Amazon Strategies and the Amazon Shopper

CHAPTER 1: EXECUTIVE SUMMARY

REPORT SCOPE

REPORT SUMMARY

THE AMAZON LANDSCAPE

e-Commerce feeds the beast

Online shopping preferences grease the wheels

Online and mobile purchasing habits broaden and deepen

Online category growth drivers

In-store purchasing category usage declines, but tapering may provide silver lining

Amazon: the nuts and bolts

The Amazon shopper & Amazon media user

The Amazon Prime shopper

The power of Prime

Broadening reach

Protecting the ecosystem: in-store browsing prohibited

Amazon versus the competition

AMAZON CATEGORY ANALYSIS: FINANCIAL SERVICES

The power of rewards and loyalty: Amazon financial services

Consumer interest in Amazon consumer financial services products

Amazon financial services moves

Alexa voice commerce

Checking account, savings account and card usage

Online payment method preferences

Online and mobile checkout preferences

AMAZON CATEGORY ANALYSIS: GROCERY

Sales forecast

Amazon versus the food and grocery competition today

Amazon Fresh product matrix

The Amazon Fresh user

The fresh factor: What consumers view as important

Interest in Amazon Fresh shows promise

Amazon Subscribe & Save

Prime Pantry

Multi-channel food retail: The Whole Foods acquisition

Meal kits

AMAZON CATEGORY ANALYSIS: PET PRODUCTS AND SUPPLIES

Online pet product sales growth

Key trends shaping the pet product and supplies industry

Amazon versus the pet products and supplies competition

Gauging the Amazon threat

Multi-channel pet product purchasing analysis

Pet product spend: multi-channel analysis

Amazon’s approach to the pet product category

CHAPTER 2: THE AMAZON LANDSCAPE

The Amazon effect

E-COMMERCE FEEDS THE BEAST

e-Commerce growth vs. overall retail sales growth

Table 2-1: Retail Sales: Total Sales and e-Commerce Sales, 2008-2017 (in billions and % growth)

Non-motor vehicle e-commerce growth vs. overall non-motor vehicle retail sales growth

Table 2-2: Retail Sales, Excluding Motor Vehicles: Total Sales and e-Commerce Sales, 2008-2017 (in billions and % growth)

e-Commerce 2016-2020 forecast

Table 2-3: Retail Sales: Total Sales and e-Commerce Sales Forecast, 2016-2020 (in billions and %growth)

Non-motor vehicle e-commerce 2016-2020 forecast

Table 2-4: Retail Sales, Excluding Motor Vehicles: Total Sales & e-Commerce Sales Forecast, 2016-2020 (in billions and % growth)

ONLINE SHOPPING

Factors important to shopping online

Table 2-5: Shopping for Household Products Online: Important Factors, 2017

Shipping

More consumers purchasing online and making more purchases online

Table 2-6: Online Purchasing in Last 30 Days: Purchase Frequency, 2008-2017

Mobile purchasing catching on

Table 2-7: Mobile Purchasing in Last 30 Days, 2014-2017

In-store purchasing shows signs of decline

Table 2-8: Percentage of Consumers Making In-Store Purchase in Last Three Months, 2008-2017

In-store category declines vary; recent trends suggest in-store retail resilience

Table 2-9: Percentage of Consumers Making In-Store Purchase in Last Three Months by Purchase Category, 2011-2017

Online category growth driven by food, cosmetics, pet, office supplies & home furnishings

Table 2-10: Percentage of Consumers Making Online Purchase in Last Three Months by Purchase Category, 2015-2017

AMAZON: THE NUTS AND BOLTS

Well past the $100 billion mark yet 20%+ growth continues

Sales: much more than selling products

Table 2-11: Amazon Product and Services Sales, 2014-2016 (in billions and % growth)

Retail and web services segmentation

Table 2-12: Amazon North American Sales, 2014-2016 (in billions and % growth)

Feeding the beast

THE AMAZON SHOPPER

Table 2-13: Percent of Adults Who Have Purchased from Amazon, 2014-2017

Table 2-14: The Amazon Shopper by Demographic, 2017

Demographic drivers

Table 2-15: The Amazon Shopper: Age by HH Income, 2017

Table 2-16: The Amazon Shopper: Population Density by HH Income, 2017

Table 2-17: The Amazon Shopper: Married with Children by HH Income, 2017

AMAZON PRODUCTS AND SERVICES USAGE FOOTPRINT

Shipping, cards, readers, subscriptions and media galore, and more

Table 2-18: Amazon Products and Services Used, 2015, 2016 and 2017

Media and video: Amazon against the competition

Table 2-19: Usage of Streaming Media Devices and Video Services by Type, 2017

Music and reading: Amazon against the competition

Table 2-20: Usage of Streaming Media Devices and Video Services by Type, 2017

Amazon Drive

AMAZON PRIME

Own Prime, own the world?

Prime benefits

Amazon products and services timeline

Table 2-21: Amazon Product/Service Timeline, 2005-2014

Table 2-22: Amazon Product/Service Timeline, 2015-2017

A value wallop

Surpassing 80 million members

The Amazon Prime shopper

Table 2-23: The Amazon Prime Shopper by Demographic, 2017

Table 2-24: The Amazon Prime Shopper by Demographic, 2016-2017

THE POWER OF PRIME

Prime users: Increased products and services engagement among touchpoints open to all

Table 2-25: Amazon Products and Services Used: Prime vs. Non-Prime Users, 2017

Prime users: increasing engagement with Prime features over time

Table 2-26: Amazon Prime Products and Services Used, 2015, 2016 and 2017

Prime users: average number of Prime benefits used increases over time

Table 2-27: Amazon Prime Members: Products and Services Used, 2015, 2016 and 2017

Prime users: More frequent purchasers

Table 2-28: Amazon Purchase Frequency Comparison: Amazon Prime Members vs. Non-Members,2017

Prime users: heavier spenders

Prime products and services: demographic analysis

Table 2-29: Amazon Prime Products and Services: Indexed Usage by Demographic, 2016-2017

Amazon Prime Day

BROADENING REACH: SEGMENTING SUBSCRIPTIONS

Amazon Family

Amazon Prime Student and Amazon @ Your University

Amazon Allowance

Amazon Prime for lower-income consumers

BROADENING REACH: GROWING AND ADDING RETAIL SEGMENTS

Consumer packaged goods

The Amazon Subscribe & Save connection

Key Subscribe & Save demographics

Table 2-30: The Amazon Subscribe & Save User: Key Demographics, Category, 2016-2017

Amazon Subscribe & Save retail category penetration

Table 2-31: Amazon Subscribe & Save Usage by Product Category, 2016-2017

Apparel

Furniture

BROADENING REACH: INTO THE TELEVISION

BROADENING REACH: ENTERING SOCIAL MEDIA

BROADENING REACH: POKING ITS HEAD INTO NEW ADVERTISING SEGMENTS?

BROADENING REACH: IS A WIRELESS NETWORK NEXT?

BROADENING REACH: ALL THINGS ALEXA

“Okay, Google”; “Hey, Siri”; . . . or just “Alexa”?

Eye-popping opportunity

Just getting warmed up: Alexa Deals

BROADENING REACH: MULTI-CHANNEL SHOPPING

Table 2-32: Percentage of Consumers Making Online Purchase in Last Three Months: Top 25 Retailers, 2015-2017

Amazon multi-channel initiatives

Protecting sales: in-store browsing prohibited

AMAZON VERSUS THE COMPETITION

Walmart holds the purchase usage crown but will cede it to Amazon next year

Table 2-33: Amazon vs. Major Retailers: Purchasers, 2014 vs. 2017

Major retailers: cross-usage of Amazon over time

Table 2-34: Major Retailers: Purchasers and Purchasers Shopping at Amazon, 2014 vs. 2017

Table 2-35: Amazon vs. Major Retailers: Indexed Usage by Gender, Age & HH Income Segments, 2017

Table 2-36: Amazon vs. Major Retailers: Indexed Usage by Top Designated Market Area and Retailer,

2017

Table 2-37: Amazon vs. Major Retailers: Indexed Usage by Metropolitan Area Grouping and Retailer,

2017

Table 2-38: Amazon vs. Major Retailers: Indexed Usage by County Size and Retailer, 2017

Walmart: the in-store retail leader fights back

CHAPTER 3: FINANCIAL SERVICES

Financial services as key

Table 3-1: Amazon Financial Services and Products, 2017

THE POWER OF REWARDS AND LOYALTY: AMAZON FINANCIAL SERVICES

Prime Rewards

Amazon Prime Reload

Amazon credit cards

Table 3-2: Amazon Purchase Frequency Comparison: Amazon Prime Users and Amazon Credit Card Users by Card Type, 2017

Table 3-3: Payment Options Used and Used Most When Purchasing from Amazon, 2016

Table 3-4: Payment Options Used and Used Most When Purchasing from Amazon: Amazon Store Card Users, 2016

Amazon-branded credit card growth

Table 3-5: Amazon Credit Cards: Purchase Value and Share of U.S. Net Sales, 2015-2020 (in billions and % growth)

Table 3-6: Amazon Credit Card Purchase Value by Card Type, 2015-2020 (in billions and % growth)

Table 3-7: Amazon Rewards Visa and Amazon Store Card Usage, 2015, 2016 and 2017

CONSUMER INTEREST IN AMAZON CONSUMER FINANCIAL SERVICES PRODUCTS

Table 3-8: Interest in Amazon Financial Services and Products by Type, 2016

Table 3-9: Interest in Amazon Financial Services and Products by Type: Prime vs. Non-Prime &

Amazon Credit Card Holders, 2016

LEADERSHIP IN EXPERIMENTATION

Amazon Anytime

DIGITAL WALLET MOVES

Pay with Amazon

Table 3-10: Consumer Purchase Methods on the Internet, 2014

IN-STORE PAYMENT MOVES

Amazon Pay Places

Amazon Go and Whole Foods

UNBANKED AND UNDERBANKED MOVES

Amazon Cash

Amazon Prime for lower-income consumers

LENDING MOVES

Amazon Lending

Whole Foods

Table 3-11: Reasons for Choosing Primary Bank, 2016

Installment payments: a PayPal Credit alternative?

B-2-B MOVES

ALEXA VOICE COMMERCE

Financial services ramifications and opportunities

For now, just the building blocks

ONLINE PAYMENT METHOD PREFERENCES

Credit cards are consumers’ online payment method of choice; PayPal firmly established

Table 3-12: Online Payment Methods Used by Type, 2014-2016

Differences in online payment methods used by major retailer

Table 3-13: Online Payment Methods Used by Type and Major Retailer, 2017

CHECKING ACCOUNT, SAVINGS ACCOUNT AND CARD USAGE

Table 3-14: Online Shoppers: Checking Account, Savings Account and Card Usage by Type, 2017

ONLINE AND MOBILE CHECKOUT PREFERENCES

Checkout button usage by brand

Table 3-15: Checkout Button Usage by Brand, 2016

CHAPTER 4: FOOD PRODUCTS

GROCERY SALES TRENDS

U.S. food at home sales trends, by channel

Table 4-1: Food at Home Sales, by Type of Outlet: 2007 vs. 2016

U.S. online grocery sales trends

Table 4-2: e-Commerce Sales: Total Sales and Food and Beverage Sales, 2008-2017

Table 4-3: e-Commerce Sales: Total Sales and Food and Beverage Sales, 2016-2020 (in billions and percentage growth)

Table 4-4: Online Food & Beverage Sales: Total Sales and Amazon Sales, 2015-2020 (in billions and percentage growth)

Supermarkets continue to reign but online penetration approaches drug store and c-stores

Table 4-5: Grocery/Fresh Food Purchasing Channels, 2017

AMAZON VERSUS THE FOOD AND GROCERY COMPETITION

Major food retailers: cross-usage of Amazon over time

Table 4-6: Supermarkets and Food Stores Shopped in Last Four Weeks: Usage and Share Purchasing

from Amazon, 2014 vs. 2017

Table 4-7: Amazon vs. Non-Amazon Shopper Population by Supermarkets/Food Stores Shopped, 2017 .. 152

Table 4-8: Amazon vs. Major Supermarket and Food Retailer Usage Indexes, by HH Income Segments,2017

Table 4-9: Amazon vs. Major Supermarket and Food Retailer Usage Indexes, by Age, 2017

Table 4-10: Amazon vs. Major Supermarket and Food Retailer Usage Indexes, by County Size, 2017

AMAZON FRESH

Amazon Fresh Pickup

AMAZON FRESH PRODUCT MATRIX

Table 4-11: Amazon Fresh: Purchase Choices, by Category 2017

Table 4-12: Amazon Fresh: Purchase Choices, by Category 2017

Making an organic effort

Table 4-13: Amazon Fresh: Organic Purchase Choices, Selected Categories, 2017

Table 4-14: Amazon Fresh: Organic Purchase Choices, Selected Categories, 2017

The Amazon Fresh user

Table 4-15: The Amazon Fresh User: Key Demographics, Category, 2016-2017

The fresh factor: What consumers view as important

Table 4-16: Factors Influencing Fresh Produce, Meat or Seafood Shopping, 2016

Interest in Amazon Fresh shows promise

Table 4-17: Interest in Amazon Fresh, by Demographic, 2016

Fresh Deals

AMAZON SUBSCRIBE & SAVE

The Amazon Subscribe & Save user

Subscribe & Save retail category penetration

Table 4-18: Amazon Subscribe & Save Usage, By Product Category, 2016-2017

PRIME PANTRY

Table 4-19: Amazon Prime Pantry, Purchase Choices, by Category, 2017

MULTI-CHANNEL FOOD RETAIL: THE WHOLE FOODS ACQUISITION

Table 4-20: Whole Foods, By the Numbers, 2014-2016

Table 4-21: Amazon, Whole Foods and Online Grocery Shoppers: Usage Indexes, by Demographic,2017

Table 4-22: Amazon, Whole Foods and Online Grocery Shoppers: Usage Indexes, by Top Designated

Market Area, 2017

Table 4-23: Amazon, Whole Foods and Online Grocery Shoppers: Usage Indexes, by County Size and

Metropolitan Area, 2017

Primed for online grocery?

Table 4-24: Weekly Shoppers, Top 15 Supermarkets/Food Stores: Online Grocery Shopping Indexes,2017

Primed to spend?

Table 4-25: Weekly Shoppers, Top 15 Supermarkets/Food Stores: Share of Use, by Weekly Grocery Spending, 2017

MEAL KITS

Why meals kits make sense for Amazon

Table 4-26: Fresh Meal Kit Delivery Usage: Online Grocery Shoppers, Amazon Users, Amazon Prime Users, and Amazon Fresh Users, 2017

How Amazon will put the heat on other providers

Table 4-27: Fresh Meal Kit Delivery Usage: Online Grocery Shoppers, Amazon Users, Amazon Prime Users, and Amazon Fresh Users, 2017

Launch underway

CHAPTER 5: PET PRODUCTS

Industry structure

Sales trends

Usage trends

Table 5-1: Percentage of Consumers Making Online Purchase in Last Three Months, Top Five GrowthbCategories, 2015-2017

Key trends shaping the pet products industry

AMAZON VERSUS THE PET PRODUCTS COMPETITION

2011-2017 pet supply purchasing trends, by retailer and channel

Table 5-2: Pet Supply Purchasers, by Channel, 2011-2017

Loyal purchasers hold steady even while number of stores shopped increases

Table 5-3: Pet Supply Purchasers: Average Number of Channels Used and Loyal Purchasers, 2011-2017

Sole-channel pet supply purchasers

Table 5-4: Sole-Channel Pet Supply Purchasers, by Channel, 2011-2017

Online pet product/supply purchasing gaining traction; online-only is another matter

Table 5-5: Sole Channel Pet Supply Purchasers, by Channel, 2011-2017

The Amazon threat

Table 5-6: Amazon vs. Petco and PetSmart: Purchasers and Purchasers Shopping at Amazon, 2014 vs.2017

Table 5-7: Amazon vs. Petco and PetSmart: Online Purchasers and Online Purchasers Shopping at Amazon, 2017

Table 5-8: Pet Supply Purchasing Indexes by Channel vs. Amazon Purchasers, by Age, HH Income Segments and County Size, 2017

Table 5-9: Pet Supply Purchasing, by Channel: Amazon Users vs. Non-Users, 2017

Sole-channel pet product and supply purchase channels used: Amazon users vs. non-users

Table 5-10: Sole Channel Pet Supply Purchasers, by Channel: Amazon Users vs. all Pet Owners, 2017

MULTI-CHANNEL PET PRODUCT PURCHASING ANALYSIS

In-store, veterinarian and online pet product purchasing

Table 5-11: Pet Product Purchases: In-Store, Online, and Veterinarian,2017

In-store only vs. online-only pet product purchasing

Table 5-12: Pet Product Purchases: In-Store, In-Store Only, Online, and Online Only, 2017

The big picture: usage across channels

Table 5-13: In-Store/Online, In-Store and Online Pet Product Purchases: Brick and Mortar and

Internet Retailers, 2017

Brick and mortar players

Table 5-14: Brick and Mortar Retailers: In-Store/Online, In-Store and Online Pet Product Purchases,2017

Table 5-15: Brick and Mortar Retailers: In-Store Pet Product Purchasers, In-Store-Only Share, 2017

Table 5-16: Brick and Mortar Retailers: Online Pet Product Purchasers, Online-Only Share, 2017

Internet-only players

Table 5-17: Online Pet Product Purchases, by Internet Retailer, 2017

Table 5-18: Amazon Pet Product Purchasers: Multi-Channel Pet Product Shopping, by Major Retailer,2017

PET PRODUCT SPEND: MULTI-CHANNEL ANALYSIS

Table 5-19: Share of Pet Product Spending, In-Store, Online and Other, 2017

The Amazon connection

Table 5-20: Multi-Channel Pet Product Spending Share: Amazon Pet Product Purchasers, 2017

Table 5-21: Multi-Channel Pet Product Spending Share, by Brick and Mortar Retailer, 2017

AMAZON PET PRODUCTS MATRIX

Amazon pet products

Table 5-22: Amazon Dog Products: Purchase Choices, by Category and Amazon Program, 2017

Table 5-23: Amazon Cat Products: Purchase Choices, by Category and Amazon Program, 2017

AMAZON SUBSCRIBE & SAVE

Pet product subscription services

Table 5-24: Online Pet Product Purchasers and Subscription/Auto-Ship Orders, by Internet Retailer,2017

Amazon Subscribe & Save

Table 5-25: Amazon Subscribe & Save Usage, By Product Category,2016-2017

AMAZON FRESH

Elbow butter in Amazon Fresh? Genius!

FreshPet front and center

Private label pet? Not yet

APPENDIX

TABLE INDEXES

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