On the front end of the e-commerce channel, the cost of customer acquisition continues to rise as consumers’ loyalty to brands erodes. You have to keep reacquiring them. In 2004, 47 percent of affluent consumers could name a favorite retail brand; six years later that number dropped to 28 percent.89 That makes pure e-commerce play increasingly dangerous. Nobody wants to be at the mercy of Google and disloyal consumers. Amazon has decided it wants off the merry-go-round of high-price acquisition coupled with zero loyalty. That’s why the company, via pricing and exclusive content and products,
On the front end of the e-commerce channel, the cost of customer acquisition continues to rise as consumers’ loyalty to brands erodes. You have to keep reacquiring them. In 2004, 47 percent of affluent consumers could name a favorite retail brand; six years later that number dropped to 28 percent.89 That makes pure e-commerce play increasingly dangerous. Nobody wants to be at the mercy of Google and disloyal consumers. Amazon has decided it wants off the merry-go-round of high-price acquisition coupled with zero loyalty. That’s why the company, via pricing and exclusive content and products, is asking people either to join Amazon Prime or leave. Prime members represent recurring revenue, loyalty, and annual purchases that are 40 percent greater than non-Prime members.90 If Prime continues to grow at its current rate, and people continue to cut the cord, within the next two years more households will have Amazon Prime memberships than cable television.91 In addition, the cost to build out a robust multichannel offering—which is rapidly becoming the table stakes for survival in retail—is painfully difficult and expensive. Cue Amazon, whose infrastructure is, effectively, building the cable pipe of stuff into the world’s wealthiest households. Eighty-two percent of U.S. high-income households have Prime.92 Amazon’s storefronts will effectively be warehouses that support Amazon’s, and other retailers’, last-mile problem. The cost to get you that little black dress from a wareh...
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