Thanks to smartphones, Amazon is softly killing retail shopping and is better at it than Google


The smartphone revolution has proved to be quite a disruptor. While it has opened new opportuities for many new startups, it has brought whole new behaviors into our lives that are making life a bit “hot under the collar” for older, established industries. One of the most impacted industries — retail. With smartphones in our pocket, we are starting to do price matching for pretty much everything, betting there is a cheaper option somewhere else.
It is something I have written about and talked about often, and every day we have more evidence of this concept of show rooming — price matching of products in physical stores on smartphones and looking around for discounts/bargains.
The biggest beneficiary of these searches is Amazon (s AMZN) — twice as much so as Google (s GOOG) — according to a study released by Pargo, a Lewisville, Texas-based commerce and rewards company. The company surveyed 1,043 US smartphone owners (53 percent female, 47 percent male) in June 2013 and summed up the results in Dynamic Pricing in Smartphone World. Here are some of the highlights (and points illustrated with the help of graphics from the study):

  • pargoshowrooming158% of adult smartphone users and 1/3 of all US adult shoppers now regularly “showroom.”
  • A price difference of just $5 can sway shoppers from in-store to Amazon purchasing
  • comparison shopping on a smartphone while in-store is up 400% over last year
  • Not only is Amazon #1, but it is used for showrooming 2x more than the next option, Google.
  • For 46%, price is king when it comes to comparison shopping on smartphones while in-store
  • 59% of households with $200,000+ annual incomes buy on their phones weekly while in-store.
  • The higher the income, the greater the propensity to switch to Amazon to save $5 on a $50 item.
  • A 5% discount on a $500+ item that is not an exact match, but is similar, can switch half of all shoppers to Amazon.

The shocking part of this survey is the relative indifference to Google as a source for price comparison and how far behind they are Amazon. The reason we see Amazon’s name come up so often is because they have done a good job of locking people in with their Amazon Prime service which allows you to get free delivery of as many goods as long as you pay an annual subscription fee  — it is a good way for them to keep people buying from them.
In addition, Amazon has done a great job of reducing the time of delivery of goods by opening up warehouses and distribution centers closer to major cities, thus making it easy for people to make the decision to wait for a day or two and save some money.