Wake up, retailers: Amazon’s seven-day shipping means you need to regroup. Now

21 Comments

Credit: Corbis / Patricia Curi

Not to be content with creating the showrooming movement, Amazon recently announced it will start making deliveries on Sundays (possibly by drones). While this service will initially be available in just a few cities, it’s just a matter of time before it becomes commonplace across the U.S. But why should this matter to retailers? And, more importantly, what can they do about it?

Amazon has always captured the consumer through experience, price and convenience; with this new offering, the company will now be delivering speed – and enhanced convenience. Amazon has its finger on the pulse of not only today’s shopper, but also tomorrow’s customer. Amazon is slowly chipping away at the frustrations of shopping.

AmazonDrone2

While fear is a natural reaction to Amazon’s business model (and indisputable success), it’s the wrong response from retailers. If retailers want to have a fighting chance, they need to regroup, educate themselves and take action – now.

So, here are five actions retailers can do to give themselves a fighting chance – because Amazon isn’t going away anytime soon.

  1. Get personal.

    The most critical element retailers need to remember: Consumers are human. While it sounds obvious and cliché, the truth is, it’s easy to hide behind email lists, foot-traffic numbers, website visitors and app downloads. But at the other side of all of that information is a human who wants to be sure they’re getting the right item at the price in the fastest way possible.

    Never has this been easier or more doable than today. Retailers and marketers can now provide the most personalized experience shoppers have ever known. Why should Amazon be the only one making recommendations about products consumers might like? With the technology available today, you can let your valued customer know about special sales the day before they happen, that new shipments of his/her favorite brands have just arrived or that offers are about to expire.

  2. Know your options.

    Technology continues to evolve, leaving many retailers feeling lost and overwhelmed. While it can seem daunting to keep up with the latest trends, it’s important to know your options and their corresponding benefits. For example, while most companies know the important role mobile can play, they don’t know exactly how to develop and deploy a strategy that will resonate with their audiences. Many design and launch an app, just to have a “mobile strategy.”

    Always start with your customer in mind. When they take out their phone in your store, what do they want? What’s their mission? Think of how you can fulfill that mission. Don’t forget to think beyond the app. Mobile offers so many opportunities to enhance your customer’s unique experience with your brand – and in ways more personal than any other channels. Become familiar with tools such as mobile wallets (e.g., Google Wallet or Apple’s Passbook), SMS and MMS and design ways to build the most relevant of these into your multichannel strategy.

  3. Omni is the only channel.

    Speaking of multichannel strategies, omnichannel is no longer a buzzword – it’s reality. Integrating seamless customer experiences across all available shopping channels is a must. A customer’s experience with Amazon can begin at several different points – the Web, a mobile phone, a tablet, etc. – and ends on the doorstep (even on Sunday).

    Ask yourself these questions: How will your mobile strategy complement and support your Web experience? What opportunities are you offering consumers to use their mobile phones to enhance their in-store experience? How do you connect with your customers when they’re not in your store or on your site? If you don’t have answers to these questions, I would recommend you find some…soon.

  4. Stop playing catch up.

    Just like how it “led” the showrooming movement, Amazon continues to give consumers the experience they desire. To compete against this, you need to not only deploy a mobile strategy, you need to really understand how the customer uses their mobile phone during the buying process. When a customer uses his or her phone, they’re using the phone as a tool to solve a mission they have. It might be finding product reviews. Or making sure they’re getting the market price for a product.

    Start with a small experiment to deliver a tool for your customer. Read a lot. Experiment again. Only in trying new things, measuring impact and revising based on what worked and what didn’t will help you learn what’s going to stick for your customers. Starbucks tried mobile payment in stores, decided it worked and rolled it out in the same amount of time it took most retailers to hire a consultant to figure out their mobile strategy.

  5. Don’t be afraid to fail.

    You can’t experiment without failure. And you can’t compete if you don’t try. The best thing about technology today is that it allows you to do things quickly – and often with minimal investment – to sample them. Mobile app didn’t stick? Try a mobile wallet campaign. Email campaign wasn’t a success? Try delivering a new in-store experience. To keep up and succeed today, you need to adopt a “rinse-wash-and-repeat” mentality.

Because Amazon’s new delivery option is definitely a sign of things to come, it represents more reason than ever for retailers to think about alternative strategies, such as mobile, to drive customers into their brick-and-mortar stores.

Alex Campbell is co-founder and chief innovation officer of Vibes. Follow him on Twitter @alexgcampbell.

21 Comments

Alex

What retailers “forgot” is that they exist for the purpose of “instant gratification”. This means that they need to predict what I want to buy and have it in stock.

I laugh every time someone at a store tells me “Oh we don’t have it in stock, but we can order it for you”. Hey, dummy, *so can I* and I would get it for *cheaper*. So why would I want to add you to the transaction?!

jmac

I ordered from HBC in Canada and Best Buy as well, and both were quicker than Amazon with really good service. Let’s also not forget Amazon has yet to actually make money!!! Most retailers do not have the luxury of being allowed to be upside down in their financials.

Akhilesh Anakapally

A good read, however more biased towards amazon, i think the other retailers are already quite educated by now and ready to compete with amazon by improving their shipping capabilities (For example shipping from their store warehouses depending on customer location, shipping it for free if customer is in the store and not able to find the item)

and competing in pricing having two prices for each product online price and store price. Also there are quite a few things/ products which people would like to get the feel of it before they actually buy it consider a mattress, dishwasher, shoes and so on..

BeeKaay

And don’t forget to hire US Citizens. There are hordes of US Citizens out of work, so don’t go to the government whining about your need for H1B visa holders.

Mick Thomas

But look at the true profit of Amazon, not it’s over inflated stock. ? Drone shipping common place in a matter of time? – Not likely. Drones are meant to be used in dense, highly populated areas. Suburbia and rural are not candidates.
People will always like brick and mortar stores. I think I read this same article back in 99. Hilarious.

Vivek Sood

Amazon’s Drones – How Viable?

This is from my blog post by the above name:
Amazon is known for its bold moves, innovation and customer centric thinking. Just yesterday it released a video of drone delivery of customer purchases from its warehouse and fulfilment centre which became the talk of the town. Regulatory and technological issues apart, I will only take a supply chain perspective in this blog to examine the economic and operational constraints this might face. At this point I have not made up my mind whether I think it is a viable option from operational and strategic viewpoint…..

By the time drone service is released sometimes in 2015 or beyond, Amazon would have increased its revenues to nearly double again – say $96 Billion per year.

Sale value of a transaction ranges from $5 for a cheap paperback to several thousands of dollars for fashion and electronics. It will be interesting to see the transaction value distribution at Amazon, but for this discussion an average sale value per transaction estimate is sufficient. If the average transaction value is say approximately $100 then the company is making $48 Billion divided by $100 = 480 Million transactions per year now. By the time delivery with drones is in place it will be making double that, say 1 Billion transactions per year.

Now Amazon already makes deliveries on Saturdays, so the total number of delivery days in a year will be approximately 300 days. That will amount to nearly 3.3 Million deliveries per day. Not all deliveries will need to be made by drones because only a few customers (say 10%) will opt for this high price, high value service. Depending on the price, and urgency the customers will make their own decisions, but it is likely that if the service is high prices most customers (90%) will opt to wait for the regular post deliveries. Here we have not yet considered capital costs of buying the drones, operational costs of housing and running them, and maintenance costs of upkeep of these drones. Neither have we considered the capital costs of retooling the warehouses to allow drones to operate.

Read the full blog, if you like.

Daniela Bolzmann

Solid advise for retailers across the board and I agree with some of the comments here that small businesses are missing out on some great opportunities. Consumers do want to shop local and support their independent retailers but having easy access to making the transaction is key. There are also many tech companies that are focused on helping local businesses stand out and reach their customers. In Chicago alone, Reppio curates top local artisan goods, Foxtrot helps consumers get their grocery and gourmet essentials in minutes, and the WeDeliver platform has a large network of stores that all offer same-day delivery of any goods. This is a great time for small businesses to utilize these online apps and platforms to help them generate new business and add value for repeat customers.

Usman Rafique

There are many mobile application for retailers out there who are fighting the battle against online shopping for the brick and mortar. One example is http://www.qairus.com The retailers should support one such provider so that the provider will be able to develop the competitive features so that consumers will love to go to stores and enjoy the outing as well as find things with online convenience while inside stores.

Steve Gumm

Alex – fantastic article. I’ve always believed the one true advantage for small, local business is the fact that (wait for it……wait for it…) they are small, local businesses.

So many try to act big, when in fact the local market wants to connect and support the entrepreneurs in their backyard. That’s tough to do when those businesses virtually hide and make it a challenge to connect and learn the story.

You’re seeing a push for big businesses like Amazon, to do everything they can to act local and build connections.

Points 1 and 4 really nail it here and every small business would be wise to listen to the advice.

Love the post….keep it rolling!

Trinadh Yerra

Since this conversation is going on, I would like to add that the very reason Amazon is reaching out for radical ideas to differentiate themselves is because they realize that competition has actually caught up well with them. The short range of drones require a local launch and stock facility, which is very much against their business model.
The promise of infinite growth on which their stock is riding ever higher will fade on them once Wall Street stops acting blind.

An Iva

All the action suggested seem to be just more “mobile strategy” yet there is not that much clarity what mobile strategy is: is it shipping on Sunday, smartphone app, or understanding what SMS/MMS is (funny that MMS is even mentioned). Amazon shall really be compared with eBay. eBay shall be compared with any retailer on the web who a) supports PayPla b) offers reasonable shipping rate c) has the item your need. Finding item is a Google job and there is some room to improve here. The only differentiating factor between Amazon and web retailer is product review, so I often go to Amazon to find out who other people think about the item. Someone else can abstract reviews from Amazon (e.g. Facebook) but it just more convenient to review at Amazon.

Fred

GirlWithoutFear would be wise to cultivate a little fear or at least caution. And point #1 (Get Personal) may lead retailers astray as well. Thefts of online retail data and even well-intentioned but overly-personal intrusion into customers lives, whereabouts, web trails, Twitter posts, etc can backfire on retailers who think a personal shopping experience means customers want them accessing and tying together all those data bits we’ve left behind on the net. On the contrary! Most people are offended and freaked out by such intrusions into their private data … or at least what they still would like to assume is their private information. Retailers pointing that out in such a blatant way will get no thanks (and maybe no business) for it.

Viraf K

I could not agree more Fred. Invasion of privacy is something most folks regard very seriously.

Claude Albertario, RST, RPSGT

I don’t think Amazon is all that great. I ordered 4 books over a week ago and they are still awaiting shipment. I think Bezos is scared silly of home-based 3D Printing which will decapitate Amazon and its silly legion of drones. Silly notion for folly flying freight.

Jameson

Congrats on your first Amazon purchase, Claude. Free super saver shipping is great; you’ll have free two-day Prime soon–or better a Kindle reader or software. 3D manufacturing able to be useful in high quality, durable goods requires an immense number of chemicals and SPACE for the large printers making larger scale products. Amazon will turn a profit from 3D printing that fuels its next decade of innovation before 3D printing technology for instant home delivery is even remotely remotely diffused.

I can’t imagine the countless bodies of retailers by the time the late majority/laggards are utilizing cost-effective, scalable 3D printing for general purpose goods. And somewhere, a statue honoring Jeff Bezos as the pioneer of 21st century retail will stand.

GirlWithoutFear

I agree with Trinadh above and also that it depends on the type of shopping you are doing. I got shoes a few times online and then stopped. I will always want to buy shoes in-store. Unless it’s something obvious like Uggs. Local businesses really do need a digital strategy across the board. When I go online to shop, I go to the larger and most well known retailers. Its the smaller mom and pop guys that are really left behind now as they are not often top of mind when online shopping. Its really important they start getting their in store customers to leave all info in their database, not just emails but also their social media info and getting customers mobile number is crucial. I live un NYC and have rarely been encouraged by a sales rep to fill out my digital info, they usually offer some store reward card or to sign an email list. They need to step it up a few notches, quickly.

Trinadh Yerra

I think writer is unnecessarily complicating things. As a regular online shopper, here is what matters to me the most.

Experience: Be it returns, replacements, or any other queries. Timely, friendly, and clear responses/actions pleases the most. This gives confidence to the customer. Amazon is really good at it.

Price: Yes, experience is important but we can’t let go a good deal. A good experience translates into a price cushion of say up to 5-12%. But if the difference is more, Customer is likely inclined to go for the cheaper place. Whatever be the reason, be it taxes and/or shipping costs.

Personalization and UI: Yes, many people do shop on phones and tablets, and adapting the UI to a smaller screen is really important to keep things smooth. Some personalized offers also help. But reading too much into “mobile” is a mistake I would say if your fundamentals are weak, which is support experience and to some extent price.

As for the Sunday delivery, it’s a new thing so I don’t really know how people generally react to it. As for me, I’m perfectly fine with skipping on Sundays, this is NOT a bigger issue than other factors, as long as the product is not a time sensitive material, or a just launched product. Sunday delivery on a just launched hot product is a pleasant feature though.

Before you set out to make or consider any changes, think from your perspective as a shopper or anyone who shops regularly and KISS.

Kevin Bauer

Good, if brief, article. I would suggest a few changes. I think the most important thing, which almost all retailers forget, is the importance of building a brand that delivers genuine value add to a customer’s lifestyle on a regular, recurring basis. Having a set of unique products/services, delivered in a way that has real meaning and relevance for customers is the only sustainable path to growth and competitiveness in retail. Otherwise you are in a race to the bottom with Amazon, and they will always win.

As part of that, i would also move the focus and requirement of Omni to number 2 since you can’t really deliver the type of value I describe above unless you are able to be where the customer needs you, when they need you, with the content they need. That requires excellence in Omni retailing.

In general though, I agree with the sentiment that rather than fear Amazon, retailers need to wake up and start figuring out how to market properly and add value to their customers lives if they want to succeed in today’s world.

Shiggity

Now think of this except add in additive manufacturing (3D printing). They could make your product at the distribution node and immediately ship it.

Kokoro Dudu

3D printing is a fad. It would fade away soon. Items are more than just solid parts.

Dom Einhorn

Or you could download a simply blueprint and 3D print it yourself.

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