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Home / Ideas / Watching Amazon: Online Grocery Shopping Rose 7x in a Month…

Watching Amazon: Online Grocery Shopping Rose 7x in a Month…

Amazon maintained its position in the number one spot and saw its brand value increase 32%, or almost $100 billion, to $415.8 billion, according to the 15th annual Top 100 Most Valuable Global Brands ranking released earlier this week by advertising firm WPP and research firm Kantar.

And they are smoking the competition, as #2 Apple is over $50 billion behind.

It’s easy to see that COVID-19 has been a big factor in this increase in value, as the size and speed of the shift to online shopping brought on by the virus caught everyone off guard.

But even after a shaky period at the beginning of the crisis, Amazon seems to have weathered the storm and is operating at levels customers have grown accustomed to.

And because the pandemic has accelerated the move to the world being even more digital, it has also positioned Amazon to be even more successful in a Post Covid world.



Growth of Online Grocery Shopping During Pandemic

My Watching Amazon co-host John Lawson and I talk about how this, and how Google looks to be responding to a downtrend in digital ad spending during the pandemic – that might also help them fend off Amazon in the long run.

And a couple of other things that happened in Amazon world this week. Below is an edited transcript of a portion of our conversation.

Click on the embedded SoundCloud player below to hear the full conversation.

Brent Leary: We talked so much about how Amazon got hammered in the first part of the pandemic.

John Lawson: Absolutely. I saw a story. Now, if you get to catch this, it’s really good to watch. CNBC did a thing on grocery special, on the grocery stores and the pandemic. And it was really interesting, but a couple of numbers that I got from that, was that online shopping for groceries was about 3% pre-COVID. And that rose, literally, in less than 30 days, to 21%. That’s 7X. Any kind of business that just overnight goes 7X up, it’s impossible to keep up with. And that was really interesting to see some of those numbers. Wow.

Brent Leary: A recent survey found that 20% of those polled bought physical goods online for the first time during the pandemic. 20%. First time they’ve ever bought anything online, physical goods. And it was just because of the pandemic. And then followed up with, 46% also said they would keep on purchasing online more frequently once we get past the pandemic. And then the last one, this is why Amazon is in such a great position, and it’s not good to say because of the pandemic. But it’s just facts here. Because people were forced to buy more stuff online, they ended up doing it. And then they realized, you know what? It’s not that bad buying this stuff online. And then only 8% said they will reduce online shopping post-COVID. All of this lines up for what, I guess, we’re seeing all over the place, which is everybody’s saying Amazon is going double their share price in the next couple of years. Because the pandemic actually accelerated the move for people to buy online at a bigger rate than it was before. And there’s no going back.

John Lawson: I won’t say there’s no going back. There’s different parts of that that will go back. It’s like, yes, I’m buying my groceries online, but when I can go back to actually touching my fruit, I’ll probably go back to touching the fruit. But there’s some areas that are definitely going to see and maintain that increase. I had a friend that actually bought a car online, but I don’t see that sustaining. Once post-COVID is over, I think people are going to go back and test drive a vehicle. So yes, you’re going to maintain some of that, but then there’s other industries that might float backwards.

Brent Leary: Well, I think that it was a general statement, that people were forced into doing something that they had never done before. And because they were forced into it, some folks, and it seems like a pretty significant amount of folks, realized, man, this ain’t bad. And then, even once things get back to whatever the new normal is, part of the new normal is, a percentage of folks will maintain buying stuff online that they had not bought before. Even though things will be more open up to go back to the way they want. Yeah. That’s what I think.
Just lets me know, where do you shop? Because I don’t want to shop there once you go back to touching things.

Google Moves to Expand Free Retail Listings to Counter Growing Ad Rivalry with Amazon

Brent Leary: Google announced they will expand free retail listings to its main search page in. They had already changed the rules so that merchants could list items in the Google shopping selection for free, but they still had to pay for a slot at the top of the main Google search page.
Google’s feeling the pain just… Well, maybe not like Facebook. But Google is feeling the pain as a lot of companies are not doing digital ad stuff right now.

John Lawson: Yeah. Yeah. Well, if you think about it too, when you say a lot of companies are not doing, they’re not spending the money on digital ads?

Brent Leary: Right, right, right.

John Lawson: Right? And does Amazon have the ability to counter this? I don’t think they do.

Brent Leary: Amazon is already countering it, let’s think about this. The uptick in shopping online, Amazon is getting more of that fair share of that uptick. So if people are cutting back their ads, but online retail is still going crazy, guess who’s benefiting from that? Amazon is getting it one way or the other. So Google is trying to figure out how do they get sellers to sell stuff on their platform? They’re trying every which way, but people don’t want to advertise.
So Google, I think, is trying to figure out a way to fend off Amazon, in one way, and keep their advertisers and I guess third party sellers, try to make some headways with them. And I think it’s tough for them right now to do that, but they’ve got to do something because the big brands are not spending as much as they used to on Google ad work right now. At least right now.

John Lawson: I don’t think that’s really the case. We’ll see when the earnings come out for second quarter. Google stock is doing well. Google is not like, oh my God, Amazon’s coming for our core business. I don’t think that’s even close. However, I do think that when it comes to advertising and advertising of hard goods, that there was a niche and an opportunity there that Google themselves never adequately navigated, in my opinion. I don’t think they ever navigated advertising for product very well. And that allowed Amazon to sneak in and make a lot of inroads in that area. I think Google-

Brent Leary: The initial business model for Google was not to point people to where they could shop. It was about finding information and-

John Lawson: No. Let’s remember. Wait. Hold on. You don’t remember something called Froogle.

Brent Leary: Was that the initial part of Google, or was that an add on?

John Lawson: No. I’m just saying that was Google’s shopping platform was Froogle. And Froogle was great. It was 100% free. All right? And it was just a shopping for you to… It would suck all your stuff out of your store, a lot of eBay stores, and it would list it. And it’d make it easy to find. I think that concept needs to come back. I think part of Google search should literally be product search.

Brent Leary: Yeah. Well, but-

John Lawson: Without paying.

Brent Leary: But I think it was originally that until people were like, well, why don’t I just go to Amazon and search.

John Lawson: Not really.

Brent Leary: It was what, three or four years ago, since Amazon became number one destination for product search?

John Lawson: Mm-hmm (affirmative).

Brent Leary: Yeah. I don’t see that changing any time soon.

John Lawson: I’m saying product search is different than text search.

Brent Leary: But product search is intent search because they want to buy something.

John Lawson: Right. And if I want to buy something, I need to see the picture. I need to see the description of said thing. When you do that on Google, you don’t get any of that experience, or you didn’t really get that experience.

Brent Leary: They tacked it on. And they also didn’t get ratings and reviews right away.

John Lawson: Exactly.

Brent Leary: Because of all that, people started going directly to Amazon for product searching.

John Lawson: Right, but Google has all that data. All that data,

Brent Leary: They have all that data, but their business model was not set up for people being able to buy stuff right from there.

John Lawson: They need to get that set up. They got all the components. They got GooglePay.

Brent Leary: I think they’re trying.

John Lawson: Look. See, that’s what I’m saying. I don’t think they were trying. I think if they do try, they’re going to have a little bit of, could be awhile-

Brent Leary: Why weren’t they trying? Why weren’t they trying real hard? Because look at the margins on retail. Look at the margins they had on ads. They had huge margins and-

John Lawson: Oh, yeah. Retail versus … Yes, absolutely.

Brent Leary: Right. But they were optimizing around that. And let’s face it, retail is a tough market, even if it’s online retail.. And supply chain isn’t easy. I think-

John Lawson: No, they need to stay out of that part.

Brent Leary: I think they need to figure out how can they best position themselves for what digital ads and digital campaigns are going to look like after COVID, because they’re going to look different than what they were before COVID. And they could position themselves, because they are the leader already, just generally speaking. So how do they take that lead and change the way that they need to keep that lead after we get through this pandemic.

John Lawson: Look at LinkedIn User’s comment says, “I always use Google because I get options. Usually end up in Amazon, since there are not many other results that matter.” I think that is the most important part, is that when you do a thing on Amazon, you’re not going to get a whole lot of different options, as you would in Google-

Brent Leary: That’s because they are optimized to sell something at the end of the interaction. How does Amazon make it easy for us to find what we want, make that decision, click the buy button, and then stand by our doorstep 24 hours later with our stuff? Google’s not optimized for that. Amazon is. And that’s why it’s going to be hard for them to try to attack on Amazon’s territory. And maybe it’s a little easier for Amazon to attack Google on their territory with the digital ad plan.

John Lawson: I disagree, but we’ll see.

Brent Leary: What else is new? You always disagree with me.

John Lawson: I think you’re saying that Amazon has an advantage.

Brent Leary: I think I’m saying –

John Lawson: That Google can’t match in its advantage, and I think Google has some tools up its sleeves too that Amazon doesn’t have. And definitely data-wise I think they do.

Brent Leary: I think you’re right about that. But it’s also about being able to actually execute. And Google has shown that they have hard times when it comes to physical products. Some of their own-

John Lawson: Here’s the thing. And that’s a good point. I think you leave Amazon in the physical product space. Don’t try to compete with that. That’s where they had their problems. When it comes to actual search, there’s nothing that compares to Google search on the planet. Amazon search is not even close. Amazon is not in my pocket. Google knows everywhere I’ve been, where I’m going, and everything that comes out of my mouth. They have to utilize that and figure out how they can use that to the advantage of the end user to make shopping experience better.

Brent Leary: I totally agree with you on that. Google is the search king, but there’s an opportunity, not just for Amazon. There is an opportunity, because search is changing more and more to voice search, which is a completely different animal. And that leaves some opportunities for, not just Amazon, but for others, to figure out how do they leverage voice search and be able to optimize voice search and voice conversations that could turn into actually connecting a retail experience that starts with a voice search versus a retail experience that starts with a traditional text search? There’s some opportunities. I think Google should be trying to optimize for that, because to me, that’s where this is going faster and faster.

CHECK OUT MORE: 

This is part of the One-on-One Interview series with thought leaders. The transcript has been edited for publication. If it’s an audio or video interview, click on the embedded player above, or subscribe via iTunes or via Stitcher.



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