Threat From Amazon Drives New Strategy, Innovation From Retailers

See the original byline here in MediaPost‘s Marketing Insider

Tackling customer experience challenges and fostering innovation in omnichannel strategy have long been crucial priorities for retailers. But more recently, finding the solutions to those challenges, and a laser focus on eliminating customer friction points, have been more urgent agenda items than ever before thanks to Amazon.

According to Slice Intelligence, Amazon alone accounted for 53% of online sales growth in the United States last year, with more and more customers turning to the marketplace as a destination for everything fast, convenient and seamless. Whether a pure-play e-commerce brand focused on elevating its digital chops, or even a successful omnichannel retailer facing long-term growth challenges, almost anyone you ask would say they’re feeling the heat not just from new consumer demands, but also from the giant that is Amazon.

In a past post, we explored some competitive and collaborative initiatives when it comes to Amazon. Brand experience and personalization are likely the most significant areas of focus when it comes to winning over customers, but if the conversation is around technology prowess, platform abilities, seamless fulfillment, and sheer audience reach, Amazon has clear advantages. As we get into the busy holiday season in retail, enabling meaningful and valuable experiences with customers is where brands should be focusing. But to really take on Amazon, retailers will need to make a substantial commitment to, and investment in innovation, growth and smart partnership strategies. Here’s how we see some big brands getting in the game to compete.

Scale – Walmart and Lord & Taylor Partnership

Walmart.com boasts upwards of 79 million monthly viewers, thanks to its aggressive, customer-centric ecommerce strategy, and a dedication to experimenting with different delivery and fast fulfillment options. It has also made a series of acquisitions of popular brands like Bonobos, Moosejaw and ModCloth, which have given the retailer access to not only a much broader audience, but also the opportunity to understand how to cultivate highly engaged customer audiences from a niche startup e-tailer perspective. But Walmart’s 79 million is of little comparison to Amazon’s current 160 million monthly visitors, which makes scale even more critical for Walmart, along with positioning itself as a valuable shopping destination beyond its discounting roots.

Recently, the company announced a partnership with Lord & Taylor, which will soon have a home to sell product on Walmart’s website. Much like its other partnerships, Lord & Taylor gives Walmart access to additional audiences, particularly higher-income shoppers who may be looking for another, more convenient environment to shop. With Marc Lore at the helm of its ecommerce strategy, Walmart will likely continue to focus on scale, technology innovation and customer experience solutions in order to stay on the heels of Amazon.

Order to Pick Up/Same-Day Delivery –Target’s Drive Up & Same- Day Delivery with FedEx

For time-strapped customers who value convenience, Target’s newly announced Drive Up offers a seamless option for shopping in-app and picking up in store — and better yet, customers don’t even have to leave the comfort of their cars to pick up their Target items.

Through Drive Up and other experimental customer experience offerings, Target has been marketing itself as the world’s fastest, most convenient way to receive merchandise. Here’s how it works: customers place an order through the Target mobile app, and Target notifies that customer when the order is ready to be picked up. Customers alert Target with an “I’m on my way” button and, at the Target destination, an employee greets the customer at one of several designated parking spots. Currently, Target has over 200,000 items available through the Drive Up service, including electronics and home furnishings. While Amazon continues to offer options like same-day delivery, and a new in-home drop-off, it has yet to explore any drive-up options to physical store locations — likely to be a big hit with suburbanites who travel frequently by car.

Target has also been focused on another convenient offering for getting product into its customers’s hands much faster, adding a same-day delivery solution to compete with Amazon Prime’s 1-day, 2-day and same-day options. Target has been testing its same-day delivery across several markets, teaming up with FedEx Ground to transport the products. When customers order by a designated time of day, they’ll be able to receive the package within that same day. Target is clearly using the leverage and scale of its brick-and-mortar to stock and deliver products from its retail stores.

Cloud Computing – Google & Cisco Collaboration

Google and Cisco are teaming up to more effectively compete against Amazon in the cloud computing business. Currently, Amazon (through its Amazon Web Services unit) controls 34% of the cloud business market, while Google owns a much smaller 5%. The partnership between the two companies enables Google to blend its tools and expertise in cloud computing for enterprises with Cisco’s first-class security and networking solutions and experience. Cisco’s portfolio of customers includes some of the largest enterprises and government contracts, and they will bring in Google as their partner to expand their services in an attempt to take real market share from Amazon.

It’s clear that many companies are gearing up for the battle against Amazon. From Walmart to Target in the retail space, to Federal Express in the shipping and logistics, and the Google partnership with Cisco — all of these companies are developing strategies and finding leverage to impede Amazon from completely dominating the marketplace.

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