Power of recomendation: More than 50% of Amazon shoppers aren’t willing to go beyond the second page when searching for a product

BY DEENA M. AMATO-MCCOY

Customers continue to visit Amazon to discover new products or brands, yet their decisions are seldom influenced by digital ads seen on the site.

source: https://www.chainstoreage.com/technology/study-majority-amazon-shoppers-not-influenced-digital-ads/

When customers visit Amazon, 65% said they don’t even notice the ads featured, while 25% find them “useful or relevant,” according to the “2018 Amazon Shopper Behavior Study: How Shoppers will Browse and Buy on Amazon,” a report from CPC Strategy.

According to the data, Amazon continues to improve its native advertising experience for shoppers, a move that ensures the company is helping consumers to find the right product, for the right price, at the right time. It also means additional digital ads are not paramount to driving sales.

For example, more than 50% of Amazon shoppers aren’t willing to go beyond the second page when searching for a product. Meanwhile, they are more open to trying new products, as 80% are open to “occasionally” or “frequently” trying new products or brands on Amazon. This is a huge jump from 50% last year. And customer reviews are not spurring this curiosity, as approximately 80% of these customers don’t entirely trust Amazon’s customer reviews.

Despite Amazon being their “go-to” shopping source however, 74.8% of Amazon shoppers still price check on other sites.

When customers are ready to make a purchase with Amazon, more shoppers are open to using voice-enabled devices. In fact, 14.2% of Amazon customers made a purchase via a voice-enabled device in the last six months, and 61.3% of voice-enabled device owners have an Amazon Dot or Echo, the study said.

“We expected that some Amazon shoppers owned Amazon’s voice enabled devices, and had made purchases using Alexa, but we weren’t prepared to see numbers like this so early into the game,” said Nii Ahene, COO and cofounder of CPC Strategy. “The battle for ultimate marketplace dominance isn’t over, but Amazon is off to an early lead.”

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Retail Revolution: Inside Amazon Go, a Store of the Future

The technology inside Amazon’s new convenience store, opening Monday in downtown Seattle, enables a shopping experience like no other — including no checkout lines.

Source: https://www.nytimes.com/2018/01/21/technology/inside-amazon-go-a-store-of-the-future.html?partner=IFTTT
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A row of gates guards the entrance to Amazon Go.CreditKyle Johnson for The New York Times

SEATTLE — The first clue that there’s something unusual about Amazon’s store of the future hits you right at the front door. It feels as if you are entering a subway station. A row of gates guard the entrance to the store, known as Amazon Go, allowing in only people with the store’s smartphone app.

Inside is an 1,800-square foot mini-market packed with shelves of food that you can find in a lot of other convenience stores — soda, potato chips, ketchup. It also has some food usually found at Whole Foods, the supermarket chain that Amazon owns.

But the technology that is also inside, mostly tucked away out of sight, enables a shopping experience like no other. There are no cashiers or registers anywhere. Shoppers leave the store through those same gates, without pausing to pull out a credit card. Their Amazon account automatically gets charged for what they take out the door.

On Monday, the store will open to the public for the first time. Gianna Puerini, the executive in charge of Amazon Go, recently gave tours of the store, in downtown Seattle. This is a look at what shoppers will encounter.

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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times
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There is no need for a shopping cart. Products can go straight into a shopping bag.CreditKyle Johnson for The New York Times

There are no shopping carts or baskets inside Amazon Go. Since the checkout process is automated, what would be the point of them anyway? Instead, customers put items directly into the shopping bag they’ll walk out with.

Every time customers grab an item off a shelf, Amazon says the product is automatically put into the shopping cart of their online account. If customers put the item back on the shelf, Amazon removes it from their virtual basket.

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The only sign of the technology that makes this possible floats above the store shelves — arrays of small cameras, hundreds of them throughout the store. Amazon won’t say much about how the system works, other than to say it involves sophisticated computer vision and machine learning software. Translation: Amazon’s technology can see and identify every item in the store, without attaching a special chip to every can of soup and bag of trail mix.

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CreditKyle Johnson for The New York Times

There were a little over 3.5 million cashiers in the United States in 2016 — and some of their jobs may be in jeopardy if the technology behind Amazon Go eventually spreads. For now, Amazon says its technology simply changes the role of employees — the same way it describes the impact of automation on its warehouse workers.

“We’ve just put associates on different kinds of tasks where we think it adds to the customer experience,” Ms. Puerini said.

Those tasks include restocking shelves and helping customers troubleshoot any technical problems. Store employees mill about ready to help customers find items, and there is a kitchen next door with chefs preparing meals for sale in the store. Because there are no cashiers, an employee sits in the wine and beer section of the store, checking I.D.s before customers can take alcohol off the shelves.

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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times

Most people who spend any time in a supermarket understand how vexing the checkout process can be, with clogged lines for cashiers and customers who fumble with self-checkout kiosks.

At Amazon Go, checking out feels like — there’s no other way to put it — shoplifting. It is only a few minutes after walking out of the store, when Amazon sends an electronic receipt for purchases, that the feeling goes away.

Actual shoplifting is not easy at Amazon Go. With permission from Amazon, I tried to trick the store’s camera system by wrapping a shopping bag around a $4.35 four-pack of vanilla soda while it was still on a shelf, tucking it under my arm and walking out of the store. Amazon charged me for it.

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CreditKyle Johnson for The New York Times
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CreditKyle Johnson for The New York Times

A big unanswered question is where Amazon plans to take the technology. It won’t say whether it plans to open more Amazon Go stores, or leave this as a one-of-a-kind novelty. A more intriguing possibility is that it could use the technology inside Whole Foods stores, though Ms. Puerini said Amazon has “no plans” to do so.

There’s even speculation that Amazon could sell the system to other retailers, much as it sells its cloud computing services to other companies. For now, visitors to Amazon Go may want to watch their purchases: Without a register staring them in the face at checkout, it’s easy to overspend.

Nick Wingfield is a technology correspondent based in Seattle. He covers Amazon, Microsoft and emerging technologies and has written on technology’s impact on economies in the Pacific Northwest. He was previously a reporter at The Wall Street Journal. @nickwingfield

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Inside Amazon’s Store of the Future. Order Reprints | Today’s Paper | Subscribe

Is Voice The Next Advertising Frontier For Amazon ? (Author: Adam Blair)

 

 

Amazon has reportedly been talking with major CPG companies, including Procter & Gamble and Clorox, about introducing digital ads to its Alexa voice platform, according to CNBC. Early discussions have focused on whether companies would pay for higher placement when a consumer searches for a product on their Echo device — similar to the way paid searches put sponsored results higher up in Google search results.

Both voice and digital advertising are becoming major forces in the retail and CPG industries. Amazon claims that millions of Prime members used Amazon Alexa to shop by voice for gifts during the 2017 holiday season, and that the Echo Dot was the number-one selling Amazon Device during this period. Amazon Echo had 70.6% of voice assistant user share in May 2017, more than triple the 23.8% of Google Home, according to eMarketer. Overall, eMarketer forecasted that 35.6 million Americans would use a voice-activated assistant at least once a month in 2017, a 129% increase over the previous year.

Will Consumers Want To Silence Voice Ads?

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There are risks in selling advertising on voice platforms. While it’s easy for a shopper to scroll past a labeled ad on a desktop or mobile device, there’s much more “inertia” with voice platforms. Users would presumably need to verbally request another brand option if they don’t want to purchase Clorox bleach or Tide detergent.“I think [ads on voice platforms] would be a turn-off,” said Paula Rosenblum, Managing Partner at RSR Research. “It would likely be followed by the ‘Pay $9.99 per month for the ad-free version.’ You’d think Amazon would be happy with its captive ecosystem. I guess not.”

Other industry experts see greater potential for benefits. “I believe this is a good thing for advertising in general,” said Sam Cinquegrani, CEO of ObjectWave, a digital strategy and services firm. “We need more space not less, whether that be voice or click ads. It’s a good move as long as the consumer accepts it. And like most ad platforms, giving the consumer a chance to turn it off is a smart move. But not everyone is annoyed by ads.”

Consumer acceptance will be heavily influenced by the content and style of voice platform advertising. “I’d recommend that any ad material should give listeners a reason to not want to switch them off, particularly given the medium,” said Cinquegrani in an interview with Retail TouchPoints. “This is Alexa, not radio. So by focusing more on being informative and less on being promotional or a hard sell, CPGs are more likely to succeed. This works very much along the same lines as content marketing.”

Brands also will need to tread lightly in terms of how consumers perceive the way their personal data is being used, in order to avoid the “creep factor.”

“Consumers will likely be concerned that these ads may interfere with their anonymity as well as privacy,” said Marshal Cohen, Chief Industry Analyst, The NPD Group in an interview with Retail TouchPoints. “They are already fighting the privacy issue. But consumers are also used to ads invading their space. Cable TV, Sirius Radio and even apps they download on phones now all come with ads. All once promoted as ‘ad free’ now come with them. So over time I suspect the objections will fade.”

Amazon’s primary competitor in the voice realm — Google — has focused on product partnerships with retailers rather than advertising. Walmart announced in August 2017 that it would make thousands of items available for voice shopping via Google Assistant. The retailer integrated its Easy Reorder feature into the platform, enabling existing customers to link their Walmart accounts to Google and receive personalized shopping results based on previous online and in-store Walmart purchases.

Amazon Moves Aggressively Into Digital Advertising In 2018

The Alexa news followed a Dec. 26, 2017 CNBC report that Amazon will be making a major push into digital advertising this year, challenging industry leaders Google and Facebook. Most of the conversations are focusing on e-Commerce search and video products. Amazon also plans to partner with third-party tech companies to sell partnered TV and mobile ads.

Digital and mobile advertising is projected to grow 13% in 2018 to reach $237 billion, or 44% of global ad revenues, according to Magna Global. The media buying research firm forecasts that by 2020, this type of advertising will comprise 50% of the total global ad spend.

Search engines are weakening Amazon’s hold on product search

This story was delivered to BI Intelligence “E-Commerce Briefing” subscribers. To learn more and subscribe, please click here.

Source: http://www.businessinsider.fr/us/google-search-engines-weaken-amazon-hold-on-product-search-2017-12/

Where US Consumers start product searches

BI Intelligence

Amazon’s share of initial product searches dropped from 55% in 2016 to 49% in 2017, and search engines like Google appear to be responsible, according to a survey from Survata as cited by Bloomberg.

Search engines’ share went from 28% to 36% between 2016 and 2017, reversing the drop they saw between 2015, when they had 34%, and 2016.

The rise of mobile commerce (m-commerce) may be responsible for search engines’ turnaround.

Search engines are the most popular option for mobile shopping, with consumers favoring them over retailers’ websites and apps, which includes Amazon’s. M-commerce is estimated to have grown from 19% of US e-commerce sales in 2016 to 23% in 2017, so search engines’ mobile advantage may be helping it gain on Amazon in product search. Mobile shopping is projected to make up nearly half of all US e-commerce by 2021, so search engines would be wise to invest in their mobile shopping search experience going forward.

Winning back search is necessary when competing with Amazon because of its strong conversion rate. Amazon has a tremendous ability to convert searchers to purchasers, which blocks competitors from having an opportunity to steal them away. If search engines and retailers want to take back more control of search, they should note the reasons consumers gave for starting their searches on Amazon — navigation, product selection, prices, and shipping capabilities — and then look to improve in those areas.

Voice shopping and social commerce may be the next battlefields for e-commerce search.

  • BI Intelligence estimates that 31% of US adults will use voice to make a payment by 2022, up from 8% this year, opening up a new field for search. Amazon is already well established in the space, but Google is working with retailers in the hopes of overtaking it and claiming more of voice search for itself. And as the industry develops, there are sure to be even more players.
  • Social media is heavily influential on younger generations of shoppers, so many of them are likely to search for products there. Those trying to control product search will need to find ways to use social media to stay competitive in search, as Amazon is trying to do with its social platform Spark.

Americans go to buy products from Amazon before Google online (Business Insider)

Source: Americans go to buy products from Amazon before Google online: CHART – Business Insider

If you’re an American buying a product online, you’re probably going through Amazon.

Online marketplaces, a category that includes everything from eBay to Amazon, are the first stop for 38% of online shoppers in the US when they search for a product, according to a recent UPS survey charted for us by Statista. And Amazon itself is by far the most popular such destination, with 29% of the 5,000 shoppers surveyed heading to Amazon first.

That’s nearly twice as many as those who use search engines like Google, and equal to the total number of those who said they use specific retailers’ various channels.

The figure is yet another reminder of how much of a necessity Amazon, a  data-drivencompany, is becoming for companies who want their products to reach consumers.

That growing dependence creates a convenient all-in-one marketplace for consumers, but given Amazon’s ability to make and heavily promote its own versions of popular products, the ongoing shift toward online shopping, the ever-increasing number of Amazon Prime members, and Prime members’ tendency to only shop on Amazon, it’s also raised questions of how healthy the trend would be for consumers if it were to keep up in the coming years.

COTD_7.6

 Here’s How 5 Tech Giants Make Their Billions – Alphabet & Facebook: Advertising

Source: Chart: Here’s How 5 Tech Giants Make Their Billions

on May 12, 2017 at 1:03 pm

Chart: How 5 Tech Giants Make Their Billions

The Revenue Streams of the Five Largest Tech Companies

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Last year, we published a chart showing that tech companies have displaced traditional blue chip companies like Exxon Mobil and Walmart as the most valuable companies in the world.

Here are the latest market valuations for those same five companies:

Rank Company Market Cap (Billions, as of May 11, 2017) Primary Revenue Driver
#1 Apple $804 Hardware
#2 Alphabet $651 Advertising
#3 Microsoft $536 Software
#4 Amazon $455 Online Retail
#5 Facebook $434 Advertising
TOTAL $2,880

Together, they are worth $2.9 trillion in market capitalization – and they combined in FY2016 for revenues of $555 billion with a $94 billion bottom line.

BRINGING HOME THE BACON?

Despite all being at the top of the stock market food chain, the companies are at very different stages.

In 2016, Apple experienced its first annual revenue decline since 2001, but the company brought home a profit equal to that of all other four companies combined.

On the other hand, Amazon is becoming a revenue machine with very little margin, while Facebook generates 5x more profit despite far smaller top line numbers.

Company 2016 Revenue (Billions) 2016 Net Income (Billions) Margin
Apple $216 $46 21%
Alphabet $90 $19 21%
Microsoft $85 $17 20%
Amazon $136 $2 2%
Facebook $28 $10 36%

HOW THEY MAKE THEIR BILLIONS

Each of these companies is pretty unique in how they generate revenue, though there is some overlap:

  • Facebook and Alphabet each make the vast majority of their revenues from advertising (97% and 88%, respectively)
  • Apple makes 63% of their revenue from the iPhone, and another 21% coming from the iPad and Mac lines
  • Amazon makes 90% from its “Product” and “Media” categories, and 9% from AWS
  • Microsoft is diverse: Office (28%), servers (22%), Xbox (11%), Windows (9%), ads (7%), Surface (5%), and other (18%)

Lastly, for fun, what if we added all these companies’ revenues together, and categorized them by source?

Category 2016 Revenue (Millions) % Total Description
Hardware $197,020 36% iPhone, iPad, Mac, Xbox, Surface
Online Retail $122,205 22% Amazon (Product and Media Categories)
Advertising $112,366 20% Google, Facebook, YouTube, Bing ads
Software $31,692 6% Office, Windows
Cloud/Server $31,396 6% AWS, Microsoft Server, Azure
Other $60,177 11% Consulting, other services (iTunes, Google Play), etc.
$554,856 100%

Note: this isn’t perfect. As an example, Amazon’s fast-growing advertising business gets lumped into their “Other” category.

Hardware, e-commerce, and and advertising make up 76% of all revenues.

Meanwhile, software isn’t the cash cow it used to be, but it does help serve as a means to an end for some companies. For example, Android doesn’t generate any revenue directly, but it does allow more users to buy apps in the Play Store and to search Google via their mobile devices. Likewise, Apple bundles in operating systems with each hardware purchase.

Uber, Lyft, Airbnb, and the on-demand economy is a bubble—and it’s about to burst — Quartz

Source: Uber, Lyft, Airbnb, and the on-demand economy is a bubble—and it’s about to burst — Quartz

Enjoy on-demand services while you can.

Whether it’s getting a lift whenever you want or ordering pad thai from the comfort of your couch, the rise of the on-demand economy has made a lot of people’s lives more convenient. But many of the services we know and love might not be around in a few years. Those that survive will continue to make aspects of your life as easy as touching a button—but there will be many more that will die a swift, quiet death.

After the rapid growth of Uber and Lyft, venture capitalists and entrepreneurs saw major opportunities to apply the principles these ride-sharing apps embody in other verticals. Food and grocery delivery on-demand services such as Instacart and Doordash quickly followed, along with dozens of others such as parking service Luxe and dry-cleaning delivery Rinse.

But just because massive companies like Airbnb are finding success in the travel sector doesn’t mean that on-demand delivery of goods and services in other areas has been solved. Other than ride sharing, lodging, and food delivery, mass-market adoption for on-demand uses is shaky at best. (In fact, we’re not even sure if the on-demand economy is technically legal.) Instead, venture capital is fueling the space and essentially subsidizing services. But VC money does not make your company invincible, and you can only finance growth through venture money for so long—even Uber and Lyft are burning through a ton of cash.

If there is a bubble. Uber would be the company that implodes first and starts the downward avalanche. https://www.nytimes.com/2017/04/23/technology/travis-kalanick-pushes-uber-and-himself-to-the-precipice.html?utm_source=digg&utm_medium=email&_r=0 

Photo published for Uber’s C.E.O. Plays With Fire

Uber’s C.E.O. Plays With Fire

Travis Kalanick’s drive to win in life has led to a pattern of risk-taking that has at times put his ride-hailing company on the brink of implosion.

nytimes.com

The on-demand bubble is poised to burst—and soon. This is because of our lack of brand loyalty, episodic customer use, and the use of precarious business models. The services that survive will focus on locking in customer and suppliers, objective outcomes (such as getting from point A to point B), a high frequency of use (you need food every day, for example), and services where automation can eventually help play a role to bring down costs.

Lack of loyalty

Consumers of on-demand products feel no inherent loyalty to a specific brand, especially when the outcome of the service is objective (such as ordering food from the same restaurant) and similarly priced. For example, if you want groceries delivered to your house, do you really care if you receive the goods from Amazon Prime, Google Shopping Express, or Instacart? How many times have you flipped back and forth between Uber and Lyft to find cheaper rates? If you have a single bad experience with one service, you’ll likely switch to another—there’s no shortage of them for you to try out, after all, and there are always new ones cropping up with cheap sign-up offers.

The same goes for the employees at these companies—if you can really call them that. (Uber doesn’t.) The on-demand economy is built on 1099 employees, who are independent contractors. These workers are not allotted the same level of benefits of full-time employees and are considered self-employed. This is both a strength of the model and a weakness.

By making Uber drivers (despite efforts to unionize) and Lyft drivers 1099 workers, these companies are able to maintain low-cost structures because they don’t have to pay benefits such as healthcare; you are also not on the hook for unemployment payouts if a 1099 employee is fired. But the flipside is that Uber and Lyft are constantly competing for workers, as good drivers aren’t tethered to a single company by an employee contract: There is no reason for a Lyft driver to remain loyal to Lyft, just as there is no incentive, other than ride-milestone bonuses, for an Uber driver to solely drive for Uber. Your next Doordash delivery might be completed by someone who also delivers for Instacart, and you can often find the same apartment listed on both Airbnb and VRBO. This concept, on both the supply side and the demand side, is known as “multi tenanting.”

Every on-demand company that supplies services using people faces this problem. Companies like app-based restaurant Sprig have tried to solve this by making its delivery and logistics teams employees, thereby incentivizing them to stick to the service. Sprig employees of all levels are also entitled to perks, like stock options.

Service is episodic—and expensive

Even services that have amazing reputations sometimes conclude that customer behavior is too episodic and inconsistent to predictably figure out realistic revenue goals to be profitable. For example, you may love Luxe’s service, but how often are you willing to actually use an on-demand valet? Many people are happy a service exists to serve a niche purpose, but they won’t use it on a regular enough basis to bring in a reliable cash flow and keep it afloat.

It’s risky to pay marketing costs to acquire a customer without understanding what their true lifetime value is. Debby Meredith, a venture partner at Icon Ventures, echoes this point. “I think on-demand services only work well when the frequency of use case warrants having an on-demand service,” she says. “Or if the company can charge enough for their service so that they break even on the first transaction.”

The blinding light of VCs

Many of the services you use on a frequent basis may be hiding a massive cost and profitability problem by continually seeking venture rounds. “Mainstream customers are not willing to bear the cost for most on-demand services,” says Howard Hartenbaum, a general partner at August Capital. “ So many services are effectively only being used when they are subsidized by VCs.”

If many of these on-demand companies are struggling to make a profit, why are VCs pouring money into these companies? It’s not because of charity. Many VCs believe it’s a “winner takes all” situation—that one brand will reign supreme, reach economies of scale, and reap most of the profit and the reward that comes with being left as the lone competitor standing—and they want their money on the winning horse. They’ll therefore back many smaller competitors with the hope of them rising to the top of the field and the rest falling away.

That being said, Uber clearly has the lead in the ride-sharing market, but is still losing billions of dollars. So why continue investing? This is a long game, and many investors have the patience—and deep pockets—to continue to support these companies until they achieve “winner” status.

The survivors: Automation and consolidation

The companies that persevere may survive just long enough for automated options to hit the market. For example, Uber already has driverless vehicles on the road (but is running into some major legal issues). As soon as the price for human service no longer plays a role, costs for a lot of on-demand companies could plummet, thus making the model viable for a lot of different verticals.

Even five years ago, self-driving cars and Amazon drones felt like science fiction. But these types of innovations may be what’s necessary for the on-demand economy to be profitable outside of VC. “Automation could have a very interesting role to play both in terms of cutting costs and providing services where people are either not available or cost effective,” says Laurie Yoler, founding board member of Tesla, board member of Zoox, and advisor to trucking telematics company Platform Science.

For many of these on-demand services, consolidation may also be key. Competition is fierce, so in order to survive, businesses would be smart to share basic services to avoid competing for the same suppliers and customers. For example, pet-sitting companies DogVacay and Rover recently merged. We will also see companies that are delivering a good or service decide to use the same delivery platform: If you are going to deliver food, why would you build your own logistics network? For example, companies like Uber have have already built out platform strategies where they open up their logistics networks to other on-demand companies for a fee.

The winners and losers

We are already seeing a lot of on-demand companies die, and many of the successes are bleeding money to stay afloat and are in dire need of another VC cash injection to keep them running. So what will distinguish the winners from the losers?

Loyalty and lock in: Great on-demand companies will focus on helping suppliers and consumers find a reason to stick with one service in the long-run.

Subjectivity vs. objectivity of outcome: If you are focused on providing a service that has an objective outcome, you are in pretty good shape.

Frequency of use: Winners will avoid the trap of episodic customer behavior by focusing on areas where the product actually needs to be used frequently.

Automation and consolidation: We are already seeing signs of this with companies like Doordash, which is now making deliveries with robots.

We are about to go through a tumultuous period where numerous services will run out of VC money. It will be interesting to see over the coming months who will survive, who will need to go back to the well for more cash, and who will disappear entirely.

You can follow Sunil on Twitter. Learn how to write for Quartz Ideas. We welcome your comments at ideas@qz.com.