Amazon is the biggest, but not always the best, in online retail
Amazon’s dominance in online retail is clear to see: The so-called Everything Store captures 49 percent of retail e-commerce sales in the U.S., thanks in large part to its 95 million-strong army of Prime customers, who in July contributed to an estimated $4 billion spent globally in just 36 hours during a promotional binge that Jeff Bezos created out of thin air. For comparison, that’s more than Church & Dwight, maker of Arm & Hammer baking soda and Trojan condoms, generates in a year.
So Amazon’s the biggest shopping site in the U.S. But is it the best? And how does one measure that, anyway? A common way is to look at how much of a retailer’s total revenue comes from its online division. By that metric — simply, who does the biggest share of their business online — Amazon is worlds ahead of most rivals.
That doesn’t tell us very much, though. For one thing, Amazon is the king of online retail, not because of the prices or shopping experience, but because it turns browsers into buyers.
that metric is declining at Amazon as the company evolves: It now owns the Whole Foods Market grocery chain and also gets almost 12 percent of net sales from its successful cloud business. At Walmart, meanwhile, the online unit is expected to grow 40 percent this year, but it will never be as big of a slice of the pie given that the company operates more
than 11,000 brick-and-mortar stores around the globe that deliver about a half-trillion dollars in sales.
Discussions about online sales usually devolve into comparing deals. But it’s not just about who has the lowest prices — most sites these days employ algorithms that can quickly match competi-
tors’ price tags, so they’re changing constantly. Executives at Walmart, the king of everyday low prices, now talk less about prices and more about “reducing friction” for online shoppers-or making the shopping experience faster and easier. And while product assortment is important, it’s more than who carries the most stuff. Consumers can get lost in a sea of online listings in much the same way they get confused staring at 52 different brands of toothpaste in a physical store.
In truth, what matters most to web retailers are three things: Traffic, engagement and conversion. In other words, how many people visit your online storefront, how interested they are in what they see and how many of them click the all-important “buy” button.
Let’s start with traffic: Amazon gets more visits in a typical month than EBay, Walmart, Target, Best Buy, Macy’s and Costco combined. One reason is Amazon’s strong referral business, whereby other websites, dubbed affiliates, send traffic to Amazon and collect a fee.
But traffic doesn’t tell the whole story. It can increase without delivering any boost in sales.
For Walmart, meanwhile, half its visitors ‘bounce’ or leave after viewing one page, suggesting its shoppers aren’t engaged with the site. That might explain why the company unveiled a website redesign in May.
The Baymard Institute, an e-commerce researcher, has found that about seven out of 10 online shopping trips end with no purchase.
Amazon converts shoppers into buyers better than its main rivals, and it’s not even close. With simple one-click checkout and discounts for household goods purchased regularly, Amazon, for now, closes the deal better than anyone. And that, more than anything, makes it the king of e-commerce.