Amazon UK sales growth slows as brand reputation hit

Amazon’s UK sales growth has slowed over the past year as consumer perceptions of the brand fell after criticism of the amount of tax the firm pays and traditional retailers upped their online game.

Accounts filed by Amazon in the US show that the company’s UK sales were $7.29bn (£4.47bn) in 2013, an increase of 12.6 per cent year on year. However, that is a slowdown from 2012, when revenues grew by 21.1 per cent.

The slowdown was despite total online sales growing by 16 per cent in 2013, up from 14 per cent in 2012, according to figures from IMRG.

The slowdown in revenue growth comes after Amazon came under fire last year over the amount of corporation tax it pays in the UK. Both MPs and consumer groups have called for people to stop shopping at the ecommerce firm over its low tax payments, which came in at £3.2m in 2012 in part because it processes sales from its offices in Luxembourg.

Figures from YouGov’s Brand Index show a drop in consumer perceptions of Amazon over the past year. The firm’s “Reputation” and “Recommend” scores have both fallen by 7.1 points over the past year, while its “Index” score, a measure of the overall performance of a brand that takes into account metrics including satisfaction, value and quality, fell 4.4 points.

In a recent study by Nunwood, Amazon lost its place as the top brand for customer experience among UK shoppers, pushed into fourth place by John Lewis, QVC and First Direct. At the time, Nunwood’s director David Conway attributed much of Amazon’s drop to the “adverse publicity” it received over its tax arrangements and its negative impact on the brand.

Traditional retailers have also increased competition in the ecommerce space, focusing on improving their online operations and making delivery more convenient through click-and-collect services that make use of their physical stores. John Lewis is making use of its Waitrose stores, while Argos has inked a deal with eBay so people can pick up orders in its stores.

James McGregor, director at retail consultants Retail Remedy, says: “Amazon is in an increasingly competitive space. Other major retailers are wising up to the Amazon model and this will inevitably impact its sales.

“One weakness in the Amazon model, which other major retailers are exploiting, is the click-and-collect proposition. You can click with Amazon but you can’t collect and it’s likely that this is leading some consumers to buy elsewhere.”

Many are also taking the price battle to Amazon. Dixons CEO Sebastian James recently said the firm plans to launch a price comparison app that will let customers scan products in store and show competitors’ prices, including online rivals such as Amazon.

Despite the revenue slowdown and rising competition, Amazon’s sales growth does continue to outpace many of its high street rivals and the ecommerce site has made a number of improvements to its service, including launching Sunday delivery.

“While revenues have been coming down, this growth is no mean feat and something that many retailers in the current climate would give and arm and a leg for.”

Latest from Marketing Week

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here