remains hugely popular

As we previously pointed out, 80 percent of spend remains in-store.

Many shoppers— including those all-important Millennials— often favor an in-store experience, particularly when shopping for luxury and fashion items.

Although Amazon has made a move into bricks and mortar retail with Amazon Go, it very much remains an online experience. And that is a huge chink in its armor.

# 5 | It does not provide a highly-personalized service

Indeed, it is arguably the opposite of personal. Even though Amazon is currently investing heavily in personalization strategies, for many people it still lags behind shopping with smaller brands or on the High Street.