Australians’ attitudes towards Amazon’s local service are improving, but a pared back Prime offering is limiting the speed of Amazon’s growth, according to new research.
Visits to Amazon Prime pages spiked 324 per cent and sign-ups to a 30 free day trial surged 377 per cent on Amazon Prime Day, according to new figures from Starcom.
Amazon’s annual sales event was held in Australia for the first time in July, offering customers big discounts as an incentive to subscribe to its Prime membership program.
Social media conversations about Amazon and Prime also surged by 190 per cent, according to Starcom, and visits to Amazon Australia and US sites increased by 68 per cent to reach more than 3.2 million during Amazon Prime Day.
Starcom has analysed online behavioural and search data, social media conversations and bespoke consumer surveys to understand how Australian consumers are responding to Amazon following Prime Day.
It found Prime Day exceeded consumers’ expectations more than Amazon did when it launched in Australia, particularly on measures of price, delivery and inspiration and excitement.
The impact on behaviour, however, was short lived. Consumer visits to Prime pages and Amazon.com.au fell sharply to pre-Prime Day levels, where they have remained, according to the data.
For its part, Amazon said 36-hour event surpassed Boxing Day, making July 16 and 17 the biggest two days of sales for Amazon Australia since opening its retail and marketplace offering in early December 2017.
Starcom Research Director, Nicole Conroy, said it was important to take a longer term view of the metrics.
“In the digital age, it is more tempting than ever to take a short-term view, to elevate the importance of immediate consumer actions above long term brand building. By investigating the human response to Prime Day, Starcom believes we’ve built a more complete picture of Amazon’s likely impact in the long term,” Conroy said.
“Our research has found that Australians are increasingly positive towards Amazon, are thinking differently about Amazon and visit the site with a shopping mission in mind. It is the online shopping experience however, and the reduced Prime Australia offering, that are holding back Amazon’s growth here.”
Key takeaways from Starcom’s research:
- 88 per cent of social media mentions about Prime were positive during June/July.
- Positive social sentiment towards Amazon increased from 62 per cent prior to Prime’s launch, to 72 per cent post-Prime Day.
- Leading into Prime Day 2018, Australians were primarily searching Amazon for gaming consoles, sportswear, and mobile phones. This indicates an increasingly strong association between Amazon and these categories.
- Hitwise data shows that conversions on Amazon.com.au (ie visits that lead to onsite purchases) averaged at 7.77 per cent, prior to Prime Day. This in itself is a strong figure, placing Amazon ahead of all other online retailers in Australia.
A Slow Burn
The research found an ‘expectation gap’ still exists between what consumers want from Amazon and the service available in Australia.
The gap was most evident in the early days after Amazon launched in Australia. Retail analysts noted Aussie consumers anticipated a more mature offering, such as the service Amazon provides in the US or UK. Instead, they were disappointed on price, product range and delivery cost.
On the other hand, the Seattle giant proclaimed it their most successful international launch ever.
Since then Amazon has been increasing the number of marketplace sellers and products available. It’s opened a new fulfillment centre in Sydney, and launched fulfillment by Amazon and its Prime membership program.
By June, Amazon was gaining momentum with consumers, significantly narrowing the ‘expectation gaps’ on product pricing, product range and delivery costs that had been identified by Starcom research post-launch.
However, Amazon has also attracted criticism for its decision to block Australians from shopping from its international sites from July 1st, in order to comply with new GST rules.
There was further trouble on Friday last week when Fairfax reported Amazon used casual employment and demanding KPIs to push productivity in its warehouses.
In response, an Amazon spokeswoman told Fairfax the company “set productivity targets objectively, based on previous performance levels achieved by our workforce”, and that workers’ performance was evaluated over a “long time”.