What retailers can learn from Amazon Prime
Only in the retail world can 24 hours become 30 hours, but this kind of creativity is integral to competing with global giants like Amazon Prime. This year’s annual Amazon Prime Day on 11 July saw sales jump 60 per cent from 2016, aided by the shopping window being extended from 24 hours to 30 hours.
For Australian retailers, the secret to maintaining and expanding their customer base lies in understanding what the customer wants and needs. This approach has seen Amazon Prime’s membership in the US increase from about 67 million at the end of 2016 to nearly 79 million, according to recent data from Morningstar.
Australian businesses can learn from the benefits Amazon provides to its customers and the data it collects on shopping, listening and viewing behaviour. This combination enables Amazon to effectively lock the customer into its world, they don’t consider shopping anywhere else, as the benefits are so compelling.
Apart from cost savings, Amazon Prime continues to enhance its offering with features such as ‘Prime Now’, a mobile app that allows customers in most parts of the country to shop from early morning to late night, seven days a week, for groceries, gifts, and food from neighbourhood restaurants. Delivery is within two hours free of charge. It also skews programs to key demographics, such as families – Amazon Family delivers savings including up to 20 per cent off diapers through its service, ‘Subscribe & Save’.
How Amazon captures ‘mindshare’
Amazon Prime is so successful because it captures mindshare from customers who sign up to the program, which results in higher spending. Prime customers spend twice as much as non-Prime customers and, according to US Customer Service and Experience Expert Shep Hyken, four out of every $10 spent online in the US is with Amazon.
While loyalty is the catchcry of the retail industry, it can only be maintained when the customer feels like a retailer ‘knows’ them. At Stocard, we have seen our retail partners experience an average 10 per cent uptake in sales due to increased transactions from customers engaging with their offers inside the Stocard app.
The imminent launch of Amazon Marketplace in Australia, announced by Amazon on its website on 20 April, doesn’t sound the death knell for bricks and mortar. Instead, it’s an opportunity to personalise all customer touch points, both online and in-store.
Amazon has perfected this art online through algorithms and big data. However, in stores, the retail staff are the key differentiator. Retailers can channel resources into popular industries, such as children’s toys – more than 3.5 million toys were purchased on Prime Day this year. They need to ensure staff are well trained, know the company and product range well and are providing exceptional customer service. In a broader sense, they can incorporate product curation and personal styling.
Outlined below are five top tips for retailers to compete with online giants:
1. Integrate e-commerce data with bricks-and-mortar to create a seamless customer experience. Use online data to personalise the in-store experience and attract customers to visit the physical store – this is still one of the main competitive advantages traditional retailers have over Amazon.
2. If you have stores’ centre locations, work with landlords such as Stockland and Westfield to tailor programs to increase footfall. In the high street, you can partner with local businesses.
3. Offer both speed AND convenience – Amazon Prime offers two-day, free delivery, but stores can offer the speed and ease of click and collect to provide instant gratification.
4. If you offer an annual subscription similar to Prime, provide compelling reasons for people to shop with you every time – such as extra member perks, free shipping and ongoing discounts on items.
5. Always be competitive with pricing and flexible with payment options – use services like Afterpay to give your customers more reasons to shop with you.