Reason #1 for Why Ecommerce Customers Leave Brands: Amazon’s Scale 

 September 19, 2022

By  HiFlyer

This ecommerce strategy article is an excerpt from our new book, The Ultimate Ecommerce Email & SMS Playbook. We’re diving into our ecommerce strategy chapter focused on the 7 Reasons Why Ecommerce Customers Leave Your Brand.

Reason 1. Amazon’s Scale

Amazon’s scale is bigger than ever, and its sheer size is attracting your customers first.  Look at the graph below:

41% of total U.S. e-commerce sales in 2020 are attributed to Amazon. The top nine brands directly under Amazon attribute only 26% of total e-commerce revenue; Amazon’s revenue is bigger than those brands combined.  In addition, Amazon is projected to hit 50% by the end of 2022. With size, scale, and selection like that, Amazon pretty much controls the pace of e-commerce. 

For brands that sell on Amazon, size is a huge benefit from a shopper’s point of view, but it has limited promise from a growth perspective. Amazon is considered a walled garden and is hoarding valuable customer data from the brands they support. The data that Amazon does share isn’t highly qualitative or super-actionable. So, you’re kind of stuck either playing with Amazon or not playing at all.

Brands that are struggling to compete with Amazon’s scale have one advantage. Since Amazon has a huge scale, the shopping experience is commonly referred to as a faceless commerce experience. Customers don’t really talk to someone on Amazon,

get to know customer service, or build a relationship for product adoption. Strong brand story-telling and creating a “brand-face” will be an opportunity we’ll go into shortly

Because of their scale, Amazon will continue to command better pricing; combined with their leadership in logistics, value, and fulfillment, your margins and unique selling proposition (USP) will be heavily impacted. 

But there’s more bad news: their next milestone is brick and mortar. They’re going to come to a local store near you and compete for last-mile fulfillment. 

When customers have a need to fill, Amazon’s scale advantage earns them a first pass over the smaller brands simply because customers can literally find everything on Amazon. In short, Amazon’s scale attracts your customers first. They come for the selection and scale, and they’ll stay for everything else. 

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