Business World

Wednesday 12 December 2018

'Tis the season for Amazon to be jolly with its dominance

An Amazon distribution centre
An Amazon distribution centre

Richa Naidu, Chris Kahn

More US online shoppers plan to give Amazon.com the bulk of their holiday business this year than in previous years, according to a Reuters/Ipsos opinion poll, despite costly efforts by traditional retailers to attract customers to their websites.

The online poll of 2,644 adults, released yesterday, found that 60pc of online shoppers planned to do most of their holiday buying on Amazon.com, up from 50pc during the same period in 2015.

Meanwhile, the proportion of shoppers who said they expected to do most of their shopping at Walmart.com, Target.com and Macys.com declined by about 1 percentage point each in that period.

Consumers opting increasingly for convenience and speedy delivery have already pushed online sales this holiday season to record highs, making it all the more crucial that retailers get their digital businesses into gear.

Wal-Mart Stores, Target Corp and Macy's Inc, like many of their peers, have invested in deeper online discounts and free shipping this Christmas, potentially hurting fourth-quarter profit margins to win back customers who have turned increasingly to Amazon.com.

Retailers have also invested heavily in sprucing up their websites and mobile device apps. They are rolling out more fulfilment options such as curbside pickup, click-and-collect and same-day delivery. The holiday shopping season can account for 20 to 40 percent of annual sales for many retailers.

Anand Raghuraman, EY's Americas leader for consumer products and retail strategy, said traditional retailers' online sales were growing, but not fast enough to win market share.

"They're dealing with an 800-pound gorilla that has different metrics around profitability than they do, which is tough to compete with," said Raghuraman.

Earnest Research, which looks at anonymous card transactions made by millions of US shoppers, said data from the two weeks after Thanksgiving showed Amazon's market share of US sales had risen 2.6pc from the same period last year.

Meanwhile Walmart's in-store and online market share for the period was down 1.7pc, while Target had lost 0.6pc and Macy's was down 0.5pc, according to Earnest.

Target expects fourth-quarter digital growth to once again be among the best in the industry, spokesman Joshua Thomas said.

Macy's spokeswoman Radina Russell said the department store chain had begun the holiday season well and would continue to offer value online and in stores.

Walmart did not immediately provide comment.

Analytics firms and industry groups expect most traditional retailers to report higher holiday sales this year, both online and in stores, driven by discounting, low US unemployment, rising consumer confidence and good weather across the country.

Sales on Thanksgiving and Black Friday also topped prior years and Amazon.com said it broke sales records during that holiday weekend.

According to the Reuters/Ipsos poll, about one in every four adults plan to shop primarily or entirely online this Christmas, up from one in five in 2012. Convenience, delivery and the ability to compare prices easily were the most common reasons people choose to shop online, the poll showed.

  • The Reuters/Ipsos poll was conducted in English throughout the United States from November 27 to December 7. (Reuters)

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