Amazon is set to hit our shores within the next several months and it’s one of the most anticipated launches in Australia. While consumers will no doubt greet it will open arms and open wallets, it has a lot of local retailers nervous wondering which brands will fall when it arrives.
As the biggest retail brand on the planet, it knows how to enter a market, where to carve out market share through its low prices, how to promote effortless browsing of its digital aisles and how to keep consumers coming back for more. Amazon also builds its data asset fast and uses it intelligently. But perhaps it’s because the organisation is totally customer focussed, in terms of service and innovation, that it poses such a threat to the local status quo.
When you contrast the financial woes of some local retailers who have been slow to adopt customer-first thinking against the $12bn in sales Amazon is estimated to hit in ten years – it’s easy to see why many are ringing the death knell.
So, with the countdown clock ticking louder every week, just how scared should Australian retailers be? To answer this, they need to ask themselves a few timely questions. All of which, in one way or another, primarily revolve around investing in the customer and their experience, not just tactics on how to shore up revenue for the CFO. Look after your customers and the dollars will look after themselves.
So, should online retailers rush to open bricks and mortar stores and invest in brand architecture? Do traditional retailers have to invest in ominchannel platforms and eComm solutions? Do Chief Customer Officers need a seat at the Exec table?
‘Yes’ is probably the answer to all of the above. However, while Australian brands have often been criticised for not keeping up with the innovation and the sophistication of their overseas competitors, they do generally have the tools and capabilities to fight. And from my experience, they won’t die lightly.
There are probably six key assets that they have at their disposal to tackle the Amazon threat – three of the easiest to leverage are:
1. Data
Amazing as it seems, there are still big brands out there sitting on massive data assets, yet not fully exploring the options on how to unlock the revenue potential. For any data asset worth the server it’s sitting on, it needs to be seen as a marketing pot of gold, not just an IT cost.
Retailers have an understandable, yet destructive, habit of spamming customer databases with regular unwanted offers, on the off chance that they want to buy yet another iPhone case or the same t-shirt in a different colour. I’ve done this myself, as you’d be a brave marketeer to not hit the entire database when sales are low.
Amazon avoids post-purchase-pestering with sophisticated algorithms that target with relevant ‘next-best offers’, based on the previous product history or what ‘look-alike’ segments have purchased. It’s intelligent, timely and it works - because you’re offering the customer what they may want, not what you want to offload to them. Plug social data into the mix and you have a powerful repeat revenue machine, but that’s for another time.
Unlocking the data asset using entertaining or useful content, timely non-promotional communications and added value exclusive partnership offers can all work extremely well. They are also a great way to connect and engage at an emotional level that will surprise and delight your customers, making them more loyal and valuable.
2. Brand
Amazon is an iconic global brand – its values are clear and strong. It’s customer-centric, innovative, always pulls a cat out of the bag with its superior service and happens to have almost every product you’ll want at a great price.
Creating a strong brand that creates an emotional connection is essential to combat Amazon. This doesn’t negate the need for ‘retail campaigns’ that drive a price message. It’s just that consumers will respond better, in the long term, to strong brands whose values and messages resonate with them. We need to connect with heads and hearts.
Research from the UK states that 60% of marketing needs to be brand building – connecting emotionally through clever or thought-provoking creative that also delivers its promise in-store or online. The remaining 40% should be allotted to ‘retail’ messages or promotions. Though, locally it seems that most retailers place the vast majority of their budget in this space, if not entirely. It’s been a tough decade in retail.
3. Community
Many Australian retailers, especially with bricks and mortar stores, have been successful in building strong relationships within their local communities. They may know their customers by name and phone them when that new perfect product is in-store. Central marketing teams have been successful in building strong communities through social media and building the data asset. It’s how they use these assets and relationships moving forward that will help combat Amazon.
Amazon will use ‘Amazon Prime’ to identify its most loyal, frequent and valuable customers by offering them products, services and speedy delivery that will make them feel special. If it can deliver the exceptional level of service and variety seen in the US and UK then it could eventually become the consumer’s first engine search… Australia Post has recently announced its ‘Shipster’ free delivery service which, for a small monthly fee, offers similar features to Amazon Prime. While many Australian retailers have signed up in time for the Christmas shopping season, only time will tell if this proves to be a winner with the ever-growing number of online shoppers.
So, is your brand battle-ready?
It’s going to be a time of accelerated innovation. Retailers will need to look to the future and adapt their marketing, customer service, tech platforms and product.
Ask yourself, what is in the DNA of your brand that Amazon wishes it had? Brands that can deliver a seamless customer experience and connect with them on an emotional level will surely do well. I’ve worked with some amazing retailers who just had that gut feeling – a kind of ‘tradie’ instinct that makes them successful. If you combine this innate instinct with customer insights, leveraging the data asset, a strong brand strategy, the right mix of marketing and building a loyal community – the Amazon arrival has the potential to be a fair fight.
The Core Agency CX director Rob Kain