• by Jack Loechner , Staff Writer @mp_research, January 1, 2014

According to The Shullman Luxury and Affluence Monthly Pulse reports on the expectations, behaviors, and plans of adults among affluent consumers, the drivers of the luxury markets, Americans with lots of money are now shopping at Amazon. For example, 69% of the adults in the $250,000+ household income segment have shopped there in the past 12 months, says the report.

Luxury and affluent marketers define their target markets in many different ways. This study provides selected insights regarding American consumers (18+ in age) in total and according to their household incomes:

• Adults living in households with total incomes of, $75,000 or more (41% of all adults and the level where some marketers believe affluence begins)
• $250,000 or more (3% of all adults and the level where many marketers believe luxury begins),
• $500,000 or more (the top 1% and where luxury consumers definitely exist).

Marketers and retailers need to start thinking about how they are going to compete with Amazon as it continues to penetrate these marketplaces, says the report, offering upscale consumers more shopping-related benefits such as Sunday deliveries.

• 60% of Amazon's customers shop at Amazon at least once a month and, as household income increases, so does the probability of an Amazon customer's shopping there (64% of the $500,000+ household-income segment shops there once a month or more frequently).
• 29% of Amazon's customers report that they are enrolled in the Amazon Prime service. Notably, the Prime enrollment soars to 45% at the $500,000+ income level.
• Attitudinally, 35% of Amazon's customers and 59% of its $500,000+ household-income customers agree with the statement that they "…like to buy designer or luxury brands."
• Not only are a substantial portion of Amazon's customers attitudinally predisposed to buying designer or luxury brands, about a quarter (28%) of them report they purchased a luxury from one or more retailers in the past 12 months, with this luxury purchasing level rising to 50% among the $250,000+ income segment and 72% among the $500,000 income segment, says the report.

Amazon and Walmart are the only two retailers from which the majority of Americans (59%) made a purchase in the past twelve months. Notably, Walmart reached more mass-market adults (with household incomes of less than $75,000) while Amazon reached many more affluent and luxury-oriented consumers (household incomes $75,000+, $250,000+ and $500,000+). According to this survey, Walmart customers' average income is about $76,000 while Amazon's average is about $89,000.

Based on Amazon's having an upscale customer base on average, the remainder of the study focuses on Amazon and its current marketplace positioning among upscale consumers who tend to shop often in the luxury and affluent marketplaces.

Adults (% of Segment) In past 12 months:	All Adults	Household Income
		< $75,000	$75,000+	$250,000+	$500,000+
Bought from Amazon	59%	53%	68%	69%	63%
Bought from Walmart	59	60	57	42	36
Source: Shullman Research Center, December 2013

Depending on which upscale marketplace(s) retailers in the top 20 list may actually target, they and Amazon share many of the same customers today. Notable among those with material overlap with Amazon are Walmart, Target, Best Buy, The Home Depot, Lowes, Macy's, e-Bay, JCPenney, Sears, Costco, Barnes & Noble, Apple, and Nordstrom, all of which share at least 30% of Amazon's customer base among one or more upscale segments.

Compared with Amazon customers with lower household incomes, those in the $500,000+ market segment are more likely to shop at Amazon once a month or more frequently (64%). Notably, though, 60% of all Amazon customers report they shop there at least 12 times a year.

Amazon Shoppers	All Adults	Bought from Amazon in Past 12 Months (% of Group)
		Total	HHI $75,000+	HHI $250,000+	HHI $500,000+
Bought from Amazon in past 12 months	59	100%	100%	100%	100%
Total once a month or more often	36	60	57	57	64
Once a week or more often	9	15	8	7	17
Once every two or three weeks	12	20	25	27	32
Once a month	15	25	24	23	15
Once every two or three months	13	22	25	22	14
Once every four to six months	7	11	13	12	17
Less often than once every six months	4	6	6	10	5
Source: Shullman Research Center, December 2013

When probed about their attitudes regarding shopping, Amazon customers:

• Are predisposed to buying American, but this orientation drops as household income rises
• Focus more on quality than price as incomes increase
• Seek out superior service as incomes increase
• Like to buy designer or luxury brands, especially at the $500,000+ income level
• Are not particularly influenced by celebrity endorsements

Amazon Customers (Percent of Segment)
	All Adults	Bought from Amazon in Past 12 Months:
		Total	HHI $75,000+	HHI $250,000+	HHI $500,000+
Agree strongly or agree:
I like to buy American products and services	69%	71%	69%	54%	49%
I tend to buy based more on quality and less on price	44	45	58	63	72
I love to shop	43	46	43	44	47
I seek out superior service when shopping	43	43	53	54	64
I like to buy designer or luxury brands	33	35	36	38	59
I usually buy the brands my parents bought	28	27	23	11	13
When shopping, I look for products and services that are exclusive	28	24	26	23	31
I sometimes buy products endorsed by celebrities	20	16	21	17	8
Source: Shullman Research Center, December 2013

When asked if they bought any luxury products or services in the past 12 months from any retailer, about one out of four Amazon customers in total did so, but as household income rises so does the percentage of Amazon customers who bought a luxury product or service in the past 12 months. Notably, half of the $250,000+ household-income segment did so, while almost three out of four (72%) of the $500,000 segment also bought one or more luxuries.

The number one luxury category that these consumers bought was premium cosmetics. As income rises, so does the likelihood of Amazon customers' buying many of the luxury categories listed. Notably, in Fall 2013 Amazon launched "Luxury Beauty" as a separate "store" on its site.

Bought from Amazon in Past 12 Months (Based on luxury purchasers)

• Premium cosmetics
• A piece of fine jewelry
• Designer clothing or accessories
• Premium fragrances
• Fine/premium wines
• Luxury car, SUV, or truck
• Luxury vacation
• Fine/premium liquors
• Fine/premium beers or ales
• Fine/premium champagnes/ sparkling wines
• A fine watch
• Fine/premium liqueurs
• Luxury cruise
• Fine art or antiques

Source: Shullman Research Center, December 2013

For additional information from the Shullman Research Center, please visit here.

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