Why Amazon is struggling to reach Gen Z

Though Amazon’s retail stronghold continues to pose a threat to companies both large and small, there’s one demographic the e-commerce giant has yet to crack: Gen Z.

According to a report by Yes Lifecycle Marketing, Gen Z consumers, more than any other generation, choose to shop at other retailers besides Amazon, with 31 percent citing that they prefer the in-store shopping experience. Additionally, in a survey of whether individuals made a purchase on the platform in the last month, 79 percent of millennials reported they had, while just 62 percent of Gen Z said the same.

Ed Kennedy, senior director of commerce at Episerver, said Amazon isn’t appealing to experience-driven Gen Z shoppers, in large part because the platform’s main value proposition — namely convenience and cost — doesn’t speak to them. While older generations are busy managing careers and families, Gen Z has time and disposable income and is seeking unique retail experiences.

“When you’re catering to a younger audience in apparel, your store has to be a destination. It has to be an immersive experience,” Kennedy said.

Further, whereas older shoppers are drawn to services like Amazon Prime and Amazon’s private label brands that offer apparel and home goods at bargain prices, younger shoppers are more interested in staying on trend. Kennedy said this presents another barrier to engaging with Gen Z, as Amazon continues to struggle to get major name brands on the site, citing that Nike just began selling on the platform in June 2017. In the Yes Lifecycle Marketing study, only 29 percent of Gen Z’ers cited product selection as a driving factor to using Amazon, compared to 59 percent for Baby Boomers.

However, Kennedy said Amazon’s biggest downfall in attracting Gen Z shoppers is its failure to meet them on social media, a channel where an increasing number of users are making purchases. This rising trend — aided by the evolution of shopping tools on platforms like Instagram that allow users to tap on a post to learn more about featured products and then go straight to a brand’s e-commerce site — is driving peers like eBay to invest in social campaigns of their own.

“Gen Z wants to shop through social. The product experience is exposed through social media,” he said. “It’s people asking for opinions and recommending products to one another. Brands and retailers are investing in social — both organic and paid sponsored content, like influencer marketing. Amazon is not doing any of that. You don’t pull up Instagram and see Amazon doing influencer marketing. If they wanted to go after and nurture Gen Z, they need to go where those consumers are, which is on social media.”

The Yes Lifecycle Marketing report also shined a light on misconceptions among Gen Z and Baby Boomer shoppers, particularly that younger generations are only shopping online and older generations only shop in brick-and-mortar institutions.

“While marketers may assume that [Gen Z] and millennials are digital-only shoppers, these age groups responded the same as older generations when asked about the importance of the in-store experience,” the report states. “Similarly, Baby Boomers, a generation marketers might assume is more averse to online shopping, find brand e-commerce sites as important as the in-store experience.”

Ultimately, Kennedy said Amazon will eventually capture these younger shoppers as they age and the benefits of the platform become more relevant to them. “The business model is around price and convenience, not experiences, the way a Gen-Z shopper might be looking for.”

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