As the biggest e-commerce company in the world, Amazon sees its fair share of newsworthy stories. Some of them laughable, some of them hard to ignore. Retail Dive challenged 10 of Amazon’s biggest myths, revealing how closely (or not) they reflect reality. Read the key points, below:
1. Prime Membership: Amazon has historically never been specific with numbers. This spring, the company estimated that it had over 100 million Prime members worldwide but didn’t qualify the number by how many were in the US. In a report last August, Moody’s Lead Retail Analyst Charles O’Shea called estimates of 85 million domestic Prime members “seriously overstated” and “highly improbable.” At the time, he estimated the figure for US Prime members at closer to 50 million. Morgan Stanley analysts, meanwhile, have estimated from survey work that US membership flattened in 2016.
2. Amazon Marketplace: Last year, Amazon sold more products through its Marketplace, selling $135 billion according to Credit Suisse, a number that is expected to increase to $259 billion by 2020 according to figures cited in Entrepreneur magazine.
3. Amazon Shorthand for Retail Apocalypse: Amazon has become the default cause for brick-and-mortar store closings, but there are many other forces at work. The apparel category is an example of this misperception. The Amazon apparel category gained 1.5% of the market last year for a total of 7.9%, putting it right behind Walmart, but this hardly makes it solely responsible for the “retail apocalypse.”
4. Amazon Employee Compensation: Amazon is on record that their median annual salary is $28,445 and their fulfillment center hourly wages are over $15 per hour. If you look at salary data at the corporate level, the average salary at Amazon is $153,320, with salaries ranging from $107,749 at the 25th percentile to $185,099 at the 75th percentile, according to salary-tracking site Paysa. Mark Meinster, executive director at Warehouse Worker Justice Center, told Retail Dive in an interview that most of the company’s new facilities primarily employ part-time workers, who are generally paid between $11 and $14 an hour. Full-time workers are paid between $12 and $15 an hour.
5. Working Conditions At Amazon: The e-commerce giant has had a reputation for creating an intense and, according to some, toxic workplace. However, Amazon receives 3.8 stars out of 5 on Glassdoor and also topped LinkedIn’s top places to work.
6. Amazon Attracts Young Shoppers: Another misconception is that because Amazon is primarily an e-commerce channel, its customer base is young. A recent study by Cowen revealed that while 90% of shoppers aged 18 to 55 purchase from Amazon, a similarly large majority (82%) of shoppers over 55 listed Amazon as their preferred shopping channel or one of their preferred channels.
7. Amazon’s Market Share: Last year, Amazon captured 44% of all U.S. e-commerce sales and 4% of total US retail sales, roughly $200 billion, according to a report from marketplace analytics firm One Click Retail. Another estimate from JP Morgan pegged Amazon’s market share at 40% of all e-commerce sales last year. By 2020, analysts at Telsey Advisory Group predict the e-commerce giant will command nearly 10% of total retail sales.
8. Amazon Lowest Pricing: Amazon has a reputation for being less expensive than its competitors, but it’s not always the cheapest. It is, however, the best at constantly monitoring pricing. Amazon uses dynamic pricing algorithms to check and update pricing up to every 15 minutes. Amazon may not always be the cheapest, but it may not have to be anymore. It just has to be perceived as such.
9. Amazon’s Marketing Muscle: Amazon’s ad revenue is expected to jump 63.5%, which would top $2 billion for the first time in the company’s history, according to eMarketer. A Forrester report found that its clients already spend 45% of their ad budgets on Amazon
10. The Popularity of Alexa: Total retail sales for 2017 were $3.5 trillion, according to the National Retail Federation. Of that, some $2 billion was transacted through voice assistants, according to estimates by OC&C Strategy Consultants. Voice transactions are a drop in the bucket. While Alexa gets a lot of air time, she’s not the only game in town.
For the full story, head over to RetailDive.
Photo: Piotr Cichosz via Unsplash