What is Amazon doing to Your website’s conversion rate?

You might think that with all of the headlines and ads for ecommerce, online marketplaces would be dwarfing brick and mortar stores exponentially, however, that’s not the case… yet.  

The reality is that ecommerce is still in its infancy. According to the first quarterly 2017 Census Report, E Commerce still only contributes to about 8.5% of total retail sales in the United States, which means that about 91.5% of sales still occur when people physically walk through the doors of a store.

That being said, those numbers are shifting balances very quickly. Online retail is becoming more and more accepted by consumers and, therefore, retailers are shifting gears toward optimizing their presences online.

People are flocking to, and even preferring to purchase from online retailers like Amazon.com and jet.com. Big retailers like Walmart and Target are pushing people to order online as well. The shift to online shopping is clearly evident at scale. Grocery shopping is easier than ever for people in metropolitan areas like New York City and Chicago as well as for those in rural areas and food deserts. Consumers can shop online through websites like Thrivemarket.com and more regional grocery stores, like Wegmans, are offering the option to order online and pick up when it’s convenient for the consumer.

The same transition that is occurring in grocery stores is having a similar impact on the matter at hand, consumer goods. As technology improves, consumers value their time more than ever. Any task that requires people to carve out just a few extra minutes is considered a waste of time. As a result, our buying habits are evolving to become more accepting of platforms and companies that can help us save time and be more efficient, like Uber and Airbnb.

This transition is causing online buying to increase at a rapid rate. However, a word of advice for brands and their websites, don’t expect to see online conversion rates soar through the roof. There is another variable to consider.

If you look up what the standard, or average conversion rate is for a CPG company, you’ll likely see that this value will range between 1% and 3%. This means that anywhere from 1% to 3% of the people that visit your website will end up making a purchase at that time.

E commerce conversion rates are beginning to dwindle despite the obvious shift to online shopping. This might come as a surprise to you as notice that your online sales and revenue continue to go up, up, and up. What could possibly explain this paradox?

Amazon prime.

Amazon, as well as a growing number of other online retailers, are making it easier than ever to buy products online. With trends like one click buying and subscription options, people can get things quicker and often cheaper than through brand websites themselves. Amazon Prime offers free two-day shipping, and other retailers reward their customers for signing up for subscriptions with alternative options, promotions and discounts.

The takeaway: Consumers are becoming more and more comfortable with buying the majority of their products online. This level of comfort leads people to click around until they find the easiest or cheapest option before they buy.

Notice the order I went in: “the easiest” THEN “the cheapest”.

As previously stated, opportunity cost of time is not a term used just for business anymore. Consumers value their time more than ever, and are willing to pay extra dollars in order to save time. Just look at Uber or Lyft, look at Airbnb or social selling app, Letgo. We don’t just want fast, we want now.

My point is, if conversation rates on your website are going down, but your sales are going up, don’t freak; Amazon is bigger than you.

But, and this is a big “but”: if conversion rates are going down, and you are not set up somewhere like Amazon, then you better start freaking out.

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