Recent research into Amazon’s status as the most cost-effective online retail destination sprang some surprises for Internet marketing and e-commerce experts.
Amazon’s Cost Advantage Eroded
The survey revealed that Amazon may no longer be the leader of cheap prices online. Wells Fargo and 360pi conducted a full year of analysis of various e-commerce sites, focusing on their pricing habits. The analysis included tracking the daily pricing for more than 25,000 similar products sold online, and the big news is that Amazon does not have the commanding edge it once had vis-Ã -vis Target and Wal-Mart in four important categories. These competing retailers offered lower online prices in electronics, health and cosmetics, clothing and shoes and house wares. The pricing advantage in these categories was a massive 10% for Wal-Mart and 5% for Target. However, Amazon was still the lowest priced in the category of “like-to-like” goods.
This could also imply that Target and Wal-Mart’s pricing software that scans the prices of competitors to adjust its own prices is quite sophisticated and can be a stiff competitor to Amazon’s pricing bots. The analysis did not, however, include shipping cost and taxes where Amazon does have a significant advantage thanks to its Prime shipping service. According to Amazon, more than 20 million households belong to its Amazon Prime program that offers free 2-day shipping for $99 per year, which means that these households enjoy free shipping when they buy at Amazon.com
Early Days Still for Online Retail
Online retailers still have a lot to tap into since the market is still in the early stages. Online retail transactions have made up only 6.2% of the total retail transactions in the first quarter of 2014. Globally, this percentage could be even lower. With the e-commerce boom progressing, the opportunities are only set to increase for all kinds of online retailers, though retailers with highest market shares are likely to emerge stronger still. Currently, Amazon is joined by Wal-Mart in this category.
While this means Internet marketers should ensure that they focus on more than just Amazon for selling their products, it should be remembered that Amazon is still the most popular online retail destination which is why the results of this study are surprising. However, Amazon does have a competitive edge when it comes to “like-to-like” specifics goods.