This week on the GeekWire Podcast, we delve into Amazon’s new “Haul” discount storefront— a competitor to Temu, Shein, and TikTok Shop — and examine its implications for the future of e-commerce and generational changes in consumer habits.
Guests Michael Levin and Josh Lowitz from Consumer Intelligence Research Partners (CIRP) join the discussion to offer insights into the ongoing trends concerning Amazon Prime membership and consumer actions on the platform.
Related links and coverage
- CIRP: Amazon Report on Substack. (Also explore their Apple Report.)
- GeekWire: Hands-on with Amazon Haul: Initial impressions of the e-commerce giant’s new Temu and Shein rival
- Amazon: Launching Amazon Haul—a broad selection of products $20 or less, with most under $10
- Business Insider: Amazon’s new discount section, ‘Haul,’ resembles a Temu version of Temu
Top takeaways
Prime numbers: CIRP’s research indicates that Amazon Prime membership has progressively expanded from predominantly younger demographics to a broader consumer base over the years.
- Prime membership in the U.S. has increased from about 17 million over a decade ago to nearly 200 million individual members today, underlining its leading role in e-commerce.
- Amazon’s logistical advancements have enabled broader reach, connecting with more customers in suburban and rural areas, thereby diversifying its Prime member demographic to mirror the broader U.S. population.
- Last year, Amazon reported around $40 billion in revenue from subscriptions, primarily believed to be from Prime memberships, which accounted for roughly 7% of the company’s total revenue.
Why launch a Temu and Shein competitor? Key motives include competitive pressures, the aim to retain younger customers, and Amazon’s strategy of experimenting and diversifying within e-commerce.
- Temu’s U.S. e-commerce market share is forecasted by eMarketer to grow from 0.7% this year to 2.3% next year, posing a challenge for Amazon to overlook.
- By providing a similar discount-centered shopping experience through Amazon Haul, the company strives to deter customers from being tempted by rival platforms.
- Even if it doesn’t achieve success, Haul allows Amazon to explore new shopping models catering to diverse consumer preferences, shaping its overall online experience.
The status of the consumer relationship with Prime: CIRP’s research suggests that Amazon generally maintains a positive relationship with the typical U.S. consumer.
- Amazon Prime members are inclined to frequent smaller transactions, adopting a “convenience store” mindset in the extensive realm of online shopping.
- Wanting to maximize their Prime membership leads many to prioritize shopping on Amazon before exploring other options, regardless of immediate necessity.
- Despite challenges, opportunities exist in the grocery sector, which Amazon has yet to dominate, leaving the extent of its potential success in that area uncertain.
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Audio editing by Curt Milton.
