In recent months Amazon has introduce a number of new mobile apps. Most notable is Amazon price-check. This app allows customers to snap a bar code of any product and then send it to Amazon for a price comparison. Now that alone isn’t really revolutionary but combined with ‘order now and ship to home’, this is a very powerful weapon in retail war. With that Amazon has effectively introduced with what so many retailers struggle with, order in store then ship to home.
This feature has the power to reduce traditional brick & mortar to Amazon’s showroom; leaving them with the costs of presenting the product but without participating in the sale. This is a direct threat to traditional business models. I guess it’s not a surprise that retail organisations in the US have started to sue Amazon over this practice. I do though think that this is most likely the wrong response to the threat. It reminds of a similar situation: the music industry gave the wrong response when threaten by digital downloads.
So what can retailers do to embrace this change, by not simply combating Amazon, but also profiting from this trend?
1. Embrace agile commerce
Well I call it agile commerce, others may call it omnichannel, cross channel or multichannel. Though the name of the game isn’t what really matters. Your customers have no idea of the industry names for these channels nor do they care. At this stage you would rather be the ball then the player who kicks it. In business terms all that ultimately matters is your bottom line. The question is not so much how to become a leader in mobile retail or online retail or brick & mortar retail, the simple question is how to become a leader in retail.
In its December issue the Harvard business review paints a far more dramatic picture in their article, ‘The future of shopping’ by Darrel Rigby: ‘unless conventional merchants adopt an entirely new perspective – one that allows them to integrate disparate channels into a single seamless omnichannel experience – they are likely to be swept away.’
The article also states, ‘Customers want everything. They want the advantage of digital, such as broad selection, rich product information, and customer reviews and tips. They want the advantage of physical stores, such as personal service, the ability to touch products, and shopping as an event and an experience’.
2. Rethink your mobile strategy
I think it’s fair to say that mobile is here to stay. Though more differently then many of us had predicted a few years ago. The technological disruption that drives the transformation of retail is in fact mobile and our ‘always on’ society has accelerate the process.
So the answer to Amazon’s mobile apps can’t be a law suite. From where I sit, a comprehensive and enticing mobile strategy is the only way to fight Amazon i.e. if scanning the product tags gets a customer more easily and quickly to the retailers offering (with full transparency on price and product information), customers are most likely to stay with the offering even when it’s somewhat more expensive. Customers very often value convenience over price.
The question is not so much about do we offer a native app or a mobile web app (most likely both anyway), rather what additional value can we add to customers shopping experience. What will encourage them to shop with us? And more importantly, rather shopping with us than with Amazon or anyone else?
3. Redefine the role of your brick & mortar
In the same Harvard business review issue I quoted earlier Ron Johnson, CEO of JC Penny, stated in an interview ‘Retail isn’t broken. Stores are.’ Though that doesn’t mean stores are dead, their role however is changing. As I pointed out earlier, customers are not just looking for a bargain or a quick purchase, shopping after all is still a deeply social experience. This can be aided and supported with online or mobile, but most likely not being replaced. So your shop’s role is changing – maybe they transform into teaching and perhaps test centres. Maybe they stock only products that have a high turn over but offer all other products virtually as an endless aisle. Maybe your stores get reduced in size, which in turn reduces your operational costs, though through online & mobile you can still offer the full range. Your stores and in-store sales personnel could also profit from online personalisation and recommendation. Paired with the sales person as a human being this can be a very powerful weapon above and beyond the very mechanical power shopping Amazon offers. These are just a few ideas, I am sure you see where I am going.
4. Keep your friends close, but your enemies closer
After reading all of this you might think Amazon is your enemy and to some extent that might be true. However, Amazon has a few things to offer that you may want to leverage for your own good.
- Take Amazon’s market place for instance, why not publish your catalogue there too? Thus you can ensure that your products are found when someone is using Amazon’s mobile apps or searches directly on Amazon. In fact, you are profiting from Amazon’s SEO strategy as your products will be visible in Google results which increases your reach with less investment into SEM.
- Use Amazon’s fulfillment power. In case you feel like your logistics aren’t ready yet, stock your products with Amazon’s and let them do the leg work.
5. Rethink how internal processes can deliver value to the customer first
In many organisations, processes run within channels and departments. As long as conversion was a single channel concept this was true and successful. However, that picture has changed forever. Today conversion is not a single channel concept. Google for instance estimates that 71% of all in-store purchases are influenced by online, mobile or other customer touch points, without generating significant additional revenue themselves. It’s not a case of ‘one channel will replace another’, the successful combination of them all will ultimately decide how well the entire organisation does.
In addition, Forrester has recently published a report that urges organisation to rethink how they deliver value to the customer first. In their research they learned that processes bridge departments and organisations are challenged to transform into a target operational model (TOM). As today’s customers journeys involve many touch points so to must internal processes involve many different departments (in-store, online, mobile, marketing and so on and so forth). Forrester defines TOM as follows: First TOM defines the key capabilities of the firm, focusing on those services that deliver value to customers, and then organises end-to-end processes that enable this delivery.
Amazon has certainly become a powerful opponent. But the game is far from over. Organisations that transform themselves quickly and see this as an opportunity have much more to win then to loose. Though the likelihood that today’s retail powerhouses won’t be the one of tomorrow is high. After all who would have thought that Apple would become a powerhouse in music? The situation in retail is pretty much the same as the situation in the music industry back in the late 90s. Now is the time to act.
- Backlash Against Amazon Price Check Builds Steam (ecommercetimes.com)
- Why E-Commerce Gets Dissed By Retail (storefrontbacktalk.com)
- Amazon’s Price Check Slams Retailers (ecommercetimes.com)
- Multichannel in 2011 – a quick recap
- Picture taken from Barefacedbooks