By now everyone involved in commerce has heard some stat saying that most product searches start on Amazon, or half of product searches start on Amazon, etc. Bloomreach kickstarted this conversation back in 2016 with their “State of Amazon 2016” report saying that 55% of product research searches began on Amazon.
“Over half of product searches begin on Amazon.”
But do they really?
This was a big deal at the time as prior to everything search was always attributed right to Google. This was a sign of the times that Amazon was here to compete and Google wasn’t invincible. And to a certain extent that’s true, but not as much as they (or Amazon) wants you to believe.
This mainly comes down to semantics. The phrasing of these stats — most product searches start on Amazon — can be misleading. What does this really mean? Simply that when people want to purchase something, or learn more about it, they come to Amazon. That’s a very good thing for Amazon’s business, but it isn’t anything we didn’t already know. People buy things on Amazon and will use it as a quick reference to compare products.
Now let’s look at what this doesn’t mean. It doesn’t mean that people discover products on Amazon, and that’s the ‘true’ start of a product search. People are searching for products before they even know they are. Platforms like Pinterest and Instagram understand this are are speeding consumers through this funnel faster than ever, and all in one place. BuzzFeed recently announced that 21% of their revenue came from driving more than $425M in directly attributable transactions. If you’re not helping users discover and get interested in products, you’re getting ready to be disrupted. And Amazon is squarely located in the bottom half of the vanilla funnel. Ben Evans had some great thoughts on Amazon as a retailer and their lack of innovation.
Let’s look at how advertisers spend on their platform as it’s usually a good measure of what works:
85% is in sponsored product ads, aka the inline ads of searches that purposely look like organic search results. 9% is in sponsored brands, aka banner ads, and 5% in product display ads, or ads placed on competing product pages. Sponsored products drive conversion, and do a damn good job of it, so much so that you often hear of people complaining that Amazon is a pay-to-win platform. But sponsored brands and product display ads only get 14% of advertiser spend. Why? Because Amazon is currently a conversion platform and not a discovery platform, something these two ad types are meant to increase.
This doesn’t mean Amazon’s dominance is over. Anyone who tries to best them on price, logistics, or ease of platform use will tell you that. But it does mean they’re far from perfect. Commerce and consumer behavior evolves incredibly fast, even the likes of Amazon have trouble keeping up.
So what are the areas to watch whether Amazon or not? Visual search is one, teaching you about something you see, which would be difficult to describe and search for otherwise, can take you directly from discovery (I gotta have those shoes!) to purchase (Oh, I can buy them on Zappos for $70. *click*). And US consumers are excited to use it, according to a study by ViSenze.
Social commerce is another. WoM is incredibly potent for social creatures like us humans, and influencers, macro or micro, are a largely untapped (in the West) army of salespeople. Here in Asia this is really catching on with interesting platforms like PinDuoDuo, Lazada, and others incorporating interesting social aspects into their platforms. Not into imperfect humans? Digital assistants and chatbots allow 1-to-1 interactions custom-tailored to each individual at scale. These are all spaces to watch, and I’ll likely write more about later.