President Trump is decidedly in the minority when it comes to disliking Amazon AMZN, -4.16%
Amazon’s stock fell sharply last week following a report from online news outlet Axios that quoted an unidentified source saying that Trump was looking for ways to target the online retailer. White House Press Secretary Sarah Sanders played down the report on Wednesday, only for Trump to tweet criticisms of Amazon on Thursday morning and send its stock reeling again. “I have stated my concerns with Amazon long before the Election,” Trump wrote.
On Monday Trump renewed his attacks, tweeting again about Amazon competing with the U.S. Postal Service and saying that the mega-retailer is not “on a level playing field” with other businesses.
While Trump may not be a fan of Amazon — or its multibillionaire founder Jeff Bezos — consumers aren’t likely to turn their backs on the company anytime soon, analysts say.
And Trump’s tweets probably won’t change consumer perception much, said Scott Galloway, a professor at New York University’s Stern School of Business and author of “The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google.” “The core base of Trump [supporters] who are inclined to like or not like whatever he likes or doesn’t like quite frankly is not Amazon’s target market,” Galloway said. “I see no evidence that consumers have any trepidation regarding Amazon.”
In 2017, Amazon.com ranked as the top brand in the U.S. in terms of positive buzz among the American public, according to YouGov BrandIndex, the division of the global analytics firm that tracks public perception of brands through daily online surveys. It was the fifth straight year Amazon.com topped the annual ranking, beating powerful brands like Netflix NFLX, -4.14% YouTube and Google GOOGL, -1.84% Separately, Amazon Prime — the retailer’s $99 a year membership program, which comes with various perks — ranked third on the YouGov BrandIndex list. (Amazon did not respond to a request for comment regarding this story.)
All told, 33% more people have favorable opinions of Amazon.com rather than negative. For Amazon Prime, that figure was 28% in 2017.
|Top brands by positive buzz in 2017|
|Source: YouGov BrandIndex|
Amazon not only attracts positive opinions — but also loyalty. A June 2016 study from Chicago-based research firm Consumer Intelligence Research Partners, found that 91% of first-year Amazon Prime subscribers renewed for a second year, up from just over 80% in 2014. That figure was even higher among second-year Amazon Prime members: 96% of them chose to keep their membership for a third year.
Why Amazon succeeds at staying in consumers’ good graces
Amazon has earned that positive perception and loyalty by following in the footsteps of another once-dominant retailer, said Michael Levin, partner and co-founder of Consumer Intelligence Research Partners. “The nearest analogy I can think of is Sears,” Levin said. “Sears went from being a retailer to provide financial services and home repair services.”
Unlike with 132-year-old Sears SHLD, -2.25% which has struggled to remain relevant as it closes stores and sales decline, Amazon’s attempt at diversifying its offerings has paid off in the longer term. Amazon Prime transformed from a subscription service offering free two-day shipping and discounted one-day shipping to a service that gives consumers movie and music streaming, photo storage and access to a massive library of e-books, among other features.
And now with its Echo smart speaker and the Alexa virtual assistant, Amazon is becoming a leader in the home automation space. And studies have shown that these devices further solidify brand loyalty and encourage consumers to spend more.
But Amazon could come up against the risks associated with ubiquity
Retail dominance is not without its drawbacks. Take Walmart WMT, -2.69% : As the big-box retailer became a behemoth in the American retail landscape, detractors came out of the woodwork. The company faced criticism for underpaying workers, and importing too many of its products from overseas. Documentaries showcased how the retailer’s low prices ultimately forced many mom-and-pop businesses to shutter when they couldn’t keep up.
Although it still lags behind Walmart and other brick-and-mortar rivals in terms of revenue, Amazon is — at least in the minds of many Americans — now moving into the role of “the 800-pound gorilla in the retail space” that Walmart once filled, said Ted Marzilli, CEO of Data Products at YouGov and leader of the BrandIndex business unit. That could open the brand up to increased criticism.
Cracks are already beginning to show. Research has shown that Amazon hurts local retail employment and that its warehouses may prompt lower wages in the communities where they are located.
Then there’s the risk of Amazon becoming a necessary evil, similar to a company like Facebook, which some users regard as a tool they depend on reluctantly. But Amazon has a weapon against this, Levin said: Its strong customer service policies, which help to counteract negative sentiment on the part of shoppers and Prime members.
And much like Facebook FB, -2.10% it will take a lot more than a single scandal to prompt a mass exodus from Amazon. “There’s a lot of consumer dissonance,” said Galloway. “Consumers talk a big game about social justice but they want that little black dress for $9.99 and that espresso pot delivered for free.”
Why Trump remains a threat to Amazon
If there is a revolution against Amazon, it won’t be consumer-led, Galloway argued. Some argue that Trump may talk big but is unlikely to act on his tweets. But if Trump’s tweets indicate his policy perspective, that would spell trouble for the retailer.
Some have said Bezos’ ownership of The Washington Post could become a sticking point for Trump based on the paper’s coverage.
Hedge fund manager Douglas Kass warned last July, in the wake of Amazon’s Whole Foods acquisition, that the company could soon come up against a government-led antitrust case. “I am shorting Amazon today because I have learned that there are currently early discussions and due diligence being considered in the legislative chambers in Washington, D.C. with regard to possible antitrust opposition to Amazon’s business practices,” Kass, who is the head of Seabreeze Partners Management, wrote at the time.
Japanese regulators raised antitrust concerns against Amazon’s unit there this month for the second time in two years.
This story was originally published on March 30, 2018 and updated on April 2, 2018.