Amazon's Gain Is Brick-and-Mortar's Pain In CE Share Shift

By Steve Smith and Alan Wolf On Jul 5 2011 - 4:01am




NEW YORK — Amazon.com is looming ever larger in the rearview mirrors of Best Buy and Walmart.

In the 12 short years since the e-tail upstart added CE to its assortment, Amazon has grown into the fourth-largest consumer electronics merchant, behind only Best Buy, Walmart and Apple.

Last year alone, the company’s CE sales soared 72 percent to $7.9 billion in hardware and video games, according to TWICE’s Top 100 CE Retailers Report, besting Target, Costco, GameStop and RadioShack, and demonstrating once again that storefronts are no longer a prerequisite for market domination.

And thanks to a formidable combination of low prices, wide assortment and positive customer experience, Amazon continues to take share from its brickand- mortar rivals. According to data from the Consumer Electronics Association (CEA) and The Stevenson Company’s TraQline shopper surveys, Amazon’s share of total CE dollars spent rose 27.5 percent over the 12-month period ended March 31, to 5.1 percent, compared with a 0.7 percent decline in share for Best Buy and essentially flat results for Walmart during the same period.

While Best Buy still commands the lion’s share of CE sell-through at 26.1 percent, followed by Walmart’s 11.7 percent share of CE revenue, “More people are shopping at Amazon than in the past,” observed Stevenson VP Eric Voyer, who, along with CEA industry analysis director Steve Koenig, presented the findings during a CEA Research Summit here last month at the Samsung Experience showroom in Manhattan’s Time Warner building.

Driving that traffic are the aforementioned factors of price, selection and shopping experience, which were cited by consumers as the chief motivations for purchasing their electronics where they do. Amazon was tops in all three areas, shoppers said, while Walmart and Target were a close tie for second in pricing but ranked low for store experience, and Best Buy placed fourth in product selection.

Also working in Amazon’s favor is increased consumer “empowerment,” Koenig said, as comparison-shopping sites and smartphone apps provide greater price transparency.

As a result, Best Buy and Walmart are, in a sense, increasingly serving as Amazon’s showrooms as a growing number of shoppers first visit chain stores and then purchase their CE online.

Specifically, about 4 percent of consumers shop Best Buy but purchase from Amazon, an increase of nearly 54 percent over the 12-month period ended March 31, while Amazon’s Walmart conversion rate more than doubled to 2.7 percent of shoppers, the research showed.

Koenig said the technology the industry sells enables consumers to check on pricing, product performance and retail service before making their purchases, and that retailers need to acknowledge that and act upon the trends. To contend with the new paradigm, retailers must embrace social media and “hop onto the connected bandwagon, revive and restore relationship building [with customers] and create and maintain open and exciting sales floors,” he said.

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