Friday, December 30, 2016

Not Everyone Wants To Shop On Amazon

Roughly 22 million U.S. households didn’t use the retailer this year.

By Sara German and Laura Stevens
The Wall Street Journal
December 30, 2016

As a 26-year-old assistant brand manager living in Brooklyn, Chris Outwater leads a comfortable life.

He doesn’t need cable to keep up with his favorite shows, like “The Walking Dead,” which he watches on Netflix. When he needs a taxi, he uses his smartphone to fetch an Uber. He books his travel on Google Flights.

One modern convenience that Mr. Outwater doesn’t use is Amazon, since he has plenty of stores near his home and office and no easy way of receiving packages at his apartment. “I live by myself, with no roommate and no doorman,” he said. “If I need something, I’d rather just go get it myself.”

Mr. Outwater is among the 17% of U.S. primary household shoppers who say they never shop on Amazon, according to data from Kantar Retail ShopperScape. While the percentage has steadily declined over the past five years, roughly 22 million American households didn’t use the retailer this year.

Those Amazon holdouts tend to be older than U.S. shoppers overall, with an average age of 57 versus 49, respectively, according to Kantar, and they tend to earn less—$45,700 in annual income, compared with $62,800 among all shoppers. They are less likely to have or live with children.

In interviews with The Wall Street Journal, shoppers across the U.S. who abstain from Amazon gave a variety of reasons. For some it was their income or living situation, for others it was simply their preference or convictions.

But whatever their reason, they are part of a shrinking minority. ​Amazon’s global e-commerce sales are greater than the combined e-commerce sales of the next 20 U.S. retailers, according to eMarketer. In addition, Amazon’s revenue is forecast to surge 28% this year to $137 billion, according to analysts surveyed by Thomson Reuters.

Amazon didn’t respond to requests for comment.

Some 80% of U.S. adults had either a smartphone or a home broadband subscription in 2015, according to Pew Research. Lack of access to web-enabled devices, or living in places where it is difficult to receive packages, are key reasons people avoid e-commerce, said Stefan Weitz, chief strategy officer at retail technology provider Radial.

“There’s still a decent amount of fear and mistrust with the web,” Mr. Weitz said. “And 80% of consumers still want to go to browse and shop in-store.”

That includes people like Eb Richardson, 28, a Los Angeles resident who prefers shopping for books—the product category where Amazon first made its name—in stores rather than online. Even though the retailer now has a much wider selection, Amazon still rarely crosses her mind.

“I never think of Amazon if I have to buy something,” she said. “I’m in my car so much in L.A. anyway that if I have to pick up something, then I get it on my way home.”

Mary Gay Sims, 75, has upgraded to texting from email. She’s on Facebook, too. But she isn’t much of an online shopper.

The retired elementary-school teacher in Panama City, Fla., said she shopped on Amazon once to buy a book written by a friend. “It was a long time ago, and it was quick and easy,” she said.

“I guess at my age, I just like to go to the store and pick out my stuff. That’s why, if I’m so inclined to get something, that’s the first place I go,” Ms. Sims added.

The rationale for not shopping on Amazon is divided into two different categories: logistical and preferential, according to David Bell, professor of digital marketing and e-commerce at the Wharton School.

“Internet connectivity is a necessity, and there’s a fraction of the economy that’s locked out because of the digital divide,” he said. On the other hand, for those who shop online but avoid Amazon, “that’s more unusual because Amazon has such a wide selection.”

Seanna Tucker, a 26-year-old content strategist in St. Louis, said she had never been a big Amazon shopper, but decided to avoid it on principle a couple of years ago after a dispute between Amazon and publishers over book pricing. Instead she shops at Target, Whole Foods and locally owned shops—although she does use Amazon Prime Video.

In recent years, both Amazon and its competitors, like Wal-Mart Stores Inc., have worked to bring more shoppers online and boost sales with membership programs, like Amazon Prime, which provides perks like video streaming and free, fast shipping for an annual fee of $99.

Although Amazon hasn’t reported how many customers are Prime members, analysts estimate there are more than 50 million. Those customers typically spend more than double their non-Prime counterparts on the retailer’s site, according to analysts.

Meg Hoehn, a mother of two and teacher in Minneapolis, said she and her husband used to have a student membership to Amazon Prime but decided against renewing it, in part to become more financially responsible.

“We bought a ton of stuff on there… It was too convenient and too easy,” she said. “We spend less money because we don’t have Prime anymore.”

Now she is more likely to shop at a nearby Target or other local shops. She estimates about 70% of her shopping takes place in stores now, compared with more than half on Amazon when she had a Prime membership.

The company is broadening its approach to attract offline shoppers, opening its first Amazon Go location this month to employees as it considers other grocery-store formats for an expansion into brick and mortar.

While Amazon’s vast selection is one of its selling points, for shoppers like Ms. Richardson of Los Angeles, it can be a deterrent.

When looking for a rice cooker for her brother, she checked on Amazon, where she found more than 50 options. Instead, she headed to Target, where they carried fewer varieties. She quickly picked one and checked out.

She doesn’t have anything against Amazon, she said. “For me it’s just sort of like a personal thing. Not a vendetta.”

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