Amazon Dominates Minds of Canadians Purchasing Online: Expert

PHOTO: VIA    COINDESK

PHOTO: VIA COINDESK

By Mario Toneguzzi

The “Amazon Effect” continues to accelerate eCommerce in Canada, heating up the competition among retailers and brands and marketers that win are those that rise to meet changing consumer expectations head on.

The research, Rethink eCommerce by Reprise Digital, a digital marketing agency, found that in the last year 63 per cent of those surveyed used Amazon to discover a new product, 88 per cent were aware of Amazon’s Prime program, and 42 per cent of Canadian households hold a Prime membership.

Among Amazon shoppers, 78 per cent say Amazon has the most efficient shipping and 84 per cent say Amazon has the widest selection.

PHOTO: AMAZON.CA VIA FACEBOOK

PHOTO: AMAZON.CA VIA FACEBOOK

“There’s a need in the market to provide some greater insight into the digital shopping journey. We heard this from a number of clients,” said Matt Ramella, Managing Director, Reprise and Digital Partnerships.

“Shopping behaviours are changing so quickly and brands need to understand that behaviour in order to keep up, come e-retail ready and capture their share of the digital shelf. That’s why we named this Rethink eCommerce.”

He said the most underdeveloped retail category is grocery. That is the largest opportunity for retailers moving forward “and the biggest nut to crack.”

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The research also found the following:

  • Canadians are more likely to purchase Toys & Games, Appliances and Baby products online from Amazon than other retailers. 26 per cent of Canadians are more likely to purchase appliances on Amazon versus 12 per cent who would purchase from Costco;

  • When purchasing Grocery, Patio & Garden, Health & Beauty, Books and Clothing Amazon is neck and neck with other well-known retailers such as Walmart, Shoppers Drug Mart and Indigo. For the  grocery category, 22 per cent of Canadians are more likely to purchase from Walmart and 21 per cent to purchase from Amazon;

  • In Canada, Furniture, Electronics and Automotive categories are dominated by category specific eRetailers. 26 per cent of Canadians are more likely to purchase furniture from Wayfair than Amazon;

  • The largest weekly online shopping cohort, 34 per cent, is the 35 to 44 year old age bracket. This group grew up in the age of media and digital transformation, making them more comfortable with technology and more apt to shop online. They have more disposable income than younger generations, making them a prime audience for online shopping;

  • 99 per cent of those surveyed researched a product online regardless if they bought it in-store or online;

  • For 68 per cent, the biggest deterrent to online shopping is the shipping fee while for 18 to 34 year olds they’re most concerned about getting products fast.

PHOTO: amazon

PHOTO: amazon

“From a points of friction standpoint, Reprise found that shipping time and shipping fees were the primary points of friction for online purchase,” said Ramella. “And that’s especially more prevalent with the younger end of the demographic - Millennials for example.

“We also found that the older end of the demographic was also concerned about missing out on that human element of shopping that you often get when you’re shopping in-store.”

Ramella said convenience is the main reason why Canadians like shopping online and its ease of research.

“From a discovery perspective, online marketplaces for example Amazon is the number one point of discovery for shopping online,” he said.

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“We do know that Amazon dominates the minds of Canadians when they purchase online. It also is front and centre as we work with our clients across the eCommerce space. From a purchase perspective in the study, 75 per cent of respondents shopped on Amazon in the past six months and the next closest retailers in the Canadian market are Walmart at 31 per cent and Costco 29 per cent. There’s a significant difference between number one and the rest.”

The research found that shoppers are using Amazon product details and reviews even when they don’t buy on Amazon and Amazon stores have become a one-stop shop for branding, reviews and purchase.

The research also showed that 85 per cent of respondents say they are likely to shop at Amazon in the future followed by 52 per cent at Costco and 50 per cent at Walmart.

Amazon is the dominant retailer when it comes to the Toys & Games, Appliances and Baby categories. It is competitive in Grocery, Patio & Garden, Health & Beauty, Books, and Clothing. It is trailing in Furniture, Electronics and Automotive.

PHOTO: amazon

PHOTO: amazon

Retail expert Bruce Winder said Amazon is the new Walmart as it relates to channel power with suppliers, especially smaller ones.

“Smaller suppliers have really no bargaining power with Amazon and are forced to capitulate on whatever terms and conditions they demand. Amazon’s ecosystem is just too big to ignore for all suppliers now. One of the major risks for all suppliers is Amazon using supplier metrics to build its own private labels to eventually displace them,” he said.

“I find it interesting that consumers are purchasing merchandise online from category specialists like Wayfair over Amazon. This may be a clue for retailers trying to survive against Amazon by building niche businesses. Also, the research may show the level of comfort Millennials have with Amazon as baby products and toys are leading categories. This will no doubt be a distant early warning for other retailers that sell products used as consumers age through their life stage. Finally, it shows that existing, large established brick and mortar retailers are holding their own in select categories online. It appears that the large investments made at retailers like Walmart, Shoppers and the like have paid off at least for now.”

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Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, city and breaking news, and business. For 12 years as a business writer, his main beats were commercial and residential real estate, retail, small business and general economic news. He nows works on his own as a freelance writer and consultant in communications and media relations/training. Email: mdtoneguzzi@gmail.com.

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Mario Toneguzzi

Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, city and breaking news, and business. For 12 years as a business writer, his main beats were commercial and residential real estate, retail, small business and general economic news. He nows works on his own as a freelance writer and consultant in communications and media relations/training. Email: mdtoneguzzi@gmail.com.