Amazon Ups The Ante In Fast, Free Shipping
On the latest episode of the E-Commerce Retail Briefing podcast:
Retailers are facing another big hit from Amazon. The retail giant has now made cheap, single-item purchases available to customers with the option for free one-day shipping. The convenience for shoppers is unmatched, but the change could add to the concerns that Amazon engages in anticompetitive behavior.
According to a survey, women’s intended spending this holiday season is flat compared to the previous year. 43% of those surveyed said they plan to spend the same as last year and nearly half of the survey’s respondents intend to make more than 50% of their holiday purchases online. According to a report from Bloomberg, women drive 70 to 80% of household purchasing decisions, making it essential for retailers to be ready to meet their needs during the busy holiday season.
- Amazon and Walmart are reportedly considering buying on-demand grocery delivery platform, FreshDirect. The company has been experiencing order issues following its move to a new distribution center in the Bronx in 2018. According to The New York Post, J.P. Morgan is now seeking potential buyers. This is the third time that both Amazon and Walmart are said to be considering acquiring FreshDirect.
Despite the predictions that online grocery shopping will eventually become a $100 billion market, growth to date has been pretty tame. The latest figures put sales at anywhere from 3% to 6% of the total market. Consumer studies have revealed that most grocery e-commerce platforms don’t make shoppers want to explore products the same way they do in-store, a key component of consumer’s lack of enthusiasm and market’s slower than expected growth. Online grocery sites don’t offer much in the way of solutions, with the design and functionality seeming more like retailers' main focus was just to get their inventory online. That online grocery platforms would be sub-par at this point is understandable, as many are just getting started. But grocers have a unique opportunity to offer new experiences in food and beverage — a segment of retail where consumers are looking for inspiration and better health. As the market continues to grow and shoppers seek improved online experiences, it’ll become increasingly important for grocery stores to work on their e-commerce platforms.
Amazon Makes Free One-Day Delivery Available On Cheap Single-Purchase Items
As Amazon has tackled more product categories on its way to e-commerce domination, there’s been one area of growth it was restrained: low-priced goods where the cost for the retail giant to ship them was higher than the price a customer paid. But now that’s changed. Over the past few months, Amazon has removed barriers that previously made it difficult for customers to purchase an item below $5 dollars on its own. Now low-price items are available to Prime customers with free one-day shipping.
Until recently, someone looking to buy a single item like a stick of deodorant would have to jump through some hoops on Amazon to get it, such as buying a four-pack or adding on items in order to hit a $25 dollar minimum before Amazon would qualify the purchase for Prime shipping. For Prime customers, the convenience of getting such a cheap item delivered so quickly now is unmatched. Amazon is also starting to place wholesale orders for cheap items it once turned away over profitability concerns. The retail giant’s changes could make it the go-to for a category of regularly consumed household items that it has yet to fully enter into.
The changes could have huge ramifications for retailers like Target or CVS, where one-off purchases of consumer packaged goods are common. At the same time, the moves could add to the complaints that Amazon engages in anticompetitive behavior.