A Blog by Jonathan Low

 

Jun 13, 2020

Amazon Doesn't Need Your Satisfaction

Because people are buying more than ever from them even though surveys repeatedly report that more customers than ever are dissatisfied.

That's what happens when consumers don't have options and a company has an effective monopoly. JL

Dan Gallagher reports in the Wall Street Journal:

(There has been) a significant drop in the number of customers claiming they were very or extremely satisfied with Amazon, due to delivery delays and lack of availability of items during the crisis. Surveys have been showing a steady decline in satisfaction levels for Amazon customers over the last five years. (But) Amazon is “a winner” in the shift to e-commerce spending driven by the pandemic due to a sharp rise in the number of customers who have made two-to-three purchases a month, as well as the number of those who have spent $200 or more on Amazon.
More people are spending more money than ever on Amazon.com, AMZN -0.51% but fewer seem happy about it.
Both points were reflected in a recent survey conducted by RBC Capital Markets. In his report on the findings Monday, RBC analyst Mark Mahaney called Amazon “a structural winner” in the large shift to e-commerce spending driven by the coronavirus pandemic. The survey, conducted in May, reported a sharp rise in the number of Amazon customers who have made at least two-to-three purchases a month, as well as the number of those who claim to have spent $200 or more on Amazon over the past 90 days.
Mixed FeelingsPercentage of Amazon customers reporting'extremely' or 'very' satisfiedSource: RBC Capital MarketsNote: Based on annual survey. 2020 survey wasconducted in May.
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However, the survey also reported a significant drop in the number of customers claiming they were very or extremely satisfied with Amazon. About 64% claimed such feelings in May, compared with 73% a year ago. Mr. Mahaney wrote that this was likely due to delivery delays and lack of availability of nonessential items during the crisis. But RBC’s surveys have been showing a steady decline in satisfaction levels for Amazon customers over the last five years. In 2015, 87% of Amazon customers said they were very or extremely satisfied with the company.
The seemingly incongruous findings make sense when considering the many moves Amazon has made to become indispensable to online shoppers. Most notable is the company’s Prime shipping program, which is 15 years old at this point but still growing fast. Amazon’s subscription revenue—made up of mostly Prime fees—totaled $20.4 billion over the trailing 12-month period ended in March, up 33% over the same period last year. Prime members are far more likely to spend more on Amazon given the guarantee of quick shipping. The RBC survey found that 59% of Prime subscribers spend more than $800 a year on Amazon, compared with 15% of non-Prime customers.
Even so, rising customer dissatisfaction still could hurt Amazon down the road as many of its competitors have sharpened their own e-commerce offerings. And Wall Street has high expectations. Amazon, already the second-largest company on the Fortune 500 in terms of annual revenue, is expected to average 18% growth over the next four years to reach nearly $550 billion in sales by 2023. Getting there will require all the happy customers Amazon can get.

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