Online sales delivered plenty of sparkle and shine to many retailers during the 2016 holiday season. E-commerce sales grew by double digits and were on the mark or slightly higher than projected for the crucial months of November and December. But the robust online growth was not enough to help all retailers, especially not retail chains or department stores, many of which reported declines in total sales.
Amazon.com Inc. continued to strengthen its already-strong grip on e-commerce. “Amazon continues to crush online players,” says Forrester Research Inc. analyst Brendan Witcher, who specializes in e-commerce. And Amazon’s top status and growth is due less to price points or two-day shipping via its $99 annual Prime service than to its ability to create value for consumers with free e-books, video streaming, photo storage and more services that come with Prime, he says.
“It’s an evolution. Amazon started as a price leader, and then it sold just about everything and now it’s a value proposition. It has such an embedded network and interconnected system, and consumers are becoming more entrenched in the Amazon ecosystem,” Witcher says. That’s largely due to Amazon Prime, which has 65 million U.S. members, 38% more than it had a year ago, according to estimates released in October by securities research firm Consumer Intelligence Research Partners LLC. Prime customers spend twice as much on Amazon per year as non-Prime members ($1200 versus $600), according to CIRP.
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