What Lies Beneath: Unveiling the New Realities of the Twisting Online Purchase Path

By Michael Perlman On Oct 31, 2018

There was once a time when customers would only go to one website to shop, and marketers would easily have all the customer data they needed. But that time is long gone. The landscape for e-commerce has shifted dramatically. Customers now make 54 percent of their purchases outside brand sites and in marketplaces, according to a recent report we released.

Today, customers search and browse numerous sites, and finally end up buying… somewhere. An average of 70 percent of online purchases happen within walled-garden marketplaces, such as Amazon, which makes it an overwhelming challenge for marketers to truly understand their customers path-to-purchase. The only consumer insights available to marketers are from their own websites, limited sales data and spotty third-party sources. All of this leads to marketers trying to figure out where customers purchase specific products, how they stack up against their competition and where they have opportunities to win market share.

Does Amazon Dominate the Online Marketplace? Yes and No

To successfully uncover the hidden customer journey, Jumpshot studied anonymous consumer actions on mobile and desktop devices within 500 e-commerce sites and marketplaces in Q2 2018, analyzing visits and transactions for different brand categories across these sites. The tech giant, Amazon, is the largest Internet retailer in the world with millions of products for customers to purchase, especially since they have more than 80 percent market share for various product categories, such as a significant 92 percent market share for health products (medicines).

However, Amazon’s dominance has left little room for it to grow further. Walmart and other retailers are surging online while Amazon’s market share has plateaued.

Top Performers Vary Across Categories

So… who are the biggest winners in furniture and women’s clothing, and why? For furniture, online sales comprise only 12% of the US home goods market, but as with other retail markets, more home goods spending is transitioning to online, and retailers such as Wayfair and Ikea are capitalizing.

Due to following Amazon’s footsteps and being willing to take losses to expand by spending almost 12 percent of its revenue last year on advertising alone and building a large distribution network to compete with new players, Wayfair has gained market share growth at 21% percent. Ikea, on the other hand, already had the ground game and name recognition in place to grow online, and is growing 5.3x faster than Amazon in online sales alone. Both WayFair and Ikea have seen such market share growth by focusing on shifting consumer behavior and providing a better e-commerce experience.

From boutique clothing shops to big-name department stores, there are hundreds, if not thousands of options to purchase clothing online. Almost all retailers saw more growth online than offline, and Amazon’s growth hasn’t been able to compete so far with more established apparel retailers. Amazon lost 30% of its market share of transactions YoY, despite adding many designers and branded storefronts to their portfolio.

Things seem to be looking up for retailers such as H&M and JC Penney. H&M’s move to online growth has offset some brick-and-mortar difficulty, but to adapt to the growing e-commerce market, they’ve invested heavily in logistical operations due to their mediocre offline sales. As a result, H&M has grown its market share at a staggering pace of 77 percent YoY. JC Penney, too, has seen excellent YoY growth, but the numbers there seem to have been driven significantly by clearances and markdowns.

Tricks Up Their Sleeve: How Amazon Is Trying to Come Out On Top

With a decrease in market share for certain categories, Amazon is pulling out all the stops to be ahead of the e-commerce pack. One method they have is to take advantage of an underutilized asset — the attention of its customers. Amazon is dramatically increasing their focus on their search engine and sponsored placements.

Amazon has now overtaken Google for the share of product searches as about 54 percent of product searches begin on Amazon, up from 46 percent in 2015. On Amazon, almost 90 percent of product views come from Amazon’s product search and not merchandising, ads, or product aggregators. That makes Amazon an incredibly valuable place for brands to get in front of buyers.

Amazon is realizing the potential value those eyes can provide it. Sponsored listings on product search terms now drive 6 percent of all product views on Amazon, and that number has grown 17 percent from the beginning of 2018. Amazon makes billions quarterly from those ads, and revenues from sponsored listings should only increase. Media agencies have reported that some brands are moving 50 to 60 percent of their Google search ad spend to the retailer.

What Can You Do To Understand The Customer’s Path to Purchase?

Obviously, there’s a lot of competition and options out there. It can definitely be a challenge trying to decipher what customers want out of their shopping experience. However, it’s not an impossible challenge to overcome. To succeed in the market today, marketers need to be knowledgeable, nimble and adaptable. Keep note of our key takeaways to help you understand how to get the customers you want, and how to help your business thrive.