Amit Sharma, CEO, Narvar
Amazon is continuing to put massive pressure on other ecommerce and retail players. In the latest example this past holiday, Target, Home Depot and Macy’srolled out same-day delivery services on Christmas Eve, an idea that would have been unthinkable for those merchants just a few years ago. But there was one big reason they felt compelled to offer the last-minute gift delivery service—Amazon announced the same thing a week before.
Indeed, almost every retailer seems to be constantly playing catch-up with the Seattle-based giant. Amazon, which had a record-breaking Cyber Monday, is the No. 1 brand to watch across marketing sectors in 2019 as it continues to expand in new ways. Here are three things retailers, in particular, should expect to see from the ecommerce giant over the next 12 months.
Make its ads work better for brands
Amazon, which was expected to make $4.6 billion in advertising revenue in 2018, has become a must-buy for media planners in the retail and CPG space. In recent years, Amazon has moved paid search placements to dominant positions on results pages to make sure they are in front of shoppers. It’s also improved ad targeting and retail insights for advertising while adding video.
In 2019, there will be a ceaseless effort in making Amazon ads more clickable for consumers, and, therefore, more lucrative to brands of all stripes. The ads will not only be placed better, but I predict Amazon will better integrate ads to combat banner blindness and figure out a way to make them look better. (Optimally, the ads would look like Instagram’s magazine-quality promos; imagine how the same concept could be applied to the Western world’s biggest shopping engine. Though Amazon ads probably won’t achieve that level of creativity this year.) Better ads will lead to better campaign performance, which will lead to more money spent on the platform by brands. Such developments will not only give Amazon more of the digital advertising ecosystem but also more e-commerce market share.
A word of caution, though: Brands need to be aware and thoughtful in how they leverage Amazon ads to drive their own businesses without selling out their own futures. They cannot and should not become too reliant on the e-commerce giant.
Ramp up on pop-ups
There’s been ample buzz around the impact that Amazon Go, Whole Foods, Amazon 4-Star and Amazon Books will have on retail. But, they don’t begin to cover CEO Jeff Bezos’ plan for establishing a brick-and-mortar footprint. In fact, there are plenty of signs afoot that his team wants to make Amazon a platform for other brands’ offline retail.
Particularly, there’s an emerging focus on pop-ups. In the last three months, the examples include Calvin Klein in London, Good Housekeeping in Minneapolis and its own branded pop-up in Madrid. In each case, shoppers can scan products with the Amazon Prime app and have the items delivered to their homes or at an Amazon drop-off center. Customers get the best of both worlds—they can see and feel their products before buying them without having to carry their packages home. And, in the case of Calvin Klein and Good Housekeeping, the retailers only need products for store display—there’s no need for backroom inventory. It seems that Amazon envisions a day when “offline transactions” for retail brands regularly go through its app, similar to how third-party merchants sell products on Amazon.com today for an affiliate fee.
This year, we’ll see more brands like Calvin Klein and Good Housekeeping run Amazon-powered pop-ups. After purchases for home delivery, it will be imperative that the customer is alerted at every step of the order fulfillment so they know what to expect. In a consumer survey conducted by my company, Narvar, we found that shoppers rate order tracking as the most important message they receive from brands.
Create more returns and pickup options
Just like notable retailers are partnering with Amazon to create pop-ups, their competitors are tying up with the company to make returning and picking up packages easier. It really makes sense for the Amazon customer experience, and it also truly makes sense to drive foot traffic into chains that need shoppers.
Kohl’s started accepting Amazon returns with a limited number of locations in 2017 and then expanded the initiative to 100 stores in August 2018. It worked out well for Kohl’s; sales increased with that additional foot traffic. The same thing is almost certainly happening with Whole Foods, as Amazon customers are returning packages every day, increasing their share of grocery trips.
Expect more of such partnerships in 2019 between Amazon and major chains. It’s worth noting that 96 percent of consumers would shop with a retailer again based on an easy returns experience.
Learn and differentiate
Amazon proves that a mix of tech and convenience are a huge part of the future of retail. The e-commerce behemoth in 2019 will gain more marketing share as its advertising prowess builds, enabling partners and brands on its platform to achieve better sales in consumers’ homes and in-store while also being able to improve the post-purchase experience with easier returns.
It’s important, though, for other retailers to differentiate themselves from Amazon because every merchant needs to innovate with customer experience. Rather than mimicking Amazon’s methods, retailers should use them as starting points to create a cutting-edge customer experience.
Narvar specializes in providing post-purchase services to online shoppers.
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