Inside Amazon's Vendor Summit: Home Improvement
Inside the Amazon Home Furnishings Vendor Summit
Could Home Improvement Be Amazon’s Next Big Move?
I attended an Amazon Vendor Summit for home furnishing in 2018. The opportunity to go inside the walls can help draw some conclusions on what Amazon is up to within the home products space, who they’re aiming for and how they plan to impact a category.
The meeting started with a variety of home category leaders making a claim on the home products space, the scope and the opportunity. They’re clearly putting their flag in the ground and bringing the troops to conquer the home products space. After a few minutes of presenting content, it doesn’t take long to realize they are essentially aiming at sites like Wayfair.com and HomeDepot.com, who are getting a hefty share of the home products online market share. Probably not a huge surprise right? Amazon seems to be virtually pursuing almost every major market niche, from grocery to B2B to apparel – and it’s very evident that Home Furnishings, Home Improvement and Building Materials are the next opportunity to reinvent how people shop online.
Why is Amazon is Ramping Up the Home Category Now?
The home furnishings market size speaks for itself. According to Amazon, online sales are projected at $8.3 billion in 2017 with a 15% forecasted growth year over year for the forseeable future. This includes everything from furniture to bathroom vanities to anything else in the home.
While the company reported a 50% increase in sales in category over the previous year, home furnishings are still a traditional “brick and mortar” purchase. According to eMarketer’s Omni-Channel study, 48% of consumers are more likely to buy home products in-store vs. digital – only second to groceries at 58% in the study. Could this be some insight into their strategy? Go where consumers are not quite comfortable with ecommerce yet, bring the Amazon core competencies of Prime, selection and customer experience to bring a level of comfort that will combat the online buying obstacles.
What are the Obstacles in Online Home Improvement Shopping Today?
Amazon reported at the summit the largest consumer obstacle with home improvement in ecommerce is the lack of inspiration, aspiration and visualization in the online marketplace setting. With the exception of Wayfair, most ecommerce sites are pages of product SKUs for a customer that already knows what they want to purchase. The helpful, inspirational consultant and guidance content similar to a blog, Houzz or HGTV is absent. Further, the ability to customize with visualization tools to combat the “look and feel” factor is hard to come by on most sites. That’s where “Amazon Home” comes in, which features category trends, Editor Picks style advice and shop-by-room content that then links to good-fit products in a more intuitive fashion.
Partnering with Brands to Drive Category Content
Amazon appears to be very focused on improving this content development based on the direction presented on customer feedback, data and branded storefronts. In addition to redesigning the branded storefront template for sellers to feature content beyond ASIN listings, Amazon Home is partnering with traditional brick-and-mortar furnishings companies like Ethan Allen to help bridge this content gap and bring more well-known traditional brands to the marketplace.
Like many things with Amazon, the responsibility for the home category leadership content will fall on the brand themselves to develop and publish. But that’s a good thing for branded sellers, especially those that help pilot the approach. By leading potential buyers to ASINs through aspirational content, they will drive more page views on their product pages. The number of page views is one of the key factors in the algorithm that feeds better visibility according to the Amazon “flywheel” definitions. More page views validates more interest in an ASIN, which in turn drives more sales momentum.
Can Amazon Win at Home Improvement eCommerce?
The obvious answer is absolutely. The question is more how long will it take? They have the users, they have the data and now they have the focus. Online shoppers who previously started predominately with Google for the product search are now using Amazon. Recent reports say 55% of all searches started with Amazon while only 28% started with a search engine. Another staggering stat is for every one dollar of product sold online today, $.60 of that is happening on Amazon.
While 90% of purchases still occur in a physical store across all categories, the convenience and comfort of online purchases will only grow. The loyalty of Prime membership is a key factor for breaking the barrier with home improvement products. It is estimated that almost 50% of all U.S. households are Prime members. Add in the future integration of augmented reality and visualization tools, all evidence says Amazon will get this right.
It remains to be seen what happens in the grocery industry with the acquisition of Whole Foods. There is plenty of speculation Amazon will reinvent how the customer shops for groceries, but there are parallels with the home improvement category. Could the home improvement category be next? If breaking down walls by going where consumers are not quite comfortable with ecommerce---which all signs report exists in this category---then anything is possible. An Amazon acquisition of a major big box national retailer for distribution, in-store experience and convenience could be on the horizon. Using the Whole Foods model as a guide, it makes sense based on the factors involved.