Only five years ago, Amazon ranked 15th behind Sears and Publix in the National Retail Foundation’s list of top 100 retailers, with $26 billion in sales. Today, Amazon runs in a league of its own with $80 billion in online sales, eclipsing second place Walmart’s $13 billion by sixfold. Moreover, while Macy’s, Gap, Nordstrom, Target and others posted disappointing sales and stock performance last year, Amazon knocked it out of the park with 16% growth. And last but not least, here’s the final jewel IN the crown: Amazon has become the most relevant brand to millennials in America.
How did Amazon do it? How did it build its e-commerce empire over a relatively short period of time?
It’s undeniable that Amazon’s founder, chairman and CEO Jeff Bezos’ relentless business innovation — from the widely popular Amazon Prime subscription service and free two-day shipping to one-click purchases — has played a key role in winning the hearts and wallets of more than 300 million Amazon customers worldwide. Amazon’s secret sauce is predicated upon a simple truth about human behavior: consumers buy when the act of buying is simple, easy and convenient. This is reflected in a recent consumer survey in which millennials reported that Amazon represents “a powerhouse of pragmatism, [and] is No. 1 in every measure of usefulness and dependability.”
By focusing on three consumer-first digital strategies — easing the purchase process by prioritizing social proof; shortening the amount of effort required for repeat purchases; and tightly connecting experiences across devices — online retailers can significantly boost sales and effectively grow and retain their customer base at scale.
Create a community of (data) givers
Amazon’s genius lies not just in the data they have but what they do with it. They build dynamic ecosystems around participatory data opportunities to activate interest and boost conversions, all while creating minimal distractions throughout a buyers’ journey. For example, Amazon continuously finds unique ways to use members’ saved credit card information to eliminate the need to think twice when paying. American Express members can even easily click on a button to pay for cart items with rewards points.
In addition, Amazon has activated their customer base to willingly provide data because it returns significant value. With 90 percent of customers saying buying decisions are influenced by online reviews, Amazon has found a way to create a culture and community that willingly provides product reviews which fuels recommendations. Online retailers similarly should take on more aggressive strategies to drive higher levels of customer feedback and data that drives convenience and cross pollinate learnings to improve consumers’ online experience.
Use behavioral patterns to shortcut the funnel and accelerate conversion
Consumers can be a forgetful bunch, and this presents an opportunity to activate revenue that would otherwise have been left on the table.
Amazon’s “Subscribe&Save” innovation provides the perfect model for how retailers can tap into behavioral patterns to accelerate sales and retain loyal customers. For example, if data shows that a consumer orders shampoo, paper towels or pet food every other month on a regular basis, why not simplify the buyer’s process via subscriptions? Online retailers that adopt this way of thinking — allowing consumers to “set it and forget it” — not only add an incredibly valuable convenience, but also create steady revenue streams without spending another dime on customer acquisition.
Tighten the consumer’s connected experience
As IoT unfolds and new, imaginative smart products go to market, digital marketers will have boundless opportunities and channels to engage with consumers. Amazon has already proven its ability to foster seamless consumer experiences between desktop and mobile. But what happens when the number of connected devices available in the ecosystem, such as smart homes, accessories and automotive devices, need to be included in the omnichannel experience?
Amazon has already begun to scratch this surface with its Alexa Voice Service by leveraging a customer centric-model in which individual channels no longer matter. If a consumer tells Alexa to add a product to cart, the product simultaneously gets added to the customer’s cart across desktop, mobile and tablet. By adopting a similar profile-driven approach, online retailers will be able to be where the customer is at all times.
While brand loyalty continues to atrophy across retailers, Amazon’s steadfast commitment to shopper convenience continues to beat growth expectations and build loyal fans. By pulling foundational digital strategies from Amazon’s playbook, online retailers stand to gain radically new competitive advantages. Over time, the combination of relentless adherence to a consumer-first vision and first-rate execution will stimulate deeper relationships with customers and future buyers.