The Amazon effect on consumer expectations and buying decisions

by | Feb 23, 2017 | Omnichannel, Retailers

We hear it more and more everyday – Uber, Airbnb, and Netflix are all changing the game in their industries. Forcing cab services to adopt online reservation methods, challenging hotels to re-evaluate their booking processes and cable networks facing cord cutting challenges while streaming services keep popping up. And who is continuing to set the bar for consumer expectations in retail? Amazon.

Amazon does a lot of the heavy lifting to get consumers onto their site with fancy customer service features, algorithmic product recommendations, an easy-to-use app and more. But if you’re selling on Amazon right now, or want to be, it’s time to take a look at what consumers are going to expect from you as a supplier.

More than 500 retailers, suppliers, distributors and logistics firms recently weighed in on the biggest factors impacting consumers’ buying decisions. That information was compiled through a survey SPS Commerce commissioned from Retail Systems Research (RSR). The survey answers the respondents gave pointed distinctly in Amazon’s direction as a driver of consumer expectations.

The price-obsessed consumer

Across the retail landscape, survey respondents report that the price of goods is still the top factor impacting customer buying decisions. About 68 percent agreed that online shoppers are looking for the best price. Amazon has likely had a big impact on setting such consumer expectations, as its marketplace has made it incredibly easy to compare prices.

Product availability came in second, with about 54 percent of respondents citing it as a major factor in buying decisions. If an e-commerce site has the right item in stock and the price is right, there is a better chance that the customer will buy it. However, after price and product availability, there’s some disagreement on what consumers want.

At 36 percent, little more than a third of survey respondents said product assortment is a major factor for buying decisions. These organizations may have caught on to how fickle online consumers are. Recall the top buying decision factor of pricing and think about how that applies to shipping charges. If an e-commerce site doesn’t provide all of the products that the customer wants to buy, they’re more likely to go to a different site to get what they want from a single provider, rather than pay shipping charges for two orders from two different sellers.

Product descriptions for the win

Coming in fourth on the list with 28 percent is product information. When it comes to e-commerce purchases, the product details can make or break the sale. The last thing a consumer wants to do is figure out how to return an item to an online retailer (and the last thing the retailer wants is to refund the sale). Full-color, detailed photos and accurate, in-depth product information tell customers exactly what they’re ordering, giving them more confidence to buy.

User ratings and reviews like those offered by Amazon can also be helpful for shoppers to make online buying decisions. About 25 percent of survey respondents listed ratings and reviews as having a big impact on whether or not a customer buys a product from the particular merchant. Not only do they give insight on what to expect when the product arrives, it can also tell them whether or not the retailer can reliably deliver on expectations.

Shipping price and speed

One difference worth noting in the results is how different players in the retail industry viewed shipping price and speed. Though free shipping was selected as a decision factor by 27 percent of respondents overall, 42 percent of retailers listed it as a major factor, as compared 24 percent of distributors and 23 percent of manufacturers/suppliers. Similarly, though fast shipping was indicated as a buying factor by 18 percent of respondents overall, 25 percent of retailers listed it as a major factor, as compared 16 percent of distributors and 14 percent of manufacturers/suppliers.

Retailers are probably more keenly aware of Amazon as a competitor, and Amazon’s shipping options could be playing a big part in setting these speed and price-related consumer expectations. First, Amazon offers two day shipping on a huge assortment of items, meaning customers know they won’t have to wait long to receive their orders. Second, with Amazon Prime many shipping options are free after the enrollment fee has been paid.

Modern consumers love the convenience of having items delivered as opposed to getting them from the store, and as long as it’s fast and cheap, it’s a choice they’ll make over and over. Other retailers would be wise to figure out how to address the shipping demands of online consumers.

In our fifth year doing the benchmark survey, one theme endures, year over year: Consumers are setting expectations in retailing. We anticipate that this trend will continue and accelerate in coming years, led in part by Amazon. Even so, there are other marketplaces and players on the field that emerge to yet again transform consumer buying behavior. The companies that learn how to adapt and anticipate in the omnichannel era will have the greatest chance at success.

Are you on Amazon Marketplace? SPS Commerce Fulfillment can connect you to Amazon and any other trading partners, so you can manage all your sales channels with one system.

Megan Brang

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