To stay current with consumers’ evolving preferences, research and development (R&D) teams have historically relied on a mix of insights from their salesforce in the field and point-of-sale data (i.e., sales captured through in-store barcode scanning). While both will continue to be critically important for brands to understand general shopper attitudes and consumption trends already happening in brick and mortar (B&M) stores, neither are the optimal data source to drive product innovation in today’s rapidly changing retail landscape.
Innovation today requires the unique power to understand the consumer of the future, or accurately predict levels and areas of growth in consumer spending.
eCommerce data — specifically, the consumption data coming from Amazon — can do this faster and more accurately than any other market research tool.
Here are key reasons why Amazon data is the best predictor of consumer product trends.
#1. Amazon data includes the complete range of products and brands.
Unlike traditional data sources coming from B&M that lack today’s breadth of consumer choices, Amazon is unique in that it provides an endless digital shelf across nearly all categories. In fact, 66% of consumers start their product searches on Amazon, knowing that the marketplace provides a better product range than in-store or other sites.
Amazon data also includes products from both legacy brands (i.e., brands that originated by selling in-store) and digitally-native brands (i.e., brands that originated by selling online only). The number and market share of digitally native brands are growing at an alarming speed, given Amazon’s low barriers to entry, plus their nimble ability to innovate quickly and release cutting-edge products to customers well before larger, traditional brands.
Reacting to the uptick in consumer demand for immunity supplements during the COVID-19 pandemic is just one example of how digitally native brands are formidable players and need to be tracked closely to fully understand market shifts:
By Q3 2020, zinc was seen as a high-growth VMS category. 5 of the top 20 zinc brands on Amazon in Q3 were digitally native, yet had $0 sales or only nominal sales in January and February of 2020. Those brands went from less than $10,000 in sales for all of January and February to generating over $500,000 in revenue in just a month of May.
The marketplace’s breadth of product options and brands, coupled with its dominance of eCommerce (i.e., more than double the market share of the next nine companies combined, including eBay, Walmart, Best Buy, Apple, and others), positions Amazon as the truest microcosm of consumers’ evolving preferences.
#2. Amazon data is available in real-time.
Unlike traditional data sources, Amazon data is available in real-time, adding a layer of business agility that is crucial to innovation. Brands cannot afford to wait for market insights to be introduced to them only periodically, such as during quarterly meetings. Alternatively, companies need to build their internal capabilities to analyze consumer data in real-time and implement swift decision-making to capitalize on micro-pockets of growth in our ever-changing new reality.