Why Amazon may lose its influencer title in 2018
As Retail Customer Experience reported last week, many an industry watcher and retail expert agree Amazon played a huge, if not the biggest, influencer role in 2017.
In providing insight, the experts noted Amazon's extensive strategies, from expanding supply chain and distribution to its cashier-less checkout store experiment to its big focus on seamless and fast, super-fast, delivery.
Yet, while more than willing to praise the ecommerce leader's strategies, none are completely convinced Amazon will retain its title of top influencer in 2018 and offer up a substantial list of reasons why.
A prime one is the reality that competitors, including Target, Lowe's, Walmart, Neiman Marcus, Wayfair and even small mom-and-pop retailers, are very busy not only catching up, but in some instances, beating Amazon when it comes to innovative technologies enhancing the customer experience.
In this second part of a two-part focus on Amazon's influence on the retail segment, industry watchers as well as Retail Customer Experience bloggers share knowledge on why Amazon may not dominate this year and why its influence may wane in the next 12 months.
Amazon's weak spots
To put it simply, despite all its innovative strides in 2018, Amazon has some weak spots.
If, for example, its growing Prime membership decides en masse to cancel their subscriptions, Amazon would take a major hit — as the subscription foundation is a big layer of support for many Amazon strategies.
A SmarterHQ report released in December claims 82 percent of Amazon's Prime users — consumers who pay an annual fee for 2-day free shipping on a good majority of items — would cancel the Prime subscription if that free, 2-day shipping was not available.
"Our report tells a surprisingly upbeat story for retail brands — consumers can be persuaded to ditch Amazon and shop in their store or on their website. We found that people aren't going to Amazon to browse; rather, they have very specific items in mind," stated Michael Osborne, CEO of SmarterHQ, in a press release on the report.
Yet there is no denying that free shipping and faster shipping (both provided through Amazon Prime) is important to consumers — it's the reason they subscribed, and if it changes, it's likely the reason they'll leave.
"Consumers have a price threshold of $200 they're not willing to cross when shopping on Amazon, a good sign for luxury brands," said Osborne. "While Amazon is viewed as Goliath by the industry, there are certainly weaknesses that retail brands can exploit to help drive their bottom line."
Retail Customer Experience blogger Chris Petersen concurs with that view. Petersen is CEO of Integrated Marketing Solutions and a strategic consultant who specializes in retail, leadership, marketing and measurement.
"The single most disruptive force of the Amazon ecosystem is Prime, as it symbolizes Amazon's customer centricity and integration across all touch points," he told Retail Customer Experience in an email interview.
"Amazon Prime is so much more than a club membership as it creates ease of ordering with a virtual guarantee of 2-day delivery and has become the expected standard of service expected by today's omnichannel customers," he added, noting, "not only does Prime attract the more profitable customers to Amazon's ecosystem, all of the value-add services retain those customers and create incredible lifetime value. "
While Petersen acknowledges Amazon is the biggest influence on the retail ecosystem in the West, he believes the title of biggest retail influencer belongs to China's biggest etailer, Alibaba.
"They have capitalized on mobility more than any other player," explained Petersen. "Their electronic payment system has become a standard for much of Asia. The epitome of their retail influence is evidenced by the fact that Alibaba is now building a huge mall as physical space for their marketplace retailers," he said. One of his blogs in 2017 focused on Alibaba's move to build a brick-and-mortar retail mall.
"While Amazon will tear down a mall to build a distribution center, Alibaba is actually building a new mall for retailers. Clearly, the transformation of retail is much more than Amazon, and more than the shift from stores to online. Alibaba's construction of a retail mall is a clear sign that future 'retail' success will involve, and in fact require much greater strategic collaboration across multiple partners," he wrote.
Petersen also wrote in his blog last August that the Amazon innovation "juggernaut seems to be everywhere and rolling over everyone! But not so fast." He reminded readers of how Amazon's WebPay failed to compete with PayPal, and the quick failure of the Amazon phone.
Those failures illustrate Amazon is not perfect, and headlines about how Walmart and Target are innovating just as fast these days are proof Amazon is not invincible.
In the blog post, Petersen cited how Walmart is testing the use of employee driven home product delivery and possibly investing in facial recognition to detect shopper moods. While both may appear far fetched, both are also out of the box — a place Amazon has been since inception.
"Who knows if it will work, but the focus on retaining existing customers is most definitely spot on," Petersen wrote.
As Retail Customer Experience reported, Walmart is now selling products via Google's online mall to offer a new shopping experience. Walmart is also reportedly now testing its own cashier-less stores, a move Amazon began testing over a year ago.
Just last week, Retail Customer Experience reported how Walmart is reportedly tapping text to provide a new personalized shopping experience for the wealthy busy New York City mom.
Meanwhile, to match Amazon's delivery strategy, Target bought Shipt in 2017, a same-day grocery delivery service platform, for $550 million, with hopes to provide same-day delivery of all major product categories by the end of 2019.
Just two months prior to Target's Shipt acquisition, Walmart purchased Parcel to provide New York City residents delivery within 24 hours. In September, Walmart announced it was beta testing another delivery service in which Walmart delivery personnel would enter consumers' homes and deliver groceries into refrigerators.
Competitors are gearing up big time
In late December, Lowe's hired on its first-ever chief digital officer, and he just happens to be an ex-Amazon leader. Just weeks earlier, Starbucks debuted its first augmented reality customer experience. CVS Health will debut same-day and next-day delivery this year. Wayfair is advancing its AR strategy with a mobile app 3D feature, and Best Buy is prepping enhanced text communication by tapping the emerging communication protocol, Rich Communications Services.
All the competitors' moves indicate Amazon could be pushed off the throne of ecommerce and retail leadership.
"Its biggest weak points or areas to give at least its brick-and-mortar competition some leverage are the obvious ones: experience and immediacy," Christopher Hall, managing director of the Interactive Customer Experience Association (ICXA), told Retail Customer Experience in an email interview.
"Amazon provides a very good shopping experience for what it is. You can order your things in a variety of increasingly convenient ways and get them ever more quickly. It's easy and cheap — but it's rarely fun," he said, noting that a recent ICX Summit speaker made a compelling point regarding the leading etailer: no one ever takes a selfie while shopping on Amazon.
"I think that captures it perfectly. It's a solitary occupation, shopping at Amazon. Shopping in the real world is fun and social, and you get your product, your little hit of endorphins, right then and there. Those are obstacles that at least right now are just insurmountable for ecommerce in general, but that also means brick-and-mortar has to provide the experience and fun for their shoppers or they will just go to Amazon — and they should," added Hall.
Chip Bell, a Retail Customer Experience blogger whose book, Kaleidoscope, won the 2017 Best Book Award in the business book category after winning a 2017 Silver Medal from the North American Book Awards, acknowledges Hall's view, but doesn't think the lack of a tactile experience is Amazon's biggest vulnerability.
"Their greater weakness is their inability to personalize, not just customize. Most customers enjoy a personal relationship who serves as a guardian of their concern and a caretaker of their experience. No computer can telegraph empathy or compliment my jacket or shake my hand," he told Retail Customer Experience in an email interview.
For example, Amazon can't provide the sense of theatre that a Bass Pro Shop does, or offer, in person, the geeky wisdom provided by an associate at an Ace Hardware or Radio Shack store.
"Its [Amazon's] sweet spot is their reliance on technology; their Achilles heel is their reliance on technology," he said, recounting that during Hurricane Irma in 2017 his neighborhood lost power and the Internet.
"In our local world, Amazon was closed. But Jerry's Bait Shop, while they had no ice and their cash registers were inoperative, still sold merchandise on the honor system or on a cash basis to their neighbors in need."
Petersen believes this year could be "the year of Walmart," noting it's in a great position to leverage stores to grow ecommerce via click and collect. He said Walmart's kiosks in stores and in parking lots are a great example of how the retailer is creating a hybrid experience, especially for customers who routinely go to stores for consumables.
"Amazon's U.S. model works great for small packages, especially durable goods and apparel. While Amazon has made a push into major appliances and furniture, other well-established ecommerce sites like Hayneedle are continuing to excel in selling and delivering large bulky items. Lowe's and Home Depot are thriving on delivering a whole solution with installation in the customer's home," he said.
"Sam Walton's advice to retailers trying to compete with Walmart was ‘do something that Walmart doesn't.' Nobody does ecommerce and home delivery better than Amazon in the U.S. But, customers highly value personalized customer service that helps them find the right products for their lifestyle," he added, noting Ace Hardware is a great example of offering personalized customer service not found online and that Best Buy is winning with the personalized Blue Shirts in store and customized delivery with installation in the home.
"Even the main street retail shop can win by engaging customers with a personalized experience," he said. "The key to the success of thousands of local shops and boutiques is no longer their products on the shelves, but the people in the store that make the experience come alive in ways that can't happen online. The most important sale is not the product at the cash register, but the creation of a personal relationship that engages the customer in the moment, and long after the sale."
Topics: Consumer Behavior, Customer Experience, Customer Service, Department Stores, eCommerce, Merchandising, Mobile Retail, Omnichannel / Multichannel, Online Retailing, Retail - Apparel, Retail - General, Retail - Home Center, Retail - Warehouse, Supply Chain, Technology, Top 100 Retail, Trends / Statistics
Judy Mottl is an experienced editor, reporter and blogger who has worked for top media including AOL, InformationWeek and InternetNews. She’s written everything from breaking news to in-depth trends. She loves a great pitch so email here, follow on Twitter and connect on LinkedIn.www