"The Amazon Effect"
In the 21st century, we can purchase items with the touch of a button, and we can have them shipped right to our front door-step. The rise in popularity of e-commerce shopping has changed the way the world shops. The most significant change was brought on by the e-commerce site Amazon. It has been coined "The Amazon Effect" by Forbes.
The Amazon effect has made it mandatory for other industries to adapt. Many companies have turned their attention to upgrading their online presence, being smart about utilizing resources, and thinking outside of the box to combat the technology curve.
Amazon is the largest internet retailer in the world by revenue (ecommerce-platforms.com/glossary/amazon). It started out as an online bookstore and has grown to offer goods and services, participate in streaming video, cloud computing, and most recently has entered into banking. You can find beauty supplies, clothing, jewelry, gourmet food, sporting goods, pet supplies, books, CDs, DVDs, computers, furniture, toys, garden supplies, bedding, and almost anything else you might want to buy. In addition, Amazon is now the world's fourth most valuable company; they also own over 40 subsidiary brands. Amazon has over 105 Million subscribers to its "Amazon Prime" service, not including non-subscribers who shop without a prime membership. When you add everything up, it comes to what this generation refers to as the Amazon effect. This is the ongoing evolution and disruption of the retail market in physical outlets.
Amazon grossed more than Walmart, Target, Best Buy, Nordstrom, Home Depot, Macy's, Kohls, and Costco combined. Although Amazon is vast, it cannot yet be considered a monopoly since it is not about "bigness," Amazon does not fit into the traditional definition of a monopoly used by the law. Since it currently has low prices and is not causing distress to consumers.(Roos, 2017)
E-commerce stores, have advantages that brick and mortar stores do not. Such as not needing physical storefronts, the ability to have a broad, almost endless variety of stock. They also have the added ability to collect data on their customers, tracking not only what their customers purchase but what they click on and even keep a record of what catches the customer's attention while they browse. Another perk of e-commerce sites collecting data is once they have enough of it, they can predict what customers will buy together based on trends of other customers. Data enables them to know what goods consumers will actually buy and then manufacture precisely that.
Another, albeit darker, advantage that large Amazon sites have are employing hundreds of employees per shift in any given warehouse. Amazon has received a lot of negative press regarding the treatment of their employees. One article even quoted a current warehouse employee who said, "Right now, at the fulfillment center, if an employee is a picker, they want that person to pick up 400 items per hour, picking each item every seven seconds." If they do not meet their quotas at each shift, it can be grounds for termination. Imagine how hard it would be to stop for things like bathroom breaks. High-stress environments result in high turn-over. So far, all the employee's attempts to unionize have not been fruitful. Allowing amazon to benefit from the high-stress fast-paced environment they create for their employees, that a smaller retail store would not get away with as they are less likely to recover from employee turnover quickly.
Big retail chains are playing against Amazon in a game they cannot win, while small businesses are on a completely different playing field. Most companies will never be cheaper or faster than Amazon, and It is clear that there is no way to beat or compete with companies such as Amazon. However, there are things companies can do to ensure they are not left in the dust.
The first step in effectively adapting is evaluating current business protocols and needs to gain an understanding of what is working that can be built on, and what is not that needs to be changed. It is no longer an option not to have an online presence as a brand. So companies need to make sure they have their website built and that they are user-friendly! It is important that the website is visually appealing and is easily accessible to both traditional desktop users and mobile users alike. Most consumers use mobile phones and devices as their main shopping device. Hiring a professional web designer is essential, as this could be the "electronic" first impression of a company to many customers. The website should allow customers to purchase the same goods available in stores.
Next businesses need to investigate processes already in place. Are there any processes or tasks that could be automated? Automation helps to not only to cut down the need for extra employees, it can also ensure that the employees in place are not spending their time on tasks that could be done quickly by AI, with more efficiency. Examples of AI uses include, front line customer service programmed to provide necessary information & pre-programmed FAQs. Companies also usually utilize AI for systems that track and order inventory automatically when needed. Integrating AI leaves staff free to complete other essential tasks.
In the face of so much technology it is important for business not to write off the importance of the in-person shopping experience. A company does not want to understaff. It is essential to protect the customer's human experience, as it is one of the few benefits to shopping in a physical store that e-commerce sites cannot replicate. In an attempt to make in-person shopping a more compelling experience for consumers, many malls have created play areas for children, incorporated spas, lounge areas, salons, and hosted pop-up restaurants and sports events. The Mall of America in Minnesota includes an aquarium and dinosaur walk museum, for example, and the West Edmonton Mall in Alberta, Canada, contains an amusement park.
Consumers in 2019, whether they are aware of it or not, are used to a high level of personalization when it comes to marketing. The ads that they see each tailored towards them in some way. Marketers have adapted by utilizing data collected from consumers to predict what ads will be the most profitable for each particular person. Gone are the days where they just "mass" broadcast the same 20 commercials and ads to everyone and hope people will like them. The modern customer "wants content tailored to their needs, wants, and pain points."(Cook, 2018)
Therefore marketers in 2019 have found a way to use data to make sure the customer searching for golf clubs see's the ads for the golf-themed vacations, and the person googling ways to air out their bathroom gets the quirky ad for "Poo-Pourri." Another term for this is Inbound Marketing. It is essential to ensure ads are not just reaching any market. The goal is for ads to be seen by the targeted market. This is where knowing the customer makes a difference. Think millennials Vs. gen-xers.
Social media is another equally important way that companies stand out from one another. Social medial allows brands to show their "personality," and values. Creating brand loyalty, because consumers feel more connected and bonded to companies they share common values with, or feel valued by. Even if this value comes in the form of a simple post interaction. Social media has proved to be a worthwhile platform. As an effective way to not only build strong brands, and create loyalty but also provides avenues to connect with new customers that may not have found them otherwise. The social media account for Wendy's on Instagram currently has 955 thousand followers. They won the hearts of consumers through a plethora of witty tweet retorts and even went as far as having "Wendy, drop a rap album making fun of their competitors." Another example of smart social media utilization is Ben and jerry's ice cream. They utilized multiple pathos-heavy campaigns speaking out against injustice to solidify loyalty from customers who cared about such issues. Be sure to hire the right personalities to man your platforms, with very clear guidelines on what the company's policies, stances, and voice looks and sounds like, to avoid PR nightmares while at the same time speaking up on the issues your brand stands for, and stands against.
Sometimes change takes some thinking outside of the box. To stay in the market, it may require businesses teaming up. This could mean with companies in the same industry, and possibly some in different realms of business. Companies should think of partnering with the companies that ship and deliver their goods. Adding just a little more to the overall customer satisfaction and experience by providing the fastest shipping possible with personalized notifications. Making the customer feel involved and informed about the process of receiving their products.
Finally, the old saying goes, "If you can beat them, join them". Companies have found themselves, integrating with Amazon selling their goods directly from the website while also keeping a personal storefront page. Alternatively, some retail book-stores have found other ways to make Amazon work for their bottom line. Since Amazon has big negotiation power they get unheard of deals from publishing houses. To most, this looks like the final nail in a coffin for retail book stores, but to the creative it looks like an opportunity. By buying the books directly from Amazon and reselling them. One book store owner says "I'm a prime member. I order books from Amazon because they're cheaper from Amazon than I can get from the publisher. This is common among booksellers. We make our 40 percent margin on it. That's what it's come to." (Diana, 2018)
All in all this is not the end of the road for brick and mortar companies as long as they are willing to follow the steps to successfully adapt. Understand what's working for them in their current initiatives and what makes them unique and building from there. Utilize AI, Keeping member experience in mind at all times. Ensuring they create a strong and memorable online presence will help expose you to possible future customers and keep existing customer feeling close which leads to brand loyalty. Combine forces if needed and remember that the only thing constant in this life is change, adapting has always been the way businesses stay open.
Citations:
Roos, Dave. "Why Is Amazon Not Considered a Monopoly?" HowStuffWorks
Diana, Ben. "Is Amazon a True Monopoly or Does the Bezos Behemoth Not Qualify?" News | Al Jazeera
Grosman, Lin. "What The Amazon Effect Means For Retailers." Forbes