Michael Osborne, president & CEO, SmarterHQ
In the last decade, more than 50% of the Fortune 500 companies have disappeared. Retail bankruptcies are increasing year-over-year by 24 percent. Consumers are moving from primarily shopping at malls and other brick-and-mortar locations to transacting online and on their mobile devices. While most retail brands have adjusted to this move by providing an e-commerce and mobile site, brands are missing the mark about why consumers prioritize online shopping — for convenience, flexibility, ease and the on-demand experience that it provides.
At the end of 2017, Amazon is predicted to represent nearly half of all e-commerce sales, ending the year with $196.8 billion. Following closely behind are eBay, Apple, and Walmart. Retail brands have long considered Amazon a top competitor and retail executives feel the pressure every quarter when the e-commerce brand announces its earnings.
However, it isn’t quite as dismal as brands might think. A recent survey we conducted at SmarterHQ found important insights about why shoppers choose Amazon over a branded website or in-store location. Survey respondents not only appreciate free shipping provided by Amazon, but they also use the e-commerce site to compare prices and view product recommendations and reviews by users.
With the holidays upon us and 2018 not far behind, it’s critical to consider some of these key findings to help convert customers and keep them coming back long after Cyber Week 2017.
Free shipping
Consumers using Amazon Prime by and large — 84 percent— reported that they would cancel the subscription without free shipping options. Of the top five reasons for cancelling, free shipping dominated 75 percent of the list. The report also showed the more frequently shoppers buy online, their demand for faster shipping increased as well. Only Prime Video came even close to shipping preferences at 34 percent.
While brands can’t offer free shipping to each and every customer, SmarterHQ data shows overwhelmingly that it can’t be ignored any longer. During the holiday season retail brands should use dynamic cart thresholds, and place a specific price point on free shipping for shoppers who spend more money.
Product recommendations and reviews
We’ve all shopped in-store and used a smartphone to compare prices, not only on Amazon but also other retail brands as well. In fact, more than 80 percent of consumers compare prices before a purchase, and a recent McKinsey & Company report found that 35 percent of purchases on Amazon come directly from the site’s unique ability to provide similar product reviews powered by algorithms and predictive modeling. Further, SmarterHQ’s report found that when provided Wish Lists, like a baby or wedding registry, purchases from relevant product recommendations doubled.
Customers like the ease and efficiency of unique suggestions, and when they were provided on a brand’s website, they stayed there longer and rarely ever compared prices on Amazon or other sites. Brands using behavioral marketing can target customers in preferred ways and prevent them from leaving to compare prices elsewhere. A previous report by SmarterHQ also found millennials increased brand loyalty by 28 percent when recommendations were part of a brand’s website or email triggers.
Over the years, retail brands have consistently argued that Amazon is a key competitor, but data shows that with added personalization and behavioral marketing tactics, shoppers can be swayed. As more retail brands adapt to behavioral marketing as the next wave in consumer buying, it is very possible to attract revenue from shoppers who may have previously made purchases on Amazon instead.
It’s no longer possible to ignore the preferences and demands of today’s digitally connected consumers. The very predictive modeling and algorithms that Amazon uses can also be achieved with behavioral marketing platforms working in conjunction with in-store and onsite interactions. If brands want to compete with Amazon, then finding behavioral marketing solutions to match the current marketing technology stack is the next step.
SmarterHQ provides a multichannel behavioral marketing platform for retailers and consumer brands.
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