All eCommerce site owners have heard of the Amazon Effect. Who wouldn’t, right? After all, Amazon is the biggest eCommerce site in the US. And as a competitor of Amazon, you would have undoubtedly experienced this first-hand.
The Amazon effect can mean different things to a lot of people and from one industry to another. But it generally refers to the difficulty many stores face when they compete with Amazon, and usually along these factors:
- Pricing
- Logistics and delivery
- Free returns and after-sales service
But it’s not all dark clouds from here.
“The brands that are winning,” says Fab Dolan, Head of Marketing at Google Canada, “are the ones that understand and own the fundamental interplay between experiential and transactional…But it’ll always depend on how you navigate the interplay between offline and online worlds, how you — the brand — interlock customers and products.”
Fact is, companies lose an estimated $300 billion annually due to poor customer experiences. And that’s what Amazon capitalized on. The Amazon Effect has created an environment in which customers expect a seamless omnichannel experience. In short, whether they’re shopping online from a desktop or on their smartphone at the local coffee shop, the customer wants that experience to be integrated and seamless.
And that’s how Amazon is winning in online retail. They focus on the experience of their customers and find a way to make it easy for them to buy the things they want.
At the end of the day, it is up to business owners like you to figure out how to contend with the Amazon Effect. Instead of making excuses that Amazon is killing small businesses, what if you can learn from them and what they are doing?
5 Ways to Overcome the Amazon Effect
If you step back and look at what Amazon is really doing, you’d noticed a single theme. They strive to make it easy for their customers to buy the things they want.
Convenience.
That’s why Amazon is winning in eCommerce. And it’s something you can learn from. Below are 5 ways you can learn from Amazon.
1. Make it easy for your customers to find you
One the first things you need to do is make it easy for your customers to find you. And that means creating an online presence. That doesn’t just mean creating a website. It has to be a website that gets found online. It also means being present where your customers are, like on search engines and social media.
Having an online presence means you need to start creating content (like articles or blog posts) and start posting on social media sites. That’s the easiest and cheapest way to get found online.
Another aspect you need to look into is advertising. The “pay-to-play” model is very popular. It allows you to reach new audiences. And if you do it right, you acquire leads and customers.
So, if you haven’t started creating helpful and educational content, start now. As you may already know, people search for solutions to their problems. They don’t search for products.
Unless you’re a big well-known brand, you most likely won’t have a great brand recall. Meaning, people will not be searching online for “Company ABC.” Rather, they will search for “how to…” or something similar.
And this doesn’t say anything about your products nor your company. It’s just a fact. So, don’t focus on your products. Rather, focus on your customers and their problems.
2. Create a seamless omni-channel experience
The other way to overcome the Amazon Effect is to create a seamless omni-channel experience for your customers. Omni-channel doesn’t mean selling on multiple channels. It goes beyond that.
Omni-channel means providing a great experience regardless of platform they bought from you. And if you haven’t already, you should be selling on multiple platforms as it’s the easiest way to reach your customers.
One of the biggest complaints by consumers is that they get passed around multiple departments when trying to reach for support or help. For example, someone might message you on Twitter about a problem they’re having with a product they bought from your store. Oftentimes, the company will reply back and tell them to send an email about the problem.
As you can imagine, it’s frustrating when you’re on the receiving end. You get passed around. It makes you feel that the company doesn’t have your best interests at heart. And while that may not be true, it is true for the consumer.
So, the best way to approach this is reply and resolve the issue where the customer is. Don’t pass them around. Even if it means it “more work” for you or more collaboration is needed internally. At the end of the day, your customer doesn’t care about departments and divisions in your company. They only see one entity — your company, your brand.
3. Focus on what matters to them
Instead of thinking that you’re a victim of Amazon, look at them as a free learning opportunity.
They invested millions of dollars testing and doing a lot of things. So, the best way for you to take advantage of that is to learn from their successes and failures.
As mentioned above, one of the things the Amazon continuously obsess about is convenience — how to make it easy for people to get their products:
- Fast and free shipping
- No surprise charges at the checkout (see point 5)
- Competitive pricing (see point 4)
- Lots of alternatives/substitutes to find the best product
- Public reviews available to make it easier to trust the product
- Lots of product shots
- Complete description of the item including both emotional and functional benefits
One strategy that has proven to be effective is if you have a brick-and-mortar store, use it as a pickup / return point for online purchases. This has become so popular that an acronym for it is being used now — buy online pickup in store or BOPIS.
Since January 2018, use of the buy online/pick up in-store option has risen by an incredible 119% across all retailers. Now, add the fact that 62% of shoppers are more likely to buy something online if they have the option of returning it at a store, you get a winning combination.
These are just some of the things you can incorporate into your Ecommerce strategy.
4. Competitive pricing
Competitive pricing doesn’t have to mean discounts and sales and promos. What it means is you have to deliver the value that your product is promising.
Let’s say you sell computers. If you price your laptops at par with Apple, or maybe even higher, no one will probably buy from you, especially if you’re a brand new player in the industry.
Apple, apart from their loyal fanatics, have created a brand name for themselves over the years. If you come in and compete with them directly, you’ll most likely fail.
But that doesn’t mean you can’t do that strategy either. What’s important is you have to be able to demonstrate the added value you bring if you want people to buy from you.
On another note, did you know that the average product listed in Amazon changes prices every 10 minutes? This allowed them to boost profits by 25%. This is all because of the data they have based on several factors such as shopping patterns, inventory, competitor prices, and profit margins.
You may not have the data and resources to copy Amazon in that regard, but what that means is you can’t rely on one single pricing for long periods of time. Make sure you evaluate the competitive landscape and adjust accordingly.
5. Don’t hide extra charges
Did you know that one report found that 91% of online shoppers in the US will leave an ecommerce site if “fast and free shipping” isn’t offered?
Whether you believe that or not, take a look at your cart abandonment. You may have noticed a big chunk of people not pushing through with their purchase if they see a shipping cost added at the end of their checkout process.
This may be expected for taxes, but not for delivery and shipping. Some eCommerce sites display a ribbon at the top of their site saying that shipping is free for orders above a certain dollar value. Some say shipping is free to their first order. Another popular strategy is to incorporate the shipping right into the prices and simply say shipping is free.
Choosing one strategy is neither wrong nor right. But explicitly displaying more about shipping fees upfront is more effective than hiding it towards the end of the purchase process.
Over to You
As we mentioned above, the main reason why Amazon is continuously growing is they focus on their customers. They make it easier for them to buy the things they want. And by focusing on their experience, they are slowly changing buyers’ behaviors and expectations.
As an online retailer, if you don’t learn from what Amazon is doing and where the industry is headed, you’ll get left behind.
If you want to learn more about the three critical problems plaguing online retailers and how to overcome them, download our free white paper.
