This year, Amazon’s Prime Day broke all kinds of records. According to reports, the 48-hour sale was the "largest shopping event in Amazon history" and "surpassed the previous Black Friday and Cyber Monday combined," the company said last week. Prime members bought more than 175 million items during the event confirming the new reality Amazon has created with its marketplace of convenience and consolidated fulfilment. In fact, for many shoppers, Prime day or not, it’s now the first point of contact.
A wealth of products, personalised recommendations, secure seamless checkout, quick delivery – it’s no surprise that more and more people are spending a significant part of their customer journeys within the Amazon ecosystem. According to reports, a staggering 56 percent of US, UK, German and French shoppers now use Amazon as a starting point for their purchasing journeys. And 51 percent go to Amazon even if they have found something they liked on another site because Amazon offers suggestions, additional information and price comparisons.
Rise of the indirect customer
Aside from the obvious impact to revenue, this market monopolisation is having ramifications, particularly in the rich customer intelligence that was previously gathered by individual retailers . The size and scale of the Amazon model has created the classic short vs long term dichotomy for the sales and marketing strategies of smaller brands. In the short-term, brands earn revenue when Amazon sells their products; this is good. However, in the long-term key performance indicators, sales data and critical consumer intelligence about who bought what and how frequently are no longer captured.
At the same time, Amazon has also redefined customer expectations. The proliferation of its Prime program means consumers have become accustomed to free two-day shipping -- creating rising customer expectations of any retailer. The National Retail Federation reports that over 49 percent of millennial-age consumers in the U.S. now expect free two-day shipping from retailers, 40 percent even free same-day shipping.
This is putting brands, and marketers in particular, in a difficult position. Customers are increasingly becoming ‘indirect customers’ whose buying habits exist behind an Amazon-shaped veil of mystery. Yet, conversely, now more than ever brands are under pressure to serve personalised customer experiences and consumer-first marketing, regardless of where their customers choose to make their purchases. But there are ways for brands to bite back.
Levelling the playing field
Amazon can boast one of the most advanced data capture and analysis set-ups in the world. However, the AI-powered, next-best-action technology that helps it know exactly which items customers want to purchase next is becoming accessible to all brands. Other machine learning technologies are becoming more accessible by the day, with algorithms which provide marketers with real-time data and insights into customer preferences, removing the guesswork and therefore delivering a more personalised experience for customers.
At the same time, marketers can create marketing personalisation from very little data, even anonymous website visitors. While marketers need to obtain as much data as possible to drive relevant, consumer-first marketing, brands are being driven towards innovation because they simply cannot compete on price and fulfilment. Ultimately, an unforgettable customer experience is hard to ship in a cardboard box.
Amazon is incredibly sophisticated at driving repeat sales and long-term loyalty. However, the main reasons for this loyalty are more transactional than emotional in nature. According to eMarketing, customers mostly choose Amazon because of free shipping (70%), price (65%), and two-day or next-day shipping (60%). This means that brands have a real opportunity to stand out by offering captivating experiences.
Competing with captivating service
Consumers appreciate Amazon as an efficient product delivery vehicle that helps streamline their shopping. But savvy marketers are finding new ways to insert themselves into the conversation with customer experiences actually worth talking about. A lot of brands are working overtime to get inside their customers’ mindset. Strategy meetings have moved on from ‘how can we sell more products’ to ‘how can we keep customers engaged beyond the purchase process and deepen the relationship?’ as this report covers.
There are lots of examples of this. While traditional bricks and mortar retailers are having a hard time in the UK, retailers like Footasylum and Adidas are offering hyper-personalised in-store service. This is helping drive footfall in-store. We’re also seeing shops connect customer data to service teams, dovetailing with innovations around physical store presence to engage the right audience, at the right time. We’re also seeing much greater integration between the on and off-line world. For too long they operated in silos but it was only earlier this month that we saw the opening of T#e Trending Store in Westfield, London - the world’s first AI-powered shop selling only goods trending on social media.
At the other end of the innovation spectrum, there are tried and trusted methods that work for all brands. Things like upselling online purchases or driving footfall with the offer of meeting an influencer or celebrity still work - especially for millennials keen on experiences. Fashion vlogger, James Charles, single-handedly brought the Birmingham Bullring to a standstill in January with a 30 second appearance. Similarly, customers still value core competencies like high-quality after-care and post-purchase support.
With that said, retailers and marketers can’t ignore Prime Day, or Amazon. So, while working to deliver innovations away from the retail behemoth, there are also things that can be done alongside it too, like sponsored adverts. Amazon ad revenues are currently growing an average of 63.5% year-on-year and are expected to reach $2.89 billion in revenues by 2018 according to eMarketer. Listing as an Amazon reseller means that brands receive notifications after each sale, together with customers’ email information for follow up via surveys. It combines the best of both worlds.
Winning in the world of tomorrow
Marketers now operate in a big-box ecosystem in which customers continue to gravitate towards e-commerce platforms. To compete in this “new world,” brands must treat Amazon as yet another arrow in the marketing quiver and align resources accordingly. As Amazon evolves from online marketplace, to product search engine and display ad powerhouse, presenting products in a controlled manner right where the searches and conversions are happening will be critical to survival.
The successful brands of the future will be those that recognise that their role in the entire commerce ecosystem has changed. And they must adapt in order to build meaningful relationships with all customers – both direct and indirect. Major e-commerce brands are powering ahead however some brands have failed to embrace these AI-powered technologies and are therefore falling behind in the fierce battleground for customer loyalty.