I came across a statistic last week that sounded unbelievable until I thought more about my own behavior.
In 2015, 205 million U.S. consumers shopped online. The growth of e-commerce is nothing new, and the number of online shoppers will continue to rise. I wasn’t surprised by this fact.
Instead, a recent survey caught my attention. It found that more than half of U.S. online shoppers start their product searches on Amazon. Amazing!
Amazon is increasingly the most convenient and cost effective shopping option for consumers. Approximately 55% of those surveyed check out Amazon first when looking for a product, representing an increase from 44% a year earlier.
As Amazon’s scale, breadth of inventory, and distribution network grows, it seems likely that the company will continue squeezing out other e-commerce players.
Indeed, the survey noted that search engines (e.g. Yahoo) saw their share of new online product searches decline from 34% a year earlier to 28% today.
Retailers were even worse as a starting point for online shopping, dropping from 21% to 16%.
The threat posed by Amazon to big-box retailers such as Wal-Mart Stores, Inc. (NYSE:WMT) and Target is nothing new. However, the impact Amazon is having should not be ignored.
Just this morning, Wal-Mart issued disappointing guidance for next fiscal year that called for earnings per share to remain approximately flat compared to consensus expectations for 4.4% growth.
The company also moderated its plans for new store openings. As seen below, new supercenter openings are expected to be almost cut in half from this fiscal year (60) to next (35).
Source: Wal-Mart Press Release