5 ways Amazon Australia will affect your retail business in 2018
After much speculation about launch dates, it’s official – Amazon Australia opened for business, just in time to fulfil Christmas deliveries down under. So, what does this mean for your retail brand in 2018? And what can you do to compete in an increasingly competitive and multi-dimensional marketplace? In this blog, we highlight five key ways in which we believe Amazon Australia will affect your retail business in 2018:
- Greater emphasis on customer service
The new generation of savvy, impatient and empowered customers expect personalised and seamless service, and the ability to control their own engagement with brands. They click their way to new products and deliveries in record time.
Internationally, Amazon has succeeded by satisfying the modern customer’s demands and setting new standards for customer service.
Technology can certainly help enhance the customer experience in several ways – enabling retailers to hone-in on, and respond to, customers’ specific needs and shopping patterns, as well as giving retailers far greater control over their supply chains, which can help ensure more reliable and efficient delivery.
With a robust data analytics strategy in place, for instance, retailers can understand their online customers’ needs in detail; responding with highly targeted and personalised offers that encourage repeat purchases and long-term loyalty. In store, interactive kiosks can be used to identify customers (enabling a seamless omni-channel experience), offer special discounts, and gather additional information about customers’ needs. Beacon technology can also be used to gather information about customer numbers and their location in-store.
Essentially, technology can help bring out the contextual relevance of what retailers and brands know about their customers. This can empower store associates to make the customer experience better, and take away the pain points and frustrations of shopping.
Another key way in which retailers can enhance the customer experience is by educating staff in-store. Sales staff represent one of the biggest contributors to the success and failure of traditional retail stores. Their availability, knowledge, advice, assistance and professionalism have a strong influence on a consumer’s likelihood to recommend a retailer to friends. Conversely, poor service is a major contributor to customer defection.
Using technology to equip staff with improved access to information and stock visibility across channels helps retailers build customer loyalty. “Rather than send customers to another store, or home to order their goods online, access to accurate stock availability and appropriate in store technology allows sales associates to close the sale there and then, giving the customer a positive experience and a reason to return,” says retail industry expert, Brett Ashcroft.
2. More engaging, data-driven, in-store experiences
Amazon is one of the biggest disruptors in retail. Traditional retailers have been haunted by the thought of Amazon using its technological prowess to capture their market. However, even online retailers like Amazon are experimenting with physical stores – which evidence suggests, are here to stay.
While online shopping is fast and convenient, there are still many reasons why people choose to shop in store, including the ability to see and physically try a product, one-on-one customer service, and the fact they will walk out of the store with their purchase in hand, rather than waiting for a delivery.
According to Ashcroft, traditional stores need to make in store shopping more of a memorable experience.
“A toy store may have a dedicated play area and craft workshops on weekends, a personal stylist in store could pull looks together for that all-important job interview, or the sweet smell of freshly baked cookies may lure you into the bakery to take home a treat. Consumers are savvy and impatient and you’re competing for a share of their time and wallet,” says Ashcroft.
He also stresses the importance of having skilled, educated sales staff – and providing them with the information they need to help customers.
“The store’s sales associate’s primary focus should be customer service. There are several aspects of the store experience that need the human touch – helping people find the perfect gift or “the look”, making displays look beautiful and appealing, running events and engaging customers generally,” he says.
To help store staff be successful, retailers must give staff access to technology that provides useful information, yet also allows them to be accessible to customers on the shop floor. With details on customers’ order histories and personal preferences at their fingertips, for instance, staff can create a highly personal and memorable experience for the customer, and this is an area where traditional retailers can win over their online competitors.
“Customers expect to jump between online and offline without thinking about it. Harnessing this behaviour is a major challenge for retailers,” he adds. “Retailers that use technology and data to create personalised shopping experiences, recognising that each customer has unique needs, are more likely to come out on top.”
3. More focus on repeat business and customer loyalty
Customer loyalty isn’t what it used to be. Technology has created more informed, more connected customers who are no longer loyal to a brand, but to an experience across channels.
For instance, nearly 80% of customers say they would move to a competitor within a week of experiencing poor customer service. Millennials are also less loyal to brands than Gen X, with 26% saying they are likely to buy whatever brand they feel like at the time.
Anita Dorwald is the Chief Operating Officer of the popular Australian fashion retailer, City Beach, and points out that their younger customers often shop online and their expectations are constantly changing.
“What is critical for us is understanding exactly where customers are at any given point in time and what they are looking for – whether it is the experience or the product or the price. All of it has to be on point for customers to stay loyal to your brand,” she says.
The highly promotional environment in retail today has given shoppers a sense that there is always a better deal at the end of the road. The rise of online retailers like Amazon has made it easier than ever for consumers to compare products and source the best deal. Customers are less likely to be loyal to a few tried and tested brands, and this has led to a sharp decline in brand loyalty.
“Customers’ attention spans are diminishing and if retailers don’t hook them appropriately, they are going to lose them. Brands need to look beyond their products to keep customers coming back and stand out in the sea of brands they’re competing with – both online and offline,” says Ashcroft.
Whether shopping online, in-store or a combination of the two, customers are looking for a hassle free, engaged experience. The reason customers keep returning to Amazon is because they get a consistently great experience.
4. Greater acceptance of ‘showrooming’
The advent of new technologies, and new ways to shop, has shaped the way customers buy.
Many studies show that most customers would still rather shop in store than online. However, a growing majority of customers are browsing products in store, before they complete the purchase online – a phenomenon known as “showrooming”. Another growing trend is for customers to research products online, visit the store to touch/feel/see the product – known as “webrooming”.
Polls suggest that 69% of people webroom, yet only 46% showroom. There are several reasons for this – customers don’t want to pay for shipping (47%), they don’t want to wait for the product to be delivered (26%), they want to feel the product before buying (46%) and they want the option to return the product to the store if needed (37%).
Traditional retailers that actually function as “showrooms” offer an ideal balance of cost and experience for differentiated products — an opportunity for consumers to experience the products, then purchase the way they want, in store or online.
With the right techniques and approaches in store, they can do so by providing a convenient, frictionless experience, not unlike what Amazon offers online.
“Mobile or kiosk devices can give employees and customers more detailed product information at their fingertips. If the store doesn’t have the product the customer is looking, they can instantly show detail on that product or show alternatives, process an order and arrange delivery at home, or collect at this store or another,” Ashcroft suggests.
City Beach, for instance, uses Microsoft’s Dynamics 365 for Retail system to manage everything from POS to Marketing. Through Dynamics 365, the business collects rich insights about customers, including what they were buying, how they shop and their interaction preferences. These are then used to curate the City Beach collection and shape the retailer’s roadmap for the future.
“I think our CRM allows us to validate what was a gut science. Dynamics allows us to gather data in a practical sense and really target our communications – EDMs and social interactions – and map out our website to be more customer focused with that new insight,” says Dorwald.
5. Greater use of emerging technologies
While Amazon’s launch in Australia is intimidating, it also represents an exciting opportunity for local retailers to embrace technology to reach customers in new ways.
Marty Drill, from Australian digital agency, Get Started, for instance, says “Amazon doesn’t have to be the enemy of Australian retail – pointing out the effectiveness of voice recognition technology in the shopping process.
“Amazon has changed how we shop, and not just for fashion… Amazon’s Alexa is completely transforming the landscape of when we shop, how we shop, and why we shop,” he says.
“Fast, form-free ordering is the way of the future. Digital natives are becoming so used to voice-led shopping experiences, that online forms and even the barrier of a screen can be an irritation that can influence their user experience. It goes without saying that being aware, and open, to voice recognition technology is your key to survival in the future,” he adds.
“The future of online experiences is with voice, and streamlined shopping experiences. With Amazon able to offer leading technology on both, I say it’s time to forget the fear of its arrival, and start to get excited about what it could offer your business.”
Find out more
For more details on developing an Amazon strategy, read the full whitepaper: Thriving in the Amazon era