Amazon enjoys a very happy holiday season

Holiday stats gave Amazon an amazing 46% of all U.S. e-commerce dollars, which is three percentage points more than the prior year.

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Martyn Williams

Although retailers know only too well how incredibly massive a rival Amazon has become — it's annualized revenue last year hit $131 billion, which is almost pure online dollars — it's scope is sometimes difficult to internalize. Holiday stats from Slice Intelligence, for example, gave Amazon an amazing 46% of all U.S. e-commerce dollars, which is three percentage points more than the prior year.

Let's put that into context. The generally accepted assumption in e-commerce has been that Amazon would dominate for the indefinite future but that major chains such as Walmart, Target and specialty players such as Apple would slowly increase their collective market share.

Instead, we have numbers that show Amazon growing its market share by three percentage points. Put another way, the total of all other retailers combined lost online market share. How can that be? How perfectly dreadful must the experiences be at Target.com and Walmart.com that they are losing their own loyal customers to Amazon?

Well, OK, 46% is a rather dominant slice of the pie, but are the others even close? Nope. Slice's figures had the next top retailer, Best Buy, at 2.9%, followed by Walmart at 2.6%, Apple also at 2.6%, Target at 2.4%, Nordstrom at 2.3%, Macy's at 2.2%, Kohl's at 1.3%, J. Crew at 0.7% and Home Depot also at 0.7%.

What is behind all of this? Two things: brand trust and shipping speed.

And brand trust and shipping speed, for a holiday shopping season, are intricately intertwined. As we've noted many times before, Walmart (and, to a lesser extent, Macy's) keep defaulting to a physical-store-first strategy. This market share report is the price they are paying for that mistake.

The most regular and loyal Walmart shopper will trust the chain to handle in-store purchases in the traditional Walmart way. But Walmart's store-first-and-always approach to almost everything means that it is sending a message to its shoppers that its online experience will be substandard.

That is a frightening trend as an increasing number of sales move from in-store to online. Walmart hoped that those sales would migrate from its stores to its site. But its attitude is instead sending shoppers to Amazon. When they want online, they go a retailer that they know cares about online.

Next we have shipping speed. "The average package arrives in just three days [in 2016] compared to five days in 2015," the Slice report said, adding that a week in late December "was even faster, with packages arriving in only 2.5 days — much quicker than the 5.5 days during the same time last year."

Those averages are being fueled by same-day delivery. When a package really needs to arrive that quickly, the shopper makes a decision based on his own perceptions of faith and confidence. Amazon has put far more marketing muscle into its same-day deliveries than anyone else. That sent a signal of confidence, one that was reinforced by lots of favorable social media experience reports about Amazon's same-day deliveries. Last year showed that Amazon has mastered the logistics needed.

Want some good news for brick-and-mortars? They killed Amazon when it came to order size. By the way, Amazon may not dislike that. One of the points of Amazon Prime was to make shoppers comfortable with making small purchases through Amazon, hence the removal of the shipping cost. There are far more $10 purchases happening in retail than $1,000 purchases.

Slice found the largest average order size for that holiday week going to Apple, at $352. Best Buy was a distant second at $186, with Home Depot ($151), Nordstrom ($149), Macy's ($116), J. Crew ($115) and Kohl's ($81) following. Amazon came in next at $67, followed by Walmart at $66 and Target at $55.

In this report, even the small order size could be good news for Amazon. Amazon has the chains beat at speed and reputation. Once it fully dominates on everyday purchases, the game may be close to over.

Copyright © 2017 IDG Communications, Inc.

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