Commentary

Lessons every retailer can learn from Amazon

Don White, vice president of enterprise solutions at Snapfulfil, says retailers have two choices when it comes to competing with Amazon: worry and not change their outdated processes or follow Amazon's lead and refresh the way they do business for the sake of improving customer experiences and keeping businesses alive.

Photo by iStock.com

September 28, 2018

By Don White, VP, enterprise solutions, Snapfulfil

With more than 310 million users worldwide, it's no secret Amazon is the "Goliath" of e-commerce and retail in general.

And while many consumers are in Amazon's corner, the company's growth and changing delivery models are concerning to many retailers. Endless product categories, intelligent product recommendations and lightning fast delivery has raised the stakes.

Retailers have two choices: worry and not change their outdated processes or follow Amazon's lead and refresh the way they do business for the sake of improving customer experiences and keeping their businesses alive.

Make it easy

Ask most people and they will tell you that one of the main reasons they prefer to shop Amazon over other e-commerce retailers is because of the effortlessness and speed from click to delivery. In fact, a recent study from Epsilon indicated more than half of consumers surveyed (52 percent) shopped on Amazon because it was easy to buy that way, and close to half (47 percent) said they used Amazon because it's a one-stop-shop where they can buy different things they need. Free and fast shipping also were high on the list — number one for Prime members in particular.

While offering free shipping might not be an option for your business, there are other ways in which you can improve convenience for your customers.

•   Avoid stockouts: You can't be a one-stop shop if you're out of stock on store favorites. Managing your inventory with precision is essential to keeping the customer experience positive.
•   Accelerate delivery: Speeding up delivery while keeping costs low can be challenging but is entirely possible. As a first step, mapping out your picking and packing processes and making simple changes to streamline steps can lead to big reductions in delivery time. You can also consider implementing an in-store fulfillment option for customers.
•   Simplify returns: Do both your customers and your warehouse staff have to jump through hoops of fire to process returns? Like your picking and packing processes, map out your return path and remove unnecessary roadblocks.

Bottom line, people like Amazon because its easy. If you're easy to do business with and make the customer journey as smooth a ride as possible, they'll come back.

Create and refine your own ideal warehouse model

Amazon is known as a master of efficiency, but that didn't happen overnight. It took several years for the company to refine and perfect its picking method, for example. And that method isn't an exact science.

According to a Quartz article, "This company built one of the world's most efficient warehouses by embracing chaos," Sarah Kessler highlights Amazon's unique approach to warehouse management — randomness.

Contrary to what you might think, Amazon stores most items in its warehouse completely at random. According to Kessler's article, when shipments arrive, Amazon employees typically unload items and place them in the nearest open space versus a dedicated space for that product. They do this out of necessity for speed in the picking process.

Embracing randomness in the warehouse may or may not be for you. The point is, Amazon found a method that worked for them and refined it until it became foolproof. You should follow their lead and do the same.

Using your warehouse management system, evaluate the efficiency of your picking and packing processes and begin refining your model so it can work perfectly for you and ultimately improve your ability to deliver fast, high quality experiences to your customers.

Invest in technology and invest in your growth

Amazon doesn't run like a well-oiled machine by way of pen and paper. You can only grow your business so far manually piecemealing data from Excel spreadsheets.

If you want to improve the efficiency and quality with which you manage your inventory, deliveries, returns, labor management — every facet of your supply chain — you must be willing to invest in technology that can enable you to do that and grow with your business.

So many retailers cheat themselves — and ultimately their customers — by not biting the bullet and spending capital on new tools that can help the logistics of their business. According to an Internet Retailing and eDelivery study, nearly 60 percent of retailers are still using in-house management systems (including manual record-keeping) while only 16 percent use best-of-breed warehouse management systems.

Without the right tools in place, you can't get the visibility you need to take your operations to the next level and deliver the type of service consumers have grown to expect.

Learn from the best

Yes, Amazon is a powerful retail player, but what the company does and how they do it should inspire you rather than intimidate you. Study Amazon and learn from the company's example. Focus on creating an easy shopping experience, perfecting your warehouse model and investing in technology tools to propel your business forward.