Going Rogue: Rethinking the Amazon Effect
Originally published in TotalRetail.
It’s no secret that Amazon.com is disruption with a capital D — and has been since your neighborhood bookstore disappeared.
However, while most of us recognize the pressure Amazon has put on on retailers, not many are focusing on the similar effect it’s having on brands. Companies across the spectrum are finding it increasingly difficult to sell directly to customers, maintain brand value and even control their own experiences. More than half of all product searches, for example, start on Amazon.com. And when you build a skill for Alexa, your brand speaks in her voice.
If you’re a chief marketing officer, that’s cause for concern.
Of course, the reason this is happening is that Amazon is darned good at what it does. The company is tops among retailers in customer satisfaction and has been for years. It grew 27 percent year-over-year in Q2, and accounted for 80 percent of the total e-commerce growth that quarter. Software may be eating the world, but Amazon is eating everything else.
The way around this is probably not to try to beat Amazon at its own game or seek alternative channels. Regardless of the problems it’s creating for brands, Amazon remains an indispensable retailer. Wal-Mart and Target may be making huge investments to keep up, but their online growth is slow at best. Going head-to-head with Amazon may be a necessary strategy for those big-box retailers, but it’s not necessarily a good one.
Rather, the brands that are successfully maintaining their identity and growing sales have all taken a different, proactive approach. They’ve come up with a unique commerce position.
Just as most companies have value propositions and voice guidelines, a commerce position outlines a stance for selling products in a uniquely branded way. To do so, a company has to take a critical look at the entire purchasing path and then create new buying experiences that speak to customers.
Let’s look at four major ways brands have succeeded in this so far.
Commerce as an Experience
Warby Parker, Blue Apron and Dollar Shave Club all offer commerce experiences that grow out of their business models. The way you buy razors at Dollar Shave Club is a huge part of the brand. The same goes for Warby Parker, whose try-on box makes shopping for frames a rewarding experience.
While all of these brands are relatively new, it’s a mistake to think that traditional companies can’t succeed with this approach as well. They have the products, data and customer service expertise needed to create these kinds of services — sometimes more robustly than the narrowly focused online upstarts. To develop a good commerce positioning, brands need to restructure how they sell and find opportunities to bundle products and services together.
Commerce as a Relationship
Some major brands are succeeding by doubling down on their relationships with their best customers. While Nike and Adidas both sell through Amazon, they also offer their own commerce platforms. And these aren’t just stores; they’re relationship magnets.
For example, you can buy shoes on Nike+ SNKRS, but the app is also a source for new product releases, limited editions and sneakerhead-friendly content. Adidas Glitch sets itself apart by selling a single type of shoe that features an inside “sock” and an outside “skin.” The product is only available via the app, and is delivered within four hours. The catch? You need a referral to get it. It may not be the best way to move lots of product, but a terrific one for connecting with loyal fans.
Commerce as a Personal Connection
Human interaction still matters. Best Buy has proved that a personal touch (and smart salespeople) can create competitive advantage, especially for high-consideration purchases. Nordstrom makes e-commerce a seamless extension of its legendary customer service. For example, you can first select clothing items on your phone, and then when you visit a physical store, the chosen items will be waiting in a dressing room that has your name on it. This kind of hands-on attention can go a long way to keeping brands relevant and customers happy.
This is a narrower opportunity, but some retailers have found success by offering products no one else has. For example, Gleem & Co is a jewelry e-consigner that focuses on one-of-a-kind estate engagement rings. That ensures that your fiancée’s ring will be something very special. You can also do unique commerce at scale. lululemon has stood apart for years by stocking very few of any one item in any store, as well as changing collections frequently. As a result, its customers don’t have to worry about running into someone else wearing the same thing. This makes the commerce (and by extension brand) experience highly personal and rewarding.
In other words, the “Amazon Effect” is powerful, but not omnipotent or even necessarily negative. Brands can benefit from the company’s reach in retail, while continuing to maintain their own identity. To do so, however, will require more than making and offering good products. Brands will also need to come up with a commerce idea that set themselves apart and delivers an experience that customers love. Good hunting.