Amazon is on a roll.
Maybe you’ve heard. Not a week goes by, it seems, that some news doesn’t break about the e-commerce pioneer moving to corner a market or launching a new line of business. The financial news is full of stories that include staggering statistics about Amazon’s revenue, or growth, or futuristic patents.
But you know what? Amazon is not inevitable. Amazon can be beaten. Retailers not named Amazon can thrive in a world with Amazon if they focus on the ways they can differentiate themselves from the Seattle heavyweight.
“There is hope,” says Carl Boutet, a retail and customer experience strategist with the Mega Group of Canada. “There is plenty of hope.”
This is the first part of “Thriving in a World with Amazon,” a series of stories that explores where that hope lies. It will look at some of the strategies and tactics underlying some of the other retail success stories in the financial news, stories that sometimes get lost amid all the jaw-dropping coverage of Amazon.
“I don’t think it’s a lost game and everyone should surrender today,” says Harish Abbott, CEO Symphony Commerce, a commerce and fulfillment platform. “Every retailer has the unique promise of the products they carry, the service attached to the products and user experience, including post purchase. Find the niche and what is unique.”
Yory Wurmser, eMarketer’s principal retail analyst, says there are a number of ways retailers can differentiate themselves from Amazon. But in broad strokes, building a better customer experience and harnessing the available trove of customer data to help do that is a good start.
“That’s sort of aspect No. 1, just improving the customer experience,” he says. “That’s in-store and online.”
And that is where data comes in.
“Connected to that is having better customer data,” Wurmser says, “really figuring out what your customer wants, so you can target, based on the person, rather than on the channel or on large segments, to really offer targeted kinds of products.”
Data-driven personalization requires machine-learning and automation
It’s the sort of data-driven personalization that requires harnessing machine-learning and automation, the way Amazon does. But as data-management and analysis has become a must-have in many industries, the tools are certainly available to retailers.
That is not to say wise data use and building a great customer experience are the only keys to success. In fact, there is no one answer. But that’s the good news. Because that means there are many answers, many steps, that retailers can take.
In fact, in posts in this series, we will explore how retailers battling Amazon can set themselves apart by:
- Remembering the brick-and-mortar store: It literally sets most retailers apart from Amazon, existentially. Not only do physical stores provide the best opportunity for the most intimate personal service, they also give retailers a surprising degree of flexibility and a widely distributed system of warehouses and fulfillment centers.
- Stocking unique inventory: Amazon can’t sell what it doesn’t have and consumers can’t buy from Amazon what is available only on your site and in your store. Given Amazon’s broad reach, it’s a tall order but some retailers are successfully pulling it off.
- Providing a unique experience: The physical store is a good start on checking this off the list. But experience doesn’t need to be limited to the brick-and-mortar vibe. There is plenty retailers can do online to distinguish themselves with content, curation, recommendations and providing relevant and personalized search.
- Offering expertise: Amazon is not big on inspiration or instruction. Smart retailers help consumers figure out what products they need for what they want to do. And they help guide them when it comes to using those products once they have them.
- Creative delivery and fulfillment options: No doubt Amazon has wowed consumers with Prime delivery and even one-hour delivery in some places. But you still can’t go to an Amazon warehouse and pick up your order or stroll through an Amazon warehouse touching and trying on items before asking someone to ship them to your house. Speed is great, but not everything.
Of course, there is no universal template. Whether a given strategy makes sense for a given retailer has everything to do with what that retailer sells, what its brand identity is, the kinds of relationships it has built with consumers.
Maybe you’re an apparel retailer that wants to be the place for fashion advice and distinctive styles. Maybe you’re an electronics retailer that wants to offer the kind of advice that takes the stress out of gadget purchases. Maybe you just want to be a place that is fun to shop.
“You’ve just got to think about it and ask, ‘What is it I really want to be?’ before you come up with an answer,” says Kasey Lobaugh, Deloitte’s chief innovation officer for retail & distribution. “Because the answer, it just is different, depending on who you are as a brand.”
One thing is fairly clear, however: It’s past time to have that conversation and past time come up with an answer.
There is no denying that Amazon is a formidable competitor. A recent USA Today analysis of U.S. Commerce Department data and Amazon financial findings concluded that 30 percent of online retail spending in the United States happens on Amazon. An important note: About half that spending occurs on Amazon’s Marketplace, meaning a third-party presumably captures the bulk of that revenue.
And BloomReach’s own research shows that Amazon is increasingly where consumers turn to begin their product searches online. In an October 2015 poll, conducted by Survata, 44 percent of respondents said they started their product searches on Amazon. By this fall, that figure had grown to 55 percent.
The share of respondents who said they start their searches on a retailer’s site, meanwhile, dropped from 21 percent to 16 percent.
But again, parts of the story were overshadowed by Amazon’s dominance. The headline-grabbing statistic resulted from a question that asked consumers where they start their searches. Retailers might be more interested in where consumers end their searches — as in where they actually buy.
On that note, there is hope, to channel Carl Boutet. The Survata data also showed that 70 percent of consumers comparison shop on another retailer’s site, even when they’ve found a product they want on Amazon. And more than half of those shoppers said they double-check most or every time.
The survey also provides some evidence that retailers who build a better site experience could create a powerful draw for customers who currently turn to Amazon to find products.
Better site experience will keep your customers close
Half of those surveyed said they had left a retailer’s site after being unable to find a product online that the knew the retailer carried. And 41 percent have left a site for Amazon after having a poor site-search experience.
While seeing customers leave is bad news for retailers competing with Amazon, it also indicates that there is room for improvement of the sort that would keep customers on retailers’ sites.
Don’t underestimate site experience. Boutet says it’s definitely an opening for those competing against Amazon.
“You’re going to have some deeper experiences online,” he says. “You are going to have retailers that are working on giving you a richer experience than you’d have on Amazon. They’re doubling down on certain technology.”
Maybe that will involved virtual reality or augmented reality, he says. Home goods seller Wayfair is already introducing an augmented reality feature to help customers see how various pieces of furniture will actually look in their homes.
Maybe the deeper experience will be something else entirely. Maybe it will involved providing superior personalization and pinpoint relevance in search results and recommendations. But there are ways that retailers can forge a closer bond with consumers; ways they can attach a feeling to the act of shopping that is missing in Amazon’s vastness.
“Their branding is very little emotion, other than the wow of getting things quickly,” Boutet says. “If you think of Warby Parker, these guys that have created a brand that really speaks to a certain segment of the population. Amazon doesn’t have that. They don’t have that kind of branding.”
It’s an opening that gives retailers a chance to zig while Amazon zags. In fact, it’s just one of the slivers of daylight that smart retailers are racing towards in order to set themselves apart from Amazon.
Mike Cassidy is BloomReach’s storyteller. Contact him at email@example.com. Follow him on Twitter at @mikecassidy.