Amazon: Angel or Demon?

Wednesday, November 8th, 2017

 One day isn’t enough for Amazon. Oh no, they have just announced that their Black Friday will start on 17th November and run for an incredible 10 days! 

Amazon-Christmas-Advert-2017-Give-60-150x150

Amazon’s 2017 Advert ‘Give’

And not content with staying in the online world, for the first time ever you’ll now be able to visit Amazon in person, with a pop up store launching in London on 21st November.

So, what’s your response to this news? Everyone knows Amazon, has bought something from Amazon and has a love/hate opinion on Amazon. Whichever camp you’re in, if you are a retailer there’s one thing you want to do – sell as much stuff as them.

So what are your options? Put simply, you can turn on your heels and vow to better their offering in every way possible. Alternatively you could send them an email inviting them for dinner and pray they will accept (though you’ll have to pay the bill of course).

Recently our Hive members from major UK retail brands sat down and discussed this very situation. First of all we took Amazon’s two strongest areas, customer understanding and omni-channel service, to examine ways we can learn from this retail giant. Then we said to ourselves, ‘would dinner really be so bad?’

I’d like to share our thoughts with you as it illustrates the state of flux many retailers are experiencing right now.

To win the game with Amazon your brand is your golden egg. Differentiate yourself, delve into your data to find out what your customers have for breakfast every morning. And if you’re hanging onto to data you’ve not looked at for 20 years – bin it. Reward your best customers; segment your data to find out who are your most valuable customers and remember quality not quantity. Your most valuable customer might only purchase twice a year, but if she makes a high spend purchase treat her differently to a more frequent customer.

If you’ve got a store, use it and turn it into an ‘experience’. Will 6 year old Rachel be able to have her Build-A-Bear party with 10 of her best friends crowded round her Mum’s tablet? No. How often do you shop around online for your washing machine and still end up buying it from John Lewis because they offer a 2 year extended guarantee at no extra cost? Especially if you’re a luxury brand, you’ve still got time on your side, for the moment.

However, if Amazon are already on your tail perhaps stocking white label products, counterfeit products (albeit unknowingly) or you don’t yet have a loyal following then take a deep breath and perhaps it’s time for collaboration, but act wisely. Follow Converse and restrict which product lines you sell on the marketplace. Retain control of key areas on which you can compete with Amazon; namely fulfillment, pricing and customer service. So fulfill orders yourself which will allow you to talk directly to your customers and offer promotions through your packaging. Do not let Amazon control your price and do everything you can to get your customers coming back to your own site.

To finish, are we being paranoid? Are we over-exaggerating Amazon’s position in the market? Unfortunately I don’t think so. By 2020, voice will make up 50% of all searches according to comScore and Amazon’s Alexa platform is set to control 70% of the voice search market this year. Following Unilever’s announcement that Alexa will play a key role in Unilever’s Digital Transformation Rahul Welde Unilever’s global VP of Digital Transformation stated “in a couple of years’ time [Alexa] is going to be in every home more or less.” And there’s also the news that for the first time in its 74 year history, Ikea will start selling on marketplaces – no guessing who they will be talking to.

So yes they are big but they are not perfect. Any future Retail strategy worth its salt should include a clear Amazon response. Whether you decide to compete, collaborate or do a bit of both; whether you think they are the ‘devil’ constantly forcing you to squeeze your margins or if they are your ‘angel’ handling your fulfilment headaches, make sure you keep a friendly eye on them and why not do a bit of Christmas shopping while you’re there, you’re bound to get a deal?!

Written by Sophie Mather, Editor, The Hive Network

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