Another Amazon Prime Day is just around the corner and peak holiday sales season is not far away. So now is the time for brands to evaluate and optimise operations to ensure a strong finish to the year. But as retailers and brands with DTC ecommerce channels know, meeting online customer expectations in an Amazon-dominated environment is challenging to say the least.
Amazon’s disruption to commerce has been so profound, there is a term for it: The Amazon Effect. Essentially, The Amazon Effect refers to the ways in which consumer expectations have changed as a result of shopping with the dominant online marketplace. And to be sure, the effect is far-reaching. From the shuttering of physical stores to seismic shifts in logistics operations, many blame The Amazon Effect.
Putting a name to Amazon’s impact on the commercial landscape is one thing. It’s another to develop strategies and procedures that meet customer expectations without damaging revenue and profits. But in order to compete, brands need to do just that.
Setting the Ecommerce Standard
During the pandemic and its lockdowns, global consumers took to online shopping for a variety of reasons. With many physical shops shuttered, consumers purchased essentials online then had them delivered or picked up curbside. Other shoppers went online to purchase things that made lockdown life more tolerable: comfortable work-from-home wardrobes, houseplants, new décor and furniture for the home office and pet supplies.
While this was good news for brands that had or could set up ecommerce channels, it may have accelerated and intensified The Amazon Effect. How?
Author, consultant and visiting fellow at the Cranford School of Management Sean Culey wrote:
“[The pandemic] exposed late adopters to e-commerce while increasing the volume of trade from those people who were already well-versed in online shopping… 74% of these new e-commerce customers started their experience with Amazon, causing a massive increase in the online giant’s revenues and profit, with the company achieving $96.1 billion in sales in Q3 2020.”
For nearly 3 in 4 first-time ecommerce shoppers, their first (and only, to that point) online buying experience was with Amazon and its seamless checkout, fast delivery and exceptional customer support. Amazon set the bar. These customers would have no reason to expect anything less than an Amazon-like experience everywhere they shop.
What the Customers Say
Not only do Amazon shoppers report high satisfaction with their experiences, but customer feedback for other retail sites suffers as a result. As one study summarised:
“On a more general level, this evidence consistently fits with the statement that Amazon has increased customers’ expectations regarding retailing and therefore has decreased customer satisfaction towards other retailers. In addition, customers that buy through Amazon are generally more satisfied than those that buy through other channels.”
Customers don’t have to have a bad experience to be dissatisfied with a brand’s online store. They just have to have a non-Amazon experience.
Key Features of the Amazon Experience (and How Brands can Apply Them)
So if Amazon is the standard, what do customers experience that sets the site apart? Here are a few ways Amazon has raised the bar and how brands can apply The Amazon Effect for themselves.
Seamless Experience
From product research to returns, Amazon’s customer journey is seamless. Shoppers can start research on a laptop, compare prices in a store and then complete an order on a mobile phone. Returns can be sent back via a courier or returned to a physical location like Kohl’s. Amazon is everywhere the customer is.
Omnichannel is here to stay. Customers love the convenience, and brands benefit by always being where the customer is. From the online storefront to the app to the payments page and package tracking, brands that think omnichannel-first are better positioned to onboard new products or services that facilitate sales.
Immediacy and Optionality
Amazon gives shoppers the ability to buy what they want on their terms and in the way they want. Compared to brick-and-mortar stores and even other ecommerce sites, Amazon gives shoppers more options (colours, sizes, models). In addition to choice within a product or product category, shoppers can order multiple product categories at once and in one place – all without leaving home.
Author, speaker and consultant Jeff Fromm puts it this way:
“If [shoppers] needed groceries, they went to the market or before markets a fruit stand. If they needed a new shirt, they went to the department store. If they needed to replace a light bulb, they went to the hardware store. Then along came the Internet and the subsequent boom of online retailers and e-commerce, which not only changed the consumer journey, but also made change very difficult for brands with heavy equity in old distribution models.”
Not only can customers buy everything they needed online, they could do it at one place – Amazon.
When selling to a global market, brands may find themselves unable to offer an entire catalogue due to country-specific restrictions and requirements. But since customers demand choice, global brands need the right partners with the expertise to broaden the product catalogue. These partners enable brands to offer more products to more customers in more places.
Customisation
Amazon makes excellent use of customer data. The marketplace collects shopper data and uses it to offer personalised recommendations for other products they might like. So even though the website has more choices than any person could reasonably deal with, data narrows down product choices and serves the shopper the items they are most likely to buy.
Brands can also use customer data to customise the shopping experience – if they own their own customer data. The value and importance of owning customer data cannot be overstated. Without it, brands are at the mercy of third party and marketplace vendors. But brands that capture zero and first party data can customise the customer journey and meet and exceed customer expectations.
Subscription Incentives
Amazon Prime Day began as a sale to reward Amazon Prime members (and celebrate Amazon’s birthday). Part of the marketplace’s success is its ability to demonstrate the value of its Prime membership. For $139 per year customers receive free expedited shipping, access to television and movies as well as other perks. Amazon offers other subscription services as well including grocery and household items on subscription and automatic shipments.
Subscriptions are a great way to earn automatic income. But brands must carefully evaluate which kinds of subscriptions – if any – are appropriate for their products. Beauty brands are well suited for subscriptions. This is especially true if the brand can personalise the products to the shopper’s preferences or specific skin concerns.
Consumer electronics brands may opt to offer subscriptions that provides early access to games and accessories, NFTs or other digital products.
No matter how brands choose to handle subscriptions, they need to have the right logistics in place. Without proper inventory management, warehousing, packing and shipping, customers will sour on the experience and cancel the subscription.
Fast Shipping
One of the first things nearly everyone associates with Amazon is fast, free shipping. Shoppers submit an order and it arrives in two days (even faster depending on the situation). As the ecommerce giant continues to optimise its logistics operations, shipping times are only going get faster. In some markets, customers can pay to receive their order in an hour.
The near instant gratification of two-day delivery delights shoppers. But it also applies pressure on retailers to offer the same no-cost delivery that arrives in no time. These expectations are especially difficult for brands doing business cross border. Items may leave the warehouse quickly but then get caught in customs for days or weeks.
To better guarantee reliable global shipping that exceeds customer expectations, brands can partner with vendors who can improve delivery times. Multi-local delivery solutions, including in-country warehousing, remove the customs barrier between the brand and the customer. Engaging a vetted logistics network that understands and complies with territory regulations, eases shipping and delivery pressures.
The Takeaway
Most brands cannot compete with Amazon on every level. The scale of Amazon’s operation is immense. But global brands with online sales channels don’t have to compete on every level. Instead, they can compete on the levels that matter most to their customers.
Brands that own their customer data can offer the personalised experience shoppers expect. Brands that outsource to optimise logistics and partner for economies of scale move more merchandise into more territories quicker.
No matter what your brand’s goals are, ESW can help you get there and sustain your success. Contact us today to learn how.
