The Amazon Strategy – Do You Have One?
As the retail landscape continues its seemingly endless path of evolution in the face of shifting consumer demands, retailers find themselves tasked with balancing innovation and growth opportunities and a relentless battle for market share. The competition, whether from similar legacy players in the space or niche newcomers, is always top of mind. Mix that competition with a consumer whose expectations are in constant swing between convenience and a more traditional, personal “brand experience”, and the challenge of identifying strategies that resonate become even more complex.
When it comes to that fine balance of branded experiences versus convenience, one e-tail giant comes to mind for primarily dominating the latter, but has recently been more compelling in its focus on creating great shopping experiences between consumers and brands on its platform – Amazon.
Amazon has likely been on the minds of retailers over the last few years, and for some, it may have directly threatened the livelihood of their business, or disrupted their overall go-to-market strategy. Amazon headlines have frequented both the business and industry trades over recent weeks, with announcements surrounding a “try before you buy” Prime member beta, leading sporting goods retailer, Nike, deciding to sell direct on the platform and an intriguing acquisition of Whole Foods. These three moves are fairly telling of Amazon’s plans to expand not only across different product verticals and brand partnerships, but also to evolve their value proposition to customers, advertisers and brands. Some companies may view Amazon like the ultimate love/hate relationship – a partner distributor with massive reach, scale, customer data and revenue opportunities, and simultaneously a heated competitor, stealing away shoppers not through necessarily stellar brand experiences, but rather through sheer convenience.
How to Think About Your ‘Amazon Strategy’
So, what can we make of Amazon’s latest moves and what those implications may mean for building out either a competing or collaborative strategy? What we can speculate now, is that Amazon is thinking much more carefully about its customers, what matters most to them, and how that may possibly play into its long term digital and ecommerce strategy. Amazon continues to make waves in its retail and Fashion category, making recent hires of top fashion designers, and attempts at integrating a more curated feel to its site. But, we know that’s not the only thing brewing at Amazon, which means that now more than ever, it’s critical to be thinking of your own “Amazon Strategy” from both a competitive and/or supportive angle.
A Competitive Approach to Amazon
While brick and mortar growth projections in the US are dipping, there is still something to be said of the innate habits ingrained in people to shop in store, and to want an individualized experience with a brand and its product. Consumers have been shown to crave that same kind of personalized, compelling brand relationship online, where they can engage through means like social media, an interactive site experience or great storytelling through visual or video ad formats. Striking that level of brand loyalty is something retailers actually have over Amazon, given that the vast majority of shoppers don’t go to Amazon’s site seeking engagement opportunities with their favorite brands; rather, they go because it’s quick, easy and convenient. On top of that, Amazon’s shopping and site experiences haven’t always won with customers, with its somewhat clunky, overcrowded interface.
Generating and sustaining loyalty from customers through experiences, both designed uniquely for them, and uniquely on brand, creates a huge advantage for retailers – but this makes it critically important to continue evaluating and innovating the offer to customers, and keeping them assured they can’t get it anywhere else. In the same vein, brands can also maintain an edge by keeping their products exclusive to their own ecommerce and brick and mortars, further emphasizing the direct to consumer approach.
Consumers’ expectations have changed dramatically in relation to when and where they want their products, and how quickly they can exchange or return if something isn’t the right buy. Aside from competing with Amazon through a customer/brand loyalty approach, retailers can also match or even surpass Amazon’s offer around fast fulfillment. One of the most enticing elements of Amazon Prime is the instant gratification that comes with free 1 Day or 2 Day shipping (sometimes even 2 hour shipping!). If fast and free shipping is a feasible option, it can give your brand a leg up over Amazon, or at least a chance to compete on an even playing field. The option of returning/exchanging for free online or when appropriate, in store, is another competitive edge. For customers that prefer to shop in the comfort of their homes, BOPUS (buy online, pick up in store) allows retailers to provide same day fulfillment, and should be considered. It’s another way to get ahead of Amazon in terms of a completely seamless buying experience.
A Partner Approach to Amazon
Distribution and Scale
From a distribution and reach standpoint, Amazon is an unmatched partner. The number of consumers on the platform continues increasing an impressive rates, with more shoppers demonstrating an openness to using Amazon as a destination for apparel and other personal goods. Most importantly, Amazon represents huge growth potential – for brands like Nike and IKEA, selling directly to their customers via Amazon can lead to massive increases in sales globally, and it also puts more protection and control around the brand by phasing out unlicensed resellers.
Customer Insights + Advertising
With the sheer amount of traffic on Amazon’s site, it also presents enticing opportunities for advertisers. Much like Facebook and Google have tremendous insight into the behavior of their users, Amazon’s evolving insights of how customers shop makes it an attractive place for ad programs, so long as they also continue to evolve their formats and offerings. eMarketer estimates that Amazon’s ad sales will jump by a third to $1.5 billion this year, with potential to reach $2.4 billion by 2019. Some agencies have even considered a completely Amazon-centric solution, focused on combining ecommerce and media growth across the entire Amazon ecosystem. Opportunities like expanding a display program through Amazon’s Media Group may be worthy of exploration, given the current reality.