Buy.com hunting in the Amazon: Part II

Part I Summary:

In September of 2005, Scott Blum, the CEO of Buy.com announced in a TV commercial that his online shopping site would offer 10% off Amazon‘s prices on books. Recently we analyzed Buy.com’s “10% off Amazon prices” campaign to measure the effectiveness of this David vs. Goliath approach. We found:

  • After launching the campaign, Buy.com’s traffic grew relatively faster compared to Amazon.com during last year’s holiday season.
  • The percentage of Amazon.com shoppers considering Buy.com nearly doubled in the months following the campaign launch.
  • The campaign did not improve Buy.com’s conversion rate.

Our initial findings suggest Buy.com’s campaign was successful; however there are additional questions that need to be addressed before we can arrive at a definitive conclusion:

  • Was the campaign solely responsible for Buy.com’s traffic lift?
  • Did consumers understand the promotion was limited to books?
  • Did Buy.com win the hearts and future purchases of legacy Amazon.com shoppers?

To explore these questions we reached out to people that shop at both sites. Using Compete’s targeted Consumer Input survey service we interviewed 170 individuals that were observed shopping at both Buy.com and Amazon during the promotional period.

Awareness/Behavior:

Compete found that 32% of shared shoppers were aware of the promotion. However, the majority of these respondents indicated their motivation to consider Buy.com was unrelated to the promotion. Of the "˜promotion aware’ respondents only 28% agreed or strongly agreed that they shopped at Buy.com because of the promotion. This indicates that only 9% of shared shoppers were positively motivated by the Buy.com campaign.

Understanding:

Did shoppers fully understand Buy.com’s "10% off Amazon prices" promotion? To its credit, Buy.com cleverly de-emphasized the details of the promotion playing down the special pricing applied only to in-stock books. In fact, the motivation of this article was a disgruntled Compete employee who didn’t pick up on the "only books" limitation. To measure the effects of this strategic ambiguity we asked "˜promotion aware’ respondents what their understanding of the campaign was. We provided five answer choices and found only 43% understood that the deal applied only to books.

Preference:

Buy.com successfully engaged 28% of promotion aware shoppers to return for future shopping. Despite the efforts from the Buy.com camp, Amazon.com remains the preferred site of overlap shoppers. In fact, 63% of respondents ranked Amazon.com their most preferred online store, compared to just 5% for Buy.com.

Conclusion:

Buy.com’s head-to-head promotion versus the mighty Amazon was inspirational, but only slightly effective in the grand scheme of internet retailing. Yes, the promotion increased visitor traffic and did lure existing Amazon shoppers; however, its long term effects are limited.

  • Only 9% of shared shoppers — those who shopped at both Amazon and Buy.com — indicated the promotion positively effected their intentions on Buy.com.
  • 58% of promotion aware shoppers did not understand the promotion was limited to books. Consumers who discover this detail and see it as a bait-and-switch might establish negative sentiments.
  • Buy.com continues to struggle to become the preferred retail destination of shared shoppers with only 5% citing Buy.com as their preferred retailer compared to 63% who prefer Amazon.

Buy.com yielded a small win with its "10% off Amazon prices" promotion, but it’s clear they will need to pull out a few more tricks to truly challenge Amazon.

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