Amazon – the new Tesco?

Okay… so it doesn’t take a rocket scientist to work out that Amazon is taking over a significant number of markets, in much the same way that Tesco came to dominate more than the grocery sector.

And I, for one, have contributed to the success of both companies – and I continue to do so.

So, why am I concerned? Surely if I’m an avid buyer from both brands, then I must be happy with what both Tesco and Amazon offer me?

Herein lies the problem. Although I like buying from both, they often make my working role a nightmare.

As a Client Service Manager in Online Marketing at Coast Digital, I find that both brands take a chunk of direct traffic that would otherwise go to some of my ecommerce clients – and it’s a share that Amazon in particular is increasingly gobbling up.

A new way of buying

This is a scenario I’m seeing more often…

A big brand spends its budget on offline advertising – on TV, magazines and display advertising. Traditionally, this would generate online traffic straight to the brand or brand-holder’s website, where sales would take place. These days, the same campaigns drive customers straight to resellers such as Amazon and Tesco.

For example, if I see an ad, I go straight to Amazon to see whether they sell the product, and what the reviews are like. I might then compare prices the likes of eBay, John Lewis & Play.com but, 95% of the time, I buy from Amazon.

Only rarely will I go to the brand site – and if they can’t beat Amazon’s deal on price or USP, they’re on to a loser.

And it’s hardly surprising. My details are already on Amazon – it’s easy to hit a button and know that an item will be with me within a day or two. Why bother to set up my details and give my credit card information to every specialist brand – and then wonder when delivery will take place?

Advertising success

So how does the original brand know its advertising was successful? No doubt there will be a spike in sales, but most of those sales will go to resellers like Amazon.

‘Great,’ you say. ‘Who cares? A sale’s a sale!’ True, but Amazon directly benefits from the brand’s advertising budget, which gives it even more power to cut costs by negotiating down prices for the increased number of sales it’s handling.

So what’s the answer? I don’t know, but would welcome any opinions on this… so I’m opening the floodgates…