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How to compete with Amazon: 5 ways to make it happen
Tobias Buxhoidt, founder and CEO of parcelLab, shares five ways every retailer can compete with Amazon.
July 3, 2019
By Tobias Buxhoidt, founder and CEO, parcelLab
Compete with Amazon? Well, surely other online retailers can't, right? The original online retailer, now the giant of them all is simply far too powerful on every operational level.
Let's take speed of delivery. Wherever you are, Amazon can get your purchase to you the next day, guaranteed. To beat this, other online retailers would have to offer a same-day service. Yet only 7% of the U.K.'s largest 100 online retailers do this currently, according to a recent parcelLab study. And it's not surprising because to achieve this you have to be located pretty close to your customers, which is impractical for many online retailers. And no doubt Amazon will be offering this service widely soon, probably via drone.
How about offering a wider variety of delivery options than Amazon? Same-day, next-day. Specific day/time. At home or local collection point. Amazon has it all covered. Most retailers don't have their own fleet and so to set this up with one or more couriers would be complex and expensive.
Next? Well, that would be cost. The sheer volume of goods that Amazon sells means it's impossible for retailers to compete in this area due to the volume of business that the online retail giant can offer its suppliers getting discounts in return. More retailers are offering subscription services like Amazon Prime, but to win this particular race they would need to offer free deliver across the board. Yet only 12% of the U.K.'s leading online retailers offer free shipping regardless of purchase price.
So if no retailer can win operationally, how else can they compete with Amazon? The online retail giant's success isn't just down to its size, it's also because it owns the entire online retail experience from search to checkout to delivery. Yet there's one area that most online retailers are neglecting that holds the key.
Retailers tend to focus on customer acquisition. They work tirelessly to make it as easy as possible to buy from them, refining the searching and buying experience as much as possible. This is great, but every retailer can do this, and they are never going to beat Amazon in this way. So what should they do? Give up? No. Think about the one area most are currently neglecting.
In general, when a customer buys online, they get a dispatch confirmation that thanks them for their custom and provides a carrier tracking link, but then it's a case of: “You're on your own mate! Good luck and goodbye!”
This is where retailers lose control of the customer journey — at the very point that arguably matters the most to the customer! Shoppers then have to navigate themselves through the shipping process, checking on the progress of their order, complaining if it's late, or doesn't turn up at all. They are also on their own to find out how to change the delivery date, time and location if this is necessary, and return goods.
A staggering 89% of the U.K.'s biggest online retailers do not communicate directly with their customers once they have placed their order. Either there is no communication at all, or it's left to their delivery company. What's more, 22% don't even include a returns label with their deliveries. Amazon, on the other hand, controls this process and by doing so makes it seamless and easy for its customers, from keeping them informed of their order's progress to answering any queries and making it simple — and free — to return goods.
With Amazon having everything tied up operationally, retailers need to look at ways they can best get across their points of difference, their personality, their brand values to set them apart. And here are five ways to do it:
1. Prioritize post checkout
It's fine investing in acquiring more people to buy your products, but it's worth very little if you don't make them happy. You need to draw them back by exciting them in order to build loyalty and inspire repeat purchase. It's way too expensive to keep acquiring them over and over again. This is where the post purchase process can help and enable you to stand out against Amazon and your other rivals.
2. Having full transparency
This means that you can see the entire post-purchase journey and can stay in control of what's going on. Your couriers are probably great at delivery, but if you only rely on their reports for insight into how your customers are experiencing the shipping journey, you're likely to be missing out on key moments.
To compete with Amazon, you need to make sure you're offering the best shipping experience, including sharing the best information and content to help and inform customers during this phase. This is only possible if you have full end-to-end transparency.
3. Friction equals customer frustration
If you're offering great products at a great price and the delivery doesn't work, your customers are unlikely to come back. Products are becoming increasingly interchangeable, as are prices, so you need to make sure you make your customers happy. Issues can occur with deliveries for many reasons and it's how you handle these problems through customer communication that will make the difference between your shopper being unhappy or satisfied.
4. Control the experience
The key is to be pre-emptive if anything goes wrong — and you can only do this if you control post-purchase communication. If there's a problem, you need to immediately communicate this to your customers before they find out themselves, apologize and tell them how you're sorting it out. If it's a big issue you can offer them compensation, such as money off their next purchase. This avoids losing customers and getting bad reviews. It also saves on customer service costs! It's about showing your customers you care and making them feel special.
5. Use your brand
This is arguably the biggest differentiator you have against Amazon. People don't necessarily buy off Amazon because they like them, they do it because it's easy and convenient and it just works. Using your brand to build a relationship with customers on an emotional level to show that you understand them, that you care, and that you will support them is something where you can clearly differentiate yourself not just from Amazon, but also your more direct competitors. When you do that really really well it does not matter if a parcel is taking one day longer than Amazon or the shipping cost is 10x higher. Your customers will not mind if they really like you.
All this — and more — is possible if you own the post-purchase experience and provide branded, personalized customer communications. This also gives you the opportunity to promote relevant offers and offer complementary purchases. And 70 to 80% of post-purchase emails are opened buy customers.
Can other retailers compete with Amazon? Well, surely they can, right?
