Path to Purchase, UFF Expansion, Assortment
Search and Amazon Key Channels for Millennial and Gen Z Path to Purchase
Amazon and Search are the two most used digital channels for Gen Z and Millennials on their path to purchase, according to our latest consumer study. Consumers in our survey indicate Amazon is an important platform because it has become trusted for its low prices, its vast assortment, and its reliable reviews. Google is important as it offers the most objective and widest breadth of search results based on shopping queries. Given the importance of both, branded manufacturers should consider right-sizing their level of ad spend on these platforms. While this right-sizing continues to progress (for example, Amazon’s ad revenue has grown nearly 6x since 2015), brands will typically have much bigger budgets on traditional media channels or via co-op funds paid to retailers compared to what they spend on Amazon. We are not necessarily suggesting brands shift dollars from Google to Amazon, but we do see more of a disconnect between the importance of Amazon on the path to purchase and the comparatively low level of ad spend on it.
Amazon expands Ultrafast Fresh to Phoenix, Houston, and Minneapolis
Amazon announced today that it is expanding its Ultrafast Fresh (UFF) service to an additional three cities: Houston, Minneapolis, and Phoenix. Our research has pointed to Amazon being happy with the results of early trials in Philadelphia, and having plans for rapid expansion in 2H19, as the eTailer targets this service as a way to gain a stronger foothold in the competitive grocery category. Most manufacturers are discounting the pace at which Amazon can expand the service, although are looking to the eTailer to develop a meaningful competitor to click & collect offerings.
One Day Prime Shipping Impact on ASP Mix
Amazon noted on its earnings call in July that they were seeing a shift towards lower ASP products, and thought that it may be due in part to One Day Prime Shipping allowing customers to purchase smaller items, particularly in consumables categories, that may not have been purchased with longer shipping times. In our survey results, most manufacturers had not yet seen a noticeable assortment shift in their business. We have heard more recent feedback that in addition to One Day Prime Shipping, Amazon has been focusing on shifting back to a growth focus, including getting lower-ASP items it delisted back onto the site.
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