At any gathering of retailers, there is always one undeniable presence, even if it doesn’t show up on banners or on stage: Amazon.
Retailers have plenty of concerns — better customer experience, nailing omnichannel, optimizing revenue, going cross-border, survival — but Amazon and its impressive growth in online retail and elsewhere are never far from the conversation. With the Seattle giant constantly innovating and upping its delivery game (now at one-day and counting), how can other retailers compete?
Lauren Freedman, a leading retail researcher, sat down for a brief video interview with us at IRCE 2019 to talk about how retailers might think about taking on Amazon and its relentless growth.
Listening to Freedman, senior consumer insights analyst for DigitalCommerce360/Internet Retailer, it seems that having both an irresistible product and a stellar way of explaining it to consumers would be golden. But it would also be possible to build an advantage on one or the other. Deloitte Digital’s Kasey Lobaugh has for years charted retail disruption with a matrix that examines the degree to which a retailer has a unique product and the degree to which it offers supreme customer service.
His conclusion: Retailers that excel at both are taking market share from legacy retailers who are not offering consumers enough that is new or different and/or not offering it in a way that consumers enjoy.
To hear Freedman tell it, a retailer that had an irresistible product and a well-thought-out strategy for developing content around the product would be in a strong position to thrive in the era of Amazon. Brands and enterprises selling directly to consumers seem particularly suited to both strategies.
Direct-to-consumer is definitely a retail growth area, powered by two trends. There are, of course, the digitally native retailers that make a direct connection with consumers a core of their strategy. And increasingly larger brands that have traditionally sold through retailers are now adding an online and direct to consumer channel.
Consumers will always care about pricing, selection and fast delivery
Not only does going direct-to-consumer mean that manufacturers are well-placed to product information, as Freedman said, it also means they have for the first time much more information about consumers who are buying directly from them.
In our extended interview, Freedman explained that her don’t-compete-to-compete strategy doesn’t mean that retailers don’t need to focus on pricing, selection, and fast delivery. Even if another retailer can’t match Amazon’s speed, Amazon has raised consumer expectations to the point that it still matters.
“They expect it quickly. They want everything fast,” Freedman told us. “I also think they want all the information that is possible.”
But if a retailer can provide an acceptable fulfillment and delivery experience and add something more, such as expertise or exclusive products or a story around sustainability or scarcity of a product or exceptional desirability, Amazon’s advantages in terms of logistics and ease-of-use begin to shrink in a consumer’s eyes.
Photo courtesy of Amazon