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Should retailers try to out-Amazon Amazon?

By Wanda Cadigan , Wednesday, May 2, 2018

E-commerce Insights blog

Some traditional retailers must think it’s all over—that Amazon can’t be stopped. B2B organizations are also waking up to the realization that they may have become a little too complacent allowing historic distribution channels to act as their brand ambassadors. Seemingly overnight, Amazon can appear in a market and cause angst and fear of disintermediation.

That’s probably how pharmaceutical middlemen must feel about now with Amazon’s rumored entry into their space. And FedEx and UPS might also be concerned about Amazon, as the Wall Street Journal just announced Amazon’s foray into the delivery space in direct competition. The service has been called “Shipping with Amazon,” or SWA, and is expected to test in the Los Angeles market with independent merchants on its site, then roll out gradually across the company. With stories like this appearing almost every day, it seems like Amazon is everywhere.

So it’s no wonder that some brands believe there’s no way to out-Amazon Amazon. But should you even try? Here are a few questions to consider before answering that question.

Does Amazon help build your brand?

For smaller companies just introducing product to market, selling through Amazon could help with exposure. But many larger companies say the reason they’re with Amazon is to go to where the traffic is. This is the modern equivalent of the old retail adage “location, location, location.” In other words, go where the customers live. Amazon is a well-established destination for consumers, which can help move your product. However, there is a cost for convenience and location:

...But do you recognize that brand name in the search results while looking for a new button-down, Oxford shirt? That’s because it’s one of Amazon’s rumored 29-and-growing private-label apparel brands (out of its total of 40 private label brands). You’re delivering your customers to the potential competition.

Does Amazon help educate customers on your product?

While Amazon gives shoppers an abundance of choices, it doesn’t provide the information that a shopper may need before they click the checkout button. For all its strengths, Amazon remains highly spartan in an era when customer expectations are demanding more and more from their online experiences.

Amazon’s weakness isn’t hard to see. Search for a product—any product. Your search results will number in the 10s, 50s, or even 100s of thousands of results. The numbers sound impressive, but what is someone supposed to do with all those choices? How does that help anyone who doesn’t already know what they want? There must be a better way—and there is.

The answer rests in presenting relevant content to help buyers in their journey. It means educating your shoppers with information that speaks directly to what that shopper needs to know at that moment. To do that, you need a solution that we call “contextual commerce”.

Does Amazon help create customer loyalty?

The ultimate goal for online commerce is far more strategic than getting a product into a shopping cart. Think about it. Most brands abandon customers right at the precise moment they have an opportunity to delight them—once they have their product. Points-based loyalty cards have their place, but post-purchase nurturing is the new customer loyalty. To engender real customer loyalty, brands need to deliver value at all stages of the customer lifecycle. They need a solution that blends content and commerce in a way that empowers shoppers with the answer they need before they even ask the question—during their deliberation—and after they buy and use the product.

Does Amazon help improve your customer experience?

This is a tricky question: Does Amazon help your customer experience? As per the preceding examples, Amazon does not typically help build your brand, educate your customer, nurture customers post purchase, or create a new level of loyalty. However, where Amazon shines is in fulfillment. Customers want and expect easy and fast fulfillment. For most companies, logistics supporting the growth in online sales has not kept up with rising customer expectations. This is not just an Amazon effect; look at Uber, Airbnb—and Silvercar, my new favorite car rental service. What are they doing right? They’re shortening the path to product. Significantly.

Finally, how important is your data to you?

While the lure of a ready-built market can be too tempting for many companies to resist, it’s important for retailers to remember the true cost of selling on Amazon. The loss of valuable customer data that would otherwise inform product development, marketing, sales, and merchandising strategies. Without data and direct access to customers, it’s easy to see how retailers could become over reliant on Amazon and lose their way.

While there are definitely lessons to be learned from Amazon, there is often a cost for convenience. For many brands, the reality is that they have to consider a sell-with strategy for Amazon. After all, Amazon will not build their brand or focus on improving their customer loyalty.

It’s more important than ever that brands not delegate control of brand, experience, loyalty, and data completely to Amazon. It’s a slippery slope. The Toy “R” Us bankruptcy is a great wake-up call that simply partnering with Amazon is not a panacea. Brands need to delight customers at every stage of the buying lifecycle.

 

Wanda Cadigan is Vice President for Commerce at Sitecore. Find her on LinkedIn.

 

This post originally appeared in Retail Customer Experience.

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