Blog Post - Frank Kochenash , Jan 16 2020

2020 predictions and trends set to impact your Amazon business

2020 predictions and trends set to impact your Amazon business

As we start 2020, here is my list of predictions that may affect your Amazon and eCommerce business. They're more accurately trends to keep an eye on and address.

1. Amazon will launch/relaunch/revamp its grocery store and catalyse the development of new retail formats

It's already been rumoured that Amazon will launch a new grocery format in Los Angeles. In 2019, we already saw the convergence between Fresh, Now, Prime and Whole Foods. My suspicion is that the new "store" will more conspicuously be a new type of retail format, something that is more akin to a new way for consumers to engage with Amazon - a combination of mobile app experience combined with personalised guided in-store experiences supported by a mashup of on-demand/on-premise, ship-to-home, and click-and-collect fulfillment.

2. Data and tools will drive Amazon Advertising growth

Scaling and automation are in Amazon's DNA. So is pushing work onto its partners. In 2020, I predict we will see Amazon Advertising continue to drive the deployment of new features, tools, and data to enable vendors and sellers to perform better. This will likely include new features on their advertising console. It will also likely include new data streams to manage performance (e.g. something like share of voice, better new-to-brand metrics etc.). It will also include new ways to optimise organic content, building upon the A/B test capability they launched in 2019.

3. Sustainability will become more meaningful in retailing and consumers will start making more decisions based on it

I frequently say that the four dimensions of retail competitiveness are price, convenience, product assortment, and experience. To these, we will add sustainability. Historically, sustainability has not been an explicit decision criterion for consumers. But increasingly, consumers will become more interested in assessing sustainability as they do with price - and Amazon will help facilitate this.

4. Purpose-driven branding and retailing will accelerate

It's getting harder to compete on price, convenience, assortment, and experience. Sustainability is one emerging dimension. Another is purpose. Many brands and retailers will seek to identify and support a purpose as a means to differentiate themselves.

5. Regulatory scrutiny will increasingly affect Amazon's actions

This is an easy prediction to make, especially during an election year. In the face of continued scrutiny, I believe Amazon will take steps, while not admitting anything, to insulate itself from potential regulatory actions. Such actions will likely address policies covering: management and oversight of 3P sellers on its site, identification and/or removal of counterfeit and/or inauthentic/lapsed products, and sourcing and control of customer reviews.

6. Transparency in sourcing will be increasingly exposed to consumers

Amazon built its business by establishing trust amongst consumers by providing wide assortment, low prices, and great service. Now, it needs to build trust in the quality of the product assortment. It will not do that as a traditional retailer would (i.e. through the buying function). Rather, it will create transparency and support authenticity by providing information about where products are sourced from, who made them, and who is selling them.

7. Amazon Business will accelerate

Amazon Business is already over $10 billion in annual sales and is only scratching this surface on the B2B opportunity. Costco revenues are about $140 billion per year and are the likely target. We will see Business marketing grow in 2020 to drive Amazon Business.

8. Amazon Shipping will emerge as the next "spinoff" of the flywheel

The margins won't be as attractive as those of Amazon Web Services (AWS) or Amazon Advertising, but Amazon Shipping or Amazon Logistics will emerge as the next noticeable and accretive gear of Amazon's flywheel system. And along with its growth, new disruption and new autonomous delivery vehicles.

9. Retailers will get real about omnichannel metrics and brands may help them

All retailers claim an omnichannel strategy. But few, if any, are measuring this as a way that allows them to properly direct an omnichannel strategy (as opposed to measuring performance in a way that simply evaluates and grows multiple channels). In 2020, we will see that change and, somewhat ironically, Amazon may catalyse this change by providing metrics to brands that these brands then demand from other retailers.

10. Walmart will become a contender

With the launch of its new self-service paid search offering, brands will have better opportunity to drive their own volume. But it is still dependent on Walmart.com's overall volume. The game changer to watch out for: in-store paid search ads with ship-to-home fulfillment.

Want to explore this further?

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