Commentary

Amazon And The Affluent Marketplace

July and August have been very high-profile months for Amazon. First of all, it celebrated the 20th anniversary of its start as an online bookseller in July 1995. It's amazing what 20 years can do for a business. Amazon also posted another quarterly profit (not yet a consistent event for it). Plus, in mid-July, as part of its anniversary celebration, it launched its first Prime Day that took on Walmart, the number two retailer in the United States based on customer counts (not based on dollars sold), according to our ongoing consumer survey. Amazon was also a major sponsor of the New York Fashion Week: Men's event that took place in mid-July. August, however, was not so positive, as The New York Times published a front-page article that devoted pages to Amazon's business and human resources practices, which led a few days later to Jeff Bezos's response to many of the criticisms included in the article.

Based on Amazon's recent endeavors, some upscale marketers (both affluent and luxury) are now wondering what else, if anything, Amazon plans to do in these markets in the near future. It already sells many upscale watches and jewelry on its site, as well as some premium and luxury fragrance and cosmetic brands. And Lacoste, an upscale fashion brand to many, has started marketing its apparel on Amazon.

advertisement

advertisement

From our perspective, Amazon is well positioned with upscale American consumers to market all categories of upscale goods and services, assuming these brands can become comfortable working with Amazon. What we currently know is the following:

  • Amazon ranks number one regarding the number of American adults (144 million, or 60% of all adults) who reported that they bought one or more items from Amazon in the past 12 months.
  • Amazon has great appeal to affluent and luxury-oriented consumers, as 67% of affluent Americans (those with household incomes of $75,000 or more) and 70% of the very affluent (those with household incomes of $250,000 or more) reported they bought from it during the past 12 months.
  • Amazon's affluent and very affluent customers shop there frequently. While 54% of all Amazon customers shop on its site once a month or more often, 58% of their affluent customers and 66% of their very affluent customers reported they purchased one or more items in the past month.
  • Amazon makes it very convenient for consumers to shop and buy on its site. Based on our survey's reported enrollment levels in its Amazon Prime program (which offers delivery within two days of a customer's placing an order, among other benefits, for $99 annually), about one-third of all Amazon customers are enrolled in Amazon Prime, including 40% of affluent customers and more than half (56%) of the very affluent.
  • Also, when asked to compare Amazon with other stores and sites at which they shop, about two-thirds (64%) of all its customers reported Amazon is better than other stores and sites. Seventy-one percent of the affluent rated Amazon as being better, and 73% of the very affluent did the same. Notably, the proportion of Amazon's customers rating it worse than other stores and sites at which they shop was 0%.
  • Finally, when customers were asked if there were any types of products or services they would not consider buying from Amazon, about a third reported there were items such as automobiles, furniture, and large appliances that are not currently on their Amazon shopping list.

Based on its current positioning among affluent and luxury consumers, we suspect that Amazon will continue moving deeper into the affluent and luxury markets. Consequently, we recommend that upscale marketers spend some of their energy reviewing the consumer benefits that Amazon provides and consider offering as many of them as they can. Shoppers want "convenience" and "to save time," to cite just two, and Amazon is offering those and other benefits to its millions of shoppers. Upscale marketers who don't offer comparable or better benefits in the near future do so at their peril.

3 comments about "Amazon And The Affluent Marketplace".
Check to receive email when comments are posted.
  1. KJ Lovell from LRCC International, September 2, 2015 at 11:33 a.m.

    "Luxury can be found in the simplest of things. Amazon makes it simple and less redundant."

     

    The above would be a great tagline for Amazon in order to engage both customers and brands in generating luxury sales online. Being involved in the luxury industries for the past 20+ years one difficulty we have is to project a true image of luxury. The current system forces the need to overproduce the goods we promote as limited and scarce. Imagine a world where redundancy of product is minimized and price integrity is maintained. It is a win for consumers, as well as for the luxury manufactures and ultimately gentler and kinder for planet earth. 

     

    "Amazon - Your One Source Shopping Solution" 

  2. Ron Kurtz from American Affluence Research Center, September 2, 2015 at 12:41 p.m.

    Retailers, even many of the upscale chain stores, are pushing consumers toward online shopping by making the in-store experience less enjoyable and worthwhile. Personnel on the floor are often limited in number as well as limited in product knowledge, skills as advisors, and motivation. Stock is often messy or disorganized, making it difficult to find one's size, make, or model. Pricing may be uncompetitive with other sources of the same item.

    A good in-store experience can be more convenient and less time consuming than shopping and ordering online and then having to return the item and secure a replacement. This is particularly true for many, but not all, product categories.

    Exclusivity is a key element of a true luxury product or brand. To protect this feature, luxury brands must be selective in their methods of distribution.

  3. Paula Lynn from Who Else Unlimited, September 2, 2015 at 8:27 p.m.

    $75,000 is not affluent. That number dates back to the 70's. So if your base is wrong, we have to assume the rest is also wrong. Also, if it is true that affluent people purchase on Amazon, it doesn't mean that Amazon targets the affluent. It's that all truth diagram thing we didn't understand in Math 101 with the if p is true and q is not, then p + q is not true. Can't get further than that and maybe it isn't necessary.

Next story loading loading..