Amazon Gains Ground In Holdout Markets

Amazon Gains Ground In Holdout Markets

The myth of Amazon dictates that any move it makes is nearly pre-ordained to end in rousing success for the eCommerce giant, crushing defeat for whatever incumbent force is trying to compete with them and a commerce paradigm left forever altered.

The reality of Amazon, however, is a lot more complicated. Not every product launches smoothly (RIP Fire Phone), not every new endeavor delivers (Amazon’s flirtations with offering a travel platform ended abruptly) and not every new market immediately yields.

Take, for example, Italy, where Amazon has been operating since 2010 with what The New York Times describes as rather “muted success” since selling its first children’s book in the nation nearly a decade ago.  Italians, as it turned out, weren’t terribly avid digital consumers pre-pandemic, with only 40 percent of consumers shopping online compared to 87 percent of British consumers and 79 percent of German shoppers.

So, what’s the hold up? A variety of factors combine to depress growth, including limited internet penetration and broadband access, lousy roads that make package delivery difficult and an older population less than enamored with supplying their payments information online. By and large, Italian consumers first encountered Amazon as a group that firmly preferred shopping in person and paying in cash.

“There were some structural issues that we had to face,” Mariengela Marseglia, Amazon’s country manager for Italy, told The Times. “Unfortunately, our country was one of those where technological understanding and tech culture is low.”

But that’s changing by the day, pushed by the strict lockdowns and shutdowns of the physical commerce sphere as the pandemic hit Italy incredibly hard in early spring and held on for weeks. Once locked down, Italians began adoption of eCommerce at record speed. Consumers like Ludocvica Tomaciello, who prior to the pandemic had never shopped on Amazon, found herself picking up some scrunchies while isolating at her parents’ home while idly perusing the site.

By the time the package arrived, she described herself as “hooked,” at which point she promptly joined Prime and went on to purchase a tapestry, a pair of sneakers, a halter top, a pair of jeans and a remote camera to take better Instagram photos. And even though the stores near her Naples home have now reopened, Tomaciello told the Times that she is sticking with her new “Amazonized” lifestyle, as it offers better prices and is more convenient than getting back out into the world of physical commerce.

On one level, that sentiment is pretty unsurprising, as it lines up nicely with similar sentiments PYMNTS has observed among U.S.-based consumers. According to PYMNTS’ last consumer survey, not only are more consumers shopping online for retail goods, groceries and restaurant orders than ever before, they are also increasingly likely to stick with that behavior once the pandemic has passed.

The degree to which consumers intend to continue shopping online seems to depend on the types of products and services they purchase. Eighteen percent of consumers surveyed in April said they had shifted to shopping for retail products online, but intended to go back to the stores post-pandemic – a figure that had fallen to 9 percent as of our last survey, half of what it was a few months ago.

And even when they are considering going back to the stores, they want some digital guardrails to make the experience safer. Fifty-seven percent of all consumers say that merchants’ digital payment offerings impact their willingness to shop in-store, with a big focus on contactless payment options. Respectively, 26 percent and 23 percent of consumers noted that merchants must accept contactless cards and offer curbside pickup for them to feel safe enough to make even a partial return to physical commerce channels.

Italians, it seems, are having a similar reaction to COVID-19 as everyone else on the planet, in terms of reconsidering and reshaping their commerce habits.

But considering how far Italy lagged behind the rest of the world in the pre-COVID period, the rapid pace of the switchover – and its apparent durability – is rather surprising to see … and if you’re Amazon, it’s likely pretty encouraging as well.

“The change is real, the change is deep and the change is here to stay,” researcher David Parma told The Times. “Amazon is the biggest winner.”

Amazon still has mountains to climb, even as the market is softening toward them. Small business owners seem to maintain a fear of being crushed by Amazon’s massive size and are concerned that their products – which they have historically sold on the basis of their superior quality – are particularly ill-suited to the design of the Amazon marketplace. The site has also been a target for criticism of its labor practices and alleged price gouging.

But Amazon has also been working to grow its footprint by opening fulfillment centers, expanding its fleet of workers and courting demographic groups including parents, teenagers and senior citizens.

How well Amazon takes hold in the long term – in Italy and in other markets that have been historically reluctant to embrace the eCommerce giant with open arms – will be interesting to watch in 2021 and beyond.