Retailers are running scared of Amazon (AMZN) for good reason.
The $387 billion e-commerce behemoth is stealing a massive amount of market share. Consumers do an average of 35 transactions every second on Amazon.com. If a potential customer ends up on Amazon.com, they make a purchase 10% of the time. “That’s about two to three times Wal-Mart or Target,” says Hedgeye Retail analyst Brian McGough in the video above.
Everyone is losing to Amazon
In the video, McGough explains why Amazon is completely redefining what consumers buy online.
Like groceries… roughly half of U.S. households have Amazon Prime, versus 29% just three years ago. The free shipping offered by Prime makes buying groceries on the site more appealing.
In a survey, McGough asked consumers about the items that they buy on Amazon.com. “Thinking specifically about the items that you buy on Amazon.com, at which store did you previously purchase those items?” In 2016, 24% said grocery stores versus 17% in 2014.
What’s next?
“If you look at couches, people thought ‘That’s non-Amazon-able.’ Well, it’s starting to happen,” McGough says. Could you buy a Rolex on Amazon? You can’t buy more expensive models at the moment, but it’s coming. Women’s cosmetics from Ulta (ULTA)? That’s coming too. How about buying a golden retriever puppy on Amazon? Sure, why not, McGough says.
Our Retail team’s analysis of total traffic lost to Amazon is particularly interesting. Companies like Barnes & Noble (BKS) and Lululemon (LULU) lost the most traffic to Amazon in 2016.
