By Jayne Charneski and Jamie Farnsworth Finn
Amazon recently released its third quarter earnings report and was greeted with headlines that included “Amazon clobbered” and “Amazon’s ugly quarter,” despite the fact that the company’s revenue was up 24% — $70 billion in the third quarter alone, (yes that’s billion with a B). You can tell a company is a powerhouse when $70 billion dollars in three months is considered a bad performance. While Amazon has been a growing behemoth for years, like all things that must go up, at some point it must also go down. But perhaps not by over-investing in its one-day shipping, or overextending cloud-based services. What Amazon may not be considering is the rise of the next generation of socially conscious consumers – Generation Z.
Many of our clients come to us to learn more about Gen Z, which is understandable. They are the largest up and coming group of consumers and they are fundamentally different from Millennials, Gen Xers, and the Boomers before them. The oldest Gen Zs are just 24, meaning we’re just starting to see their impact on culture and as consumers. It’s precisely those reasons Amazon should pay more attention to them; they’re not the same consumers that have contributed to Amazon’s rise from Jeff Bezos’s garage to impending world domination, and they could throw a serious wrench in those plans. Gen Z cares about sustainability, buying local, purchasing from a company with a purpose, rooting for the underdog, and authenticity. These values may not be entirely compatible with the Amazon we know today.
Sustainability is one of the most important issues for Gen Z. They have grown up knowing about climate change, hearing that we’re not doing enough to fix it, and knowing that they will inherit an Earth in crisis. They’re leading climate change marches and putting their money where their mouths are. 74% of Gen Zs we surveyed believe they can help make the world a better place through the brands and corporations they support. And they want to support companies that are environmentally responsible and curb their carbon footprints. Amazon is focused on one-day shipping for anything a consumer may want. We’ve had Zs tell us that they would rather walk outside to buy toilet paper or other household items rather than order them online simply to curb their environmental impact. This could be a problem for Amazon.
Similarly, Zs tell us they want to support their local businesses. Here in New York City, we recently had Zs tell us they like to go to the corner store or bodega for items they need because they see the value in putting their money back into the community they live in. The return to localism has been a trend for a while, but Zs really take it to heart. They really and honestly ask themselves “why would I order that online when I could walk down the street and buy it?”
Company purpose is another area Gen Z wields their purchasing power. They believe companies should be giving back, and companies that are founded with a social good rather than simply profit-driven model are the favorites for Zs. According to our research, 89% of Zs prefer brands and corporations that contribute positive change to the world, and a similar number (84%) are more likely to support a brand if its values and mission are similar to their own. Brands that include social impact into their company from the beginning are extremely popular with Gen Z. Examples include Reformation, the sustainable fashion brand, and Billie, a women’s razor brand that donates revenue to women’s causes and celebrates all types of women and body hair.
Amazon has a great founder story, something Gen Z loves. But the problem for Amazon is that most Gen Zs don’t remember a time before Amazon was the massive, successful company that it is today. They relate more to founders like Tyler Haney of the activewear brand Outdoor Voices, who is accessible, relatable, and aspirational but attainable – just like her brand. Zs want to support her brand and its mission to bring people together while also minimizing environmental impact. Just looking at Tyler’s Instagram posts – blurry selfies, photos of her protesting at climate marches, and pictures of her baby bump – show how accessible she is. Jeff Bezos’s Instagram, by contrast, appears more curated, with professional photos highlighting his speeches, company highlights like the Emmy nominations for The Marvelous Mrs. Maisel, or Jeff speaking at a climate conference. While the theme of their posts might not differ that much, Zs value realness – they like blurry selfies and a protest over a more curated and polished appearance.
To that end, there isn’t much about billionaire Jeff Bezos that is relatable for an 18-year-old. That’s not to say the company isn’t trying, they recently announced their new music festival aimed at younger consumers. The problem? It’s a cliché – trying to reach younger consumers by throwing a branded music festival isn’t entirely original. At best, it’s a half-hearted attempt to win them over, at worst, it’s an inauthentic and shallow attempt to gain their attention. It’s a bit like your parents trying to keep up with the latest music in an attempt to connect; it’s off the mark. That might be even worse for Amazon, as Zs can smell inauthenticity a mile away.
Does this all mean Gen Z will take down Amazon? No, not necessarily. There are a lot of variables for Zs and Amazon in the near and far future. For example, there are plenty of environmentally conscious Millennials who order household items online because they’re juggling family and work obligations. Zs aren’t established in their careers yet, many aren’t even in the workforce, and even more haven’t started families. It’s possible that when they have less free time, they may be more inclined to trade in their values for convenience. But unlike Millennials, their values are baked into their DNA. It will be a much harder trade for them to make. It’s also possible that Amazon will find a way to more authentically engage socially conscious consumers. One effort that’s already underway is their Amazon Smile donation program, which shares a tiny portion (.5%) of each purchase made on the site to charities of the consumer’s choice. It’s not the same as pushing for equality for all, pledging to donate a substantial portion of profits, or reconsidering its contracts with ICE, but it’s not nothing. Only time will tell.