Gordon Haskett breaks out five reasons why Amazon isn't the end of brick-and-mortar

NEW YORK — In part two of Gordon Haskett's review of consumer behavior online, analyst Chuck Grom gives Amazon their due, as the online juggernaut "commands the majority of online traffic with an equal (or greater) share of household purchases when compared to all other e-commerce retailers combined," he said. But brick-and-mortar retailers shouldn't fret (too much), he added, because in-store sales still remain relevant, particularly in non-discretional categories.



Here are the five key takeaways Grom gleaned from the latest survey of more than 500 households:



Takeaway #1: Amazon may dominate sales, but not in all categories, and not all online

Amazon definitely commands the lion's share of sales of entertainment, including music, books and movies, as well as small household appliances. But that dominance drops significantly when it comes to health and beauty or groceries. "Groceries holds the highest average percent of households' in-store purchases over the previous 30 days at 76.5%, which is approximately three times the percent of online purchases (23.5%) in the category," Grom wrote. Again, for both health and beauty and pet products, two times as many purchases occur in a store as opposed to online.



Takeaway #2: Amazon Prime subscriptions holding steady, but Fresh and CC use is dropping

Approximately half of those households surveyed by Gordon Haskett (52.1% to be exact) were Prime members, and that share remained steady over the five months of the survey. However, from March 2017 through July, the number of consumers using Fresh dropped 895 basis points and the number of households employing Amazon's credit card in their purchases dropped 1,065 basis points.



Takeaway #3: The appeal of Amazon Prime drops in accordance to household income

"According to our survey data, even at a discounted rate, Amazon may have a difficult time driving incremental Prime membership in the lower income demographic," Grom observed. Only 28.5% of households accruing less than $40,000 in annual income are Prime members. Of those who object to the $10.99 monthly fee, 81% still object to a discounted fee of $5.99, so value-oriented retailers can rest easier.



Takeaway #4: Consumers use Amazon for discretionary items, for basics they shop in-store

"About the same percent of people (36.2%) are buying discretionary items (i.e., clothes, electronics, music, movies, etc.) from Amazon than they had in the past vs. those that are not (34.7%)," Grom wrote. "Conversely, 44.2% of respondents said they are not purchasing any more of their basic necessities (i.e., toiletries, vitamins, food, etc.) from Amazon vs. just 30.8% who said they were."



Takeaway #5: The consumer journey can be influenced through social media

"According to our survey results, about two-thirds of consumers visit a social media website more than once per day," Grom noted. "Furthermore, over half of survey takers use social media to research products they are considering purchasing," he said. "The implication is that connectivity is increasingly important for today’s consumer and the more ways in which a brand can interact with its customer the higher the likelihood they can influence the customer at various points in their journey."



For the full report, click here.