Amazon is the most controversial retailer of the modern era. It has become many consumers’ guilty default for convenience purchases. In fact, 49 percent of internet searches start on Amazon and 8 out of 10 Prime members start their online product search with the megalith. But Amazon has a growing reputation problem that’s threatening to undermine the empire Bezos has built. Logistical issues, waning brand sentiment and unsuccessful product quality control (read: selling counterfeits and unsafe products) might mean the beginning of the end for the go-to e-commerce retailer.
Customer’s Age Factors into the Equation
Amazon is the brand you love to hate. Even though Amazon has 101 million Prime members, some customers love Amazon, others hate it–similar to retailers’ sentiments. While Amazon does sell many independent brands from small biz retailers, it’s also notorious for putting both mom and pop shops and legacy department stores out of business. But for a lot of consumers, the reason they shop on Amazon comes down to good, old fashioned laziness. eMarketer reports that over half (56 percent) of 18-to-24-year-olds say they’re at least somewhat more likely to order a low-cost product on Amazon than they were to buy the product in store. Even more (63 percent) of 25 to 34-year-olds said the same thing, while nearly half of respondents age 55 or older (49 percent) said they were “at least somewhat likely” to buy a cheap item from Amazon if shipping were free.
Amazon is facing a large-scale trust issue and now that Walmart is getting in on the third-party marketplace biz and its own membership program, Walmart+, its bad reputation is a growing problem (one that Jeff Bezos throwing money at climate change published alongside a pic of him doing namaste hands won’t fix). Consumers who value products “Made in the USA” are less likely to trust products from Amazon, many of which are manufactured overseas even when the label says differently. Older consumers are also slightly less likely to try new brands online and more likely to shop at brick-and-mortar stores. But Amazon has another problem: it is struggling to reach Gen Z consumers, who are weary of “the man” (which is Amazon to a T) and expect brands to establish trust through personalized messaging on social media (which Amazon isn’t likely to do).
Last-Mile Delivery Nightmares
In addition to trust issues, Amazon has become infamous for shipping delays and troubling last-mile delivery snafus. Amazon pulled its delivery business from FedEx early last year, instead banking on UPS, the post office and its own logistics enterprise. Business Insider reports that Amazon now ships 48 percent of its own packages. But as Amazon handles more of its own deliveries, the number of late deliveries also increases–from 4.6 percent of items delivered late from January to late June in 2017, to an average of 16.6 percent in 2019.
Amazon’s new logistics enterprise is nothing short of impressive, with hundreds of warehouses, thousands of delivery trucks… and hundreds of thousands of ambivalent and underpaid workers jeopardizing the last-mile delivery experience for frustrated customers. Here’s the deal: it doesn’t matter how magnificent Amazon’s logistics operations may be–whether it uses warehouse robots, drones, or autonomous vehicles–when its underpaid delivery drivers are chucking customer orders over fences and into the bushes days after the date when the products were guaranteed delivery.
Although Amazon can save a lot of money by handling its own shipping operations, the company needs to tread lightly when it comes to customer opinion. It’s beginning to look like negative consumer sentiment poses some real issues to Amazon’s staying power, and last mile delivery issues (as well as the moderately terrifying ways that Amazon meets its lofty promises of next-day delivery) are at the forefront of customer concern with the brand.
Will Amazon Soon Mirror Walmart in Consumer Sentiment?
In WD Partners’ annual survey of 11,000 customers, “The Good, the Bad, and the Ugly,” Amazon-owned Whole Foods was for the first time ranked one of the “Ugly” brands in 2019. Walmart on the other hand, was a “Worst” retailer, with 24 percent of consumers voting Walmart as the absolute “Worst” retail brand of 2019. Since “employees” and “customer service” are the two top factors that can make a brand rank in the “worst” category, it’s easy to see how Walmart’s experience could fall short. With its strong physical presence and notoriously low (albeit climbing) wages, Walmart’s ubiquitous physical presence lends itself to physical retail experiences that underwhelm.
But how much longer will Amazon’s sales remain immune to the brand’s terrible reputation? While millennials are reportedly the generation most apt to do their convenience shopping on Amazon, there’s been a lot of millennial-led journalism dedicated to the fact that shopping on Amazon isn’t as cost-effective as it may seem. And Amazon’s logistics operation is a nightmare both for delivery employees and some of the individual citizens living in the communities they serve. Millennials are a notoriously cause-driven demographic, and it’s only a matter of time before concerns about the environment, stolen packages, overseas sourcing and worker treatment have a greater influence on where they do their convenience shopping.
There’s also a political component to this, and the outcome of the next election will have a strong impact on Amazon’s fate. Thus far Amazon has been able to combat cries of “Monopoly” by pointing to the third-party sellers making a living on the platform. But politicians are jumping on the anti-trust bandwagon this year and guess which monopoly might wind up getting run over in its tracks? Presidential candidates Warren, Sanders, and even Trump have criticized platforms such as Facebook, Amazon, and/or Google, and are calling for the “breaking up of big tech.”
An Alternative Course of Action
The convenience sector is rife for disruption. While it’s fine that Amazon is hyper-focused on futuristic supply-chain solutions, the next generation of customers is more concerned with how Amazon is treating their existing employees. We’re living in a world where technology enables warehouse employees and delivery drivers to rub elbows with journalists on a daily basis. Not to mention the fact that many would-be Amazon customers have friends and family members employed by the megalith. All this to say that there’s no hiding shady business practices. Last-mile delivery employees distributing Amazon’s products make a statement every time they chuck another customer order into their shrubbery–happy, well-compensated workers don’t operate like that.
Amazon has a reputation problem. Without altering its approach to its employees, it’s only a matter of time before Amazon goes from a necessary evil to that place we all shopped before a more ethical disruptor came onto the scene. We aren’t wanting for innovation from Amazon… we are wanting for heart. DTC brands with a strong mission statement, like Public Goods are already making a play for Amazon’s “convenience shopping” market share and, eventually, one of these disruptors will succeed in overthrowing Goliath. Amazon would be wise to take a page from Target’s handbook by paying workers a competitive, living wage and then promoting the heck out of the fact that they’re doing so. But that would mean a short-term dip in profits, and monopolies are historically unwilling to sacrifice short-term profits for long-term relevance.
Let’s see how this plays out.