Report: Amazon, eBay Not the Biggest Threat

Though they attract a large percentage of the online buying audience, e-tail giants like Amazon (Nasdaq: AMZN) and eBay (Nasdaq: EBAY) do not necessarily compete directly against other e-tailers, according to a new report from Nielsen//NetRatings

The report argues that even though the two mammoth sites reach one-fourth of the online population, e-tailers must determine which other sites are their true competitors and then forge a strategy to win customers accordingly.

“The Web is an ideal place for comparison shopping,” Nielsen//NetRatings senior Internet analyst Dawn Brozek told the E-Commerce Times. She noted that comparison shopping sites, such as Dealtime and MySimon, often rank among the top shopping destinations. “But e-tailers have to know who their at-risk shoppers are, which ones are actively comparison shopping.”

Where Did You Go?

In conducting the report, NetRatings focused on three heavily trafficked shopping sites — Walmart.com (NYSE: WMT), BestBuy.com (NYSE: BBY) and JCPenney.com (NYSE: JCP) — and determined which shoppers at those sites visited a similar site within 10 minutes. Those visitors are most likely to be comparison shopping, Brozek noted.

While shoppers who visited the three sites also visited Amazon in large numbers, just small percentages clicked to the e-tail giant’s site within 10 minutes, suggesting that most were not comparison shopping but perhaps looking for unrelated items.

“Evaluating the data in this way helps identify competitors who are more of a threat or less of a threat,” Brozek said.

Percentage Matters

For instance, 1.5 million people shopped at both BestBuy.com and Amazon in the month of July. But only about 10 percent of those shoppers visited Amazon within 10 minutes of viewing BestBuy.com’s site.

On the other hand, while BestBuy.com and CircuitCity.com shared only about 700,000 common visitors, more than 50 percent of those shoppers visited the two sites within the 10-minute time frame.

Walmart.com is operating in a similar competitive situation. While more than 1.5 million visitors per month visit both it and Amazon, Walmart.com’s real competitive threat is Target.com, which 40 percent of all common visitors clicked to within 10 minutes.

“If e-tailers have this info, they can hone in on different strategies for preventing straying, retaining customers and enticing new ones,” Brozek said.

Little Things Matter

Competitive advantage can best be gained through differentiation, Brozek added. For instance, consumers see electronics as a commodity, viewing all DVD players, for instance, as similar. With only small price differences among major sites, e-tailers that provide extra features are more likely to win, she said. Amazon’s 1-click checkout is an example of an effort to set itself apart.

“When consumers are comparison shopping, they want to ensure they’re getting a good deal, but they’re also looking for the best shipping deal, the fastest delivery or some kind of added freebie or reward,” Brozek said. “The key is differentiating yourself, especially to those customers who you know are looking around.”