The growth of e-commerce giants, such as Amazon, has soared exponentially in recent years, putting enormous pressure on competing retailers to maintain loyal customers. The sheer scale of Amazon’s success was seen earlier this year when Amazon’s ‘Prime Day’ broke all kinds of records and was described as the ‘largest shopping event in Amazon history’. Prime members bought more than 175 million items during the event, confirming the new reality Amazon has created with its marketplace of convenience and consolidated fulfilment. In fact, for many shoppers, Prime Day or not, it’s now the first point of contact for all manner of products.
A wealth of products; personalised recommendations; secure, seamless checkout; and quick delivery – it’s no surprise that more and more people are spending a significant part of their customer journeys within the Amazon ecosystem. According to reports, a staggering 56 per cent of shoppers in the US, UK, Germany, and France now use Amazon as a starting point for their purchasing journeys. And 51 per cent go to Amazon even if they have found something they like on another site because Amazon offers suggestions, additional information, and price comparisons.
Rise of the Indirect Customer
Aside from the obvious impact to revenue, this market monopolisation has ramifications, particularly in the rich customer intelligence that was previously gathered by individual retailers. The size and scale of the Amazon model has created the classic short- versus long-term dichotomy for the sales and marketing strategies of smaller brands. In the short-term, brands earn revenue when Amazon sells their products; this is good. However, in the long-term, key performance indicators; sales data; and critical consumer intelligence, about who bought what and how frequently, are no longer captured.
At the same time, Amazon has also redefined customer expectations. The proliferation of its Prime program means consumers have become accustomed to free two-day shipping, creating rising customer expectations of any retailer. The National Retail Federation reports that over 49 per cent of millennial-aged consumers in the US now expect free two-day shipping from retailers, and 40 per cent even expect free same-day shipping.
This is putting brands, and marketers in particular, in a difficult position. Customers are increasingly becoming ‘indirect customers’ whose buying habits exist behind an Amazon-shaped veil of mystery. Yet, conversely, now more than ever brands are under pressure to serve personalised customer experiences. A recent study of global consumers found that over half of consumers are willing to share personal data for a more personalised experience, and this consumer-first marketing is expected regardless of where their customers choose to make their purchases.
Levelling the Playing Field
Amazon can boast one of the most advanced data capture and analysis set-ups in the world. However, the AI-powered, next-best-action technology that helps it know exactly which items customers want to purchase next is becoming accessible to all brands. Other machine learning technologies are becoming more accessible by the day, with algorithms that provide marketers with real-time data and insights into customer preferences, removing the guesswork and, therefore, delivering a more personalised experience for customers.
At the same time, marketers can create marketing personalisation from very little data, even anonymous website visitors. While marketers need to obtain as much data as possible to drive relevant, consumer-first marketing, brands are being driven towards innovation because they simply cannot compete on price and fulfilment. Ultimately, an unforgettable customer experience is hard to ship in a cardboard box.
Amazon is incredibly sophisticated at driving repeat sales and long-term loyalty. However, the main reasons for this loyalty are more transactional than emotional in nature. According to e-marketing, customers mostly choose Amazon because of free shipping (70 per cent), price (65 per cent), and two-day or next-day shipping (60 per cent). This means that brands have a real opportunity to stand out by offering captivating experiences.
Competing with Captivating Service
Consumers appreciate Amazon as an efficient product delivery vehicle that helps streamline their shopping. But savvy marketers are finding new ways to insert themselves into the conversation with customer experiences actually worth talking about. A lot of brands are working overtime to get inside their customers’ mind-set. Strategy meetings have moved on from ‘how can we sell more products?’ to ‘how can we keep customers engaged beyond the purchase process and deepen the relationship?’ as this report covers.
There are lots of examples of this. While traditional brick and mortar retailers are having a hard time in the UK, retailers like Footasylum and Adidas are offering hyper-personalised in-store service. This is helping drive footfall in store. We’re also seeing shops connect customer data to service teams, dovetailing with innovations around physical store presence to engage the right audience at the right time. We’re also seeing much greater integration between the on- and off-line world. For too long they operated in silos but it was only a few months ago that we saw the opening of T#e Trending Store in Westfield, London – the world’s first AI-powered shop selling only goods trending on social media.
At the other end of the innovation spectrum, there are tried and trusted methods that work for all brands. Things like upselling online purchases or driving footfall with the offer of meeting an influencer or celebrity still work, especially for millennials keen on experiences. Fashion vlogger, James Charles, single-handedly brought the Birmingham Bullring to a standstill in January with a 30-second appearance. Similarly, customers still value core competencies like high-quality after-care and post-purchase support.
With that said, retailers and marketers can’t ignore Prime Day, or Amazon. So, while working to deliver innovations away from the retail behemoth, there are also things that can be done alongside it too, like sponsored adverts. Amazon ad revenues are currently growing an average of 63.5 per cent year on year and are expected to reach $2.89 billion in revenues by 2018 according to eMarketer. Listing as an Amazon reseller means that brands receive notifications after each sale, together with customers’ email information for follow-up via surveys. It combines the best of both worlds.
Winning in the World of Tomorrow
Marketers now operate in a big-box ecosystem in which customers continue to gravitate towards e-commerce platforms. To compete in this ‘new world’, brands must treat Amazon as yet another arrow in the marketing quiver and align resources accordingly. As Amazon evolves from online marketplace, to product search engine and display ad powerhouse, presenting products in a controlled manner right where the searches and conversions are happening will be critical to survival.
In order for brands to successfully maintain brand loyalty, it is critical that they accept that commerce has changed, and so too has their role within it. But they aren’t powerless; AI-powered technologies give them an opportunity to maintain strong relationships with both direct and indirect customers. Those who fail to embrace these changes risk falling behind, but those with the foresight and ingenuity to embrace technology will give themselves an invaluable competitive advantage.