According to eMarketer, Amazon accounts for more than 43 percent of all online sales, and is quickly transforming the industry. Brick-and-mortar and online retailers continue to face growing competition from the retail behemoth, yet almost half of retailers—44 percent, according to a 2017 Bluecore report—say they don’t know how to respond to the power of Amazon.
Competition breeds opportunity, and 2018 will require these retailers to adapt even more rapidly to ongoing changes in consumer shopping. In order to truly thrive in today’s environment, retailers need a strategy designed to deliver results in the age of Amazon: one that fuses data and technology to deliver personalized experiences.
Know the Amazon shopper (and your own customers)
There are plenty of opportunities for retailers to maintain and win market share, and it starts with really understanding the profile of an Amazon shopper: what compels them to buy—on Amazon and elsewhere—and their attitudes toward shopping in general.
According to Epsilon’s transactional, demographic and lifestyle data, the typical Amazon shopper’s average income is greater than $100,000. More than half of these shoppers have a net worth of $500,000, which means they have disposable income to spend and represent strong marketing profitability as a result. That said, even low spenders on Amazon spend more than the average consumer, buying an average of $1,084 worth of goods at brick-and-mortar stores (compared to $487 respectively for consumers in general).
More so, Amazon shoppers aren’t necessarily loyalists—each year, the top 1% of Amazon Prime customers complete 19 transactions with an average order value of $171 at other retailers.
One of the most telling aspects retailers can draw from to understand why (or why not) consumers are making purchases are behavioral insights. Price, free or fast shipping, and convenience are the main reasons why consumers shop on Amazon, but there are also offers (like free shipping) that are likely to persuade Amazon shoppers to buy elsewhere.
By incorporating demographic, transactional and behavioral data insights with first-party data, retailers can create a comprehensive CRM strategy. The right data can lead to actionable customer profiles that, when fused with the right systems and technology, enable you to activate insights across channels via social, digital media, email and direct mail to deliver highly effective marketing communications.
Look at JustFab, for example. The subscription ecommerce site and lifestyle fashion brand used transactional data to acquire new VIP members. By leveraging the right data and honing in on highly qualified prospects, the online retailer was able to use direct mail (a non-traditional channel for the online retail category) to grow its customer base and increase customer lifetime value.
Don’t lose sight of the 4Ps
With the amount of digital innovation taking place, it’s easy to move away from the fundamentals that have traditionally helped retailers attract and retain customers in favor of the next innovation. The 4Ps are still critical components of retail strategy:
Price: 64 percent of consumers who shopped on Amazon in the past six months cited price as a primary reason why. You don’t have to be cheaper than Amazon, but you must consider price matching if you want to gain wallet share. Retailers like Toys ‘R Us, Target and Bed Bath & Beyond all have effective price matching strategies.
Product: 38 percent of Amazon shoppers shared that unique products would help them decide to purchase from another retailer, either at a store or online. Attract consumers away by showcasing your individuality with products consumers can’t find elsewhere.
Promotion: Free shipping is the one of the top reasons shoppers chose Amazon and something all online retailers need to consider. Online shoppers (44 percent) can also be swayed by discounts and special offers.
Place: Consumers expect a shopping experience that offers convenience and ease. Invest in your CRM systems and websites to meet these expectations. Find inspiration from Amazon features like one-click checkout, customer reviews and recommended products, and implement your own strategies that blur the lines between brick-and-mortar and digital through mobile.
Eight out of 10 consumers are more likely to do business with a brand that offers personalized experiences, and knowing who customers are and what they want is something Amazon does very well. Competing (and winning) in this age requires retailers to use data and technology to innovate in ways that enhance the overall customer experience. By focusing on digital strategies that add value to the shopping experience through convenience and ease—while not losing sight of the fundamentals that have long helped attract customers and build customer loyalty—retailers can continue to thrive.
Epsilon is a global marketing company.