Amazon is the largest e-commerce retailer in the world and shows no signs of slowing down despite turning 25 this year. The retailer continues to offer new forms of convenience and value to its customers which keep them engaged, satisfied and coming back. Besides its diversification, Amazon’s “silver bullet” that leads to high retention rates is its Amazon Prime membership program which reportedly heralds over 105 million subscribers, making it the second-largest subscription-based model after Netflix.
According to Mintel research on Amazon, two-thirds of Prime subscribers say they are “highly satisfied” with Prime’s value. Despite the company instilling a rate hike a year ago to $119 per year, no apparent signs of attrition are expected. In fact, we can expect that Amazon will up its membership levels once again during its annual Prime Day extravaganza.
But how do consumers really feel about Amazon?
Does Amazon fill functional or emotional needs?
One-fifth of Amazon shoppers admit they couldn’t live without Amazon and are addicted to shopping, while one-third say it’s their favorite place to shop. These sentiments are much higher among Prime members. But why do they love Amazon so much? Is it because Amazon fulfills their emotional or functional needs, or both? Consumers tend to be more loyal to companies who share their own beliefs, morals and values. However, Mintel research suggests that consumers’ love affair with the e-commerce giant can be described more as infatuation rather than true love.
A majority of shoppers most closely associate Amazon with being a “money saver” and a “time saver” – both functional in nature.
Shoppers rank Amazon above all major competitors on nearly all attributes including delivery, ease of use and product selection. In other terms, Amazon consistently overdelivers on consumers’ functional needs as it relates to convenience and ease of use. The retailer has enlightened its customers to a new, more convenient way to shop with more than four in 10 agreeing Amazon has redefined what convenience means when it comes to shopping. It’s also raised the bar in terms of setting expectations for other retailers: 27% of consumers expect more from other retailers they shop because of what Amazon delivers. This is the “the Amazon effect” in a nutshell, which has also led other retailers and brands to change the way they do business in order to try and steal away the hearts of Amazon’s core customers.
Consumers’ strong feelings toward the brand are not rooted in emotional needs, such as attributes in brand confidence, moral beliefs and a love of what the brand stands for. Rather, consumers’ high affinity is grounded in transactional and functional needs. A majority of shoppers most closely associate Amazon with being a “money saver” and a “time saver” – both functional in nature. However, when it comes to more emotionally-grounded attributes such as being genuine, personal and loveable, Amazon scores low comparatively, with a quarter or less of shoppers giving it credit for these traits.
This insight casts light on some of Amazon’s vulnerabilities, and causes one to ponder what might happen if another retailer offers a better value proposition. Will consumers stay loyal to Amazon or move on to explore new opportunities? This remains to be seen, as consumer loyalty to Amazon is strong. Amazon has garnered high levels of trust: nearly half of consumers view the retailer as trustworthy. This is a strong advantage that Amazon has, as trust is an important foundational element to any meaningful and lasting relationship. There are signs of a soft undercurrent of discord though, with 14% of consumers thinking Amazon is “too powerful.” The demographic that Amazon covets the most – young affluents – is even more likely to agree with this statement (24%).
What we think
While consumers do “love” Amazon, it’s questionable whether this love will result in a long-term, lasting relationship over time. According to Mintel research on online shopping, more than four in 10 online shoppers say their favorite retailers are those that feel like friends. Additionally, most online discussion panelists expressed an interest in being friends with Amazon if Amazon were a person. Consumers’ love affair with Amazon may end up turning into a “just friends” scenario after all. Regardless, Amazon has an opportunity to deepen the emotional relationship with its customers. As other retailers improve their own delivery and convenience, Amazon’s ownership of these attributes will wane, and a deeper relationship will be needed to retain customer loyalty. For now, whether it’s love or infatuation that drives them, consumers remained firmly attracted and committed to Amazon’s alluring ways.
