Amazon Echo owners are spending more money on Amazon (AMZN)
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Amazon Echo owners tend to spend more on Amazon's marketplace than they did before they owned the device, according to NPD research cited by TechCrunch.
The voice-activated Echo allows owners to place orders on Amazon without needing to go to the site or app themselves. With the Echo and other devices, Amazon is continually removing friction from buying on its marketplace, which could encourage consumers to ramp up their purchases from the retailer.
The Amazon Echo is driving up sales on the marketplace:
- Amazon Echo owners spend more money. Owners of an Amazon Echo device spend about 10% more on Amazon than they did before they had the device.
- They also shop more frequently. Echo owners purchase from Amazon 6% more often than they did before.
Amazon's efforts in e-commerce convenience will continue contributing to the marketplace's growth. In addition to the Echo's ordering capabilities, Amazon launched its Dash Buttons in 2015 that allow for one-click ordering on partnered brand products. These devices give the company a significant advantage against competitors by removing reasons for consumers to look elsewhere when shopping online.
This convenience factor also likely contributes to customer retention as it keeps them within the Amazon ecosystem. Echo owners may become some of the most valuable customers to Amazon by repeatedly returning to the marketplace and making higher average order values, driving up incremental sales gains for the company.
As Amazon grows, it is laying the foundation for other retailers to sell on its platform. For example, Dash Buttons offer products from major brands including Dove, Glad, and Tide. Additionally, the Echo features associated "skills" from brands like Campbell's and Uber. Although Amazon is inventing new and disruptive products, competitors can turn a threat into an opportunity by integrating themselves into these devices. This allows them to add new sources of revenue without heavy investments in proprietary platforms.
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