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Do Amazon prices drive consumer loyalty ?

Amazon prices key factor in purchase decision

Amazon prices are perceived as competitive but consumers still price compare across other retailers.

CPC Strategy surveyed 1500 men and women in the U.S. about their Amazon shopping habits and the results not suprisingly, show price and delivery as the key criteria in the buying decision.

The reports’ introduction quotes some interesting Amazon statistics on its’ size and dominance of U.S retail channels.

  • 33.8% of all retail website visits during Nov and Dec 2016 were to Amazon
  • Approximately 44% of U.S. households have Amazon Prime
  • 44% of shoppers start their product search on Amazon
  • Amazon’s market value is now more than $370 billion, that’s more than the combined total of Sears, Macys and Target.

Pretty impressive statistics but what drives U.S. consumers to this giant selling machine ?

It turns out that the product price and the cost of shipping are important factors for consumers, followed by convenience and quality of reviews.

The importance of Amazon prices

  • More than 23% of respondents stated price as the biggest factor in their decision to buy from Amazon – the number 1 factor
  • Approx 20% cited the convenience of shopping on Amazon and no doubt driven in large part by Prime
  • Reviews also feature high on the list


Amazon Prices – game over for other retailers ?

So is it game over for other retailers given that Amazon has such dominance ?

Not necessarily, whilst it’s a common practice for bricks and mortar shoppers to check prices on Amazon before checking out in store, it is also common for Amazon shoppers to check other online retailer prices before checking out on Amazon. More than half of respondents said they always or sometimes compare Amazon prices elsewhere. That’s good news for other retailers as it suggests consumers don’t just assume Amazon have the best prices.

Comparing Amazon prices across other online retailers

Our perspective

Amazon continues to dominate and increase its market share of online retail. Factors that are driving its growth include,

  • General perception of good prices
  • Convenience of shopping on Amazon (range of products, Prime etc)
  • Product reviews

Competing with Amazon is never going to be easy as they have so many ‘fair’ and ‘unfair’ advantages. However there are tactics that can help you stay in the game,

  • Price – Consumers will continue to price compare, make sure you are price competitive versus Amazon and use price tracking tools to maintain visibility
  • Range – You can’t compete with Amazons overall range but you can narrow your focus and specialise in certain products. There are product categories that are not well represented on Amazon and even if they are can you identify gaps in their range ?
  • Shipping costs – Build the cost of shipping into your product prices and offer free shipping whenever possible. You don’t have to offer same day or even next day delivery but your free shipping option needs to be within a couple of days.
  • Visibility – in order to have a chance of competing you need to be visible when consumers price compare across retailers. Your search engine marketing activities should focus on maximising traffic to your most profitable products.