There’s a good reason that Amazon.com Inc. aggressively marketed its Alexa-enabled, voice-activated Echo devices during the just-concluded holiday shopping season: Once a shopper has an Echo device in her house, she tends to spend more money on Amazon.
Shoppers who own an Echo device spend an average of $1,700 a year on Amazon, or about 70% more than Amazon shoppers who do not own an Echo device ($1,000), according to a new study released by securities research firm Consumer Intelligence Research Partners (CIRP).
The average of $1,700 spent by Echo owners is about 30% higher than what Amazon Prime members spend on average ($1,300) per year. CIRP’s data is based on a survey of 2,000 U.S. shoppers who bought something on Amazon between October 2016-September 2017.
“Our data from the past five years has shown that Prime members spend more at Amazon,” says CIRP co-founder Josh Lowitz. “Now we can see that Echo owners spend even more than customers with just a Prime membership. Based on the spending patterns of Echo owners, Amazon can certainly subsidize sales of its Echo devices.”
Amazon, No. 1 in the Internet Retailer 2017 Top 500, does not release the number of Alexa-enabled Echo devices it has sold. CIRP in November estimated that as of Sept. 30 there were 20 million Alexa-enabled devices in U.S. shoppers’ homes, up 33.3% from 15 million at the end of June. CIRP based that estimate on an Oct. 1-25 survey of 500 U.S. shoppers.
Amazon made a big push to sell Echo devices during the holiday shopping season, dropping the price of the smaller Echo Dot by 40% to $29.99 heading into Cyber Monday. Amazon said last month that it sold tens of millions of Alexa-enabled devices during a record setting 2017 holiday shopping season, though the e-retailer declined to provide the number of products sold or year-over-year percentage growth from 2016.
Amazon’s efforts to get more Echo devices in shoppers’ homes isn’t limited to its own website and app. Amazon also sells Echo devices in select Kohl’s Corp. (No. 18) stores in Los Angeles and Chicago through a new Amazon smart-home experience, which gives Amazon dedicated space in those Kohl’s stores. Amazon also began selling Echo devices in Whole Foods stores after its $13.7 billion acquisition of the upscale grocer was completed in August.
Though the smart speaker market is new, “an unmistakable trend has started to emerge, that Amazon creates products and services that seek to promote retail shopping and deeper affiliation at Amazon.com,” CIRP co-founder Mike Levin said. “Amazon probably wants the Echo device family to stand on its own as a consumer electronics line, while supporting the greater mission of succeeding as an online retailer.”Favorite