Morgoth vs Fingolfin by Benjamin Goutte : TolkienArt

Amazon in 2017, is like Morgoth back in the day before Sauron turned up. A better, badder version of what might come next. Its laser sharp focus on customers and long term strategy is legendary. By steadfastly insisting on doing its own thing Amazon is marching towards a future that they decide — a future that other companies can’t even imagine because these companies are still busy playing catch up.

Yup. Badder than bad.

With its central tenet of ‘customer obsession’ Amazon has not only delivered what customers want but shaped what they want. Indeed Jeff Bezos and the company at large are well aware of how they are now drivers of customer want. Consider his words in the famous ‘Day 1’ letter to shareholders:

“Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.”

That’s were the true challenge lies for other retail companies. Amazon has consistently made promises that customers never even thought of, let alone demanded. And it has kept to them with more sincerity than customers ever hoped for. Decades of consistent behavior has given Amazon a competitive moat that few talk about — the ability to lead customers who implicitly trust them.

And for the past two years it has been expanding beyond the realm of online shopping and putting some serious money towards its omnipresence.

The impact that this will have on customer behavior will be to completely change the way people think about shopping as a specific activity and instead intersperse a different kind of behavior into their lives.

Shopping will no longer be a distinct thing that people do, instead the focus will shift to instantaneously getting things as and when you want them.

So, what exactly is Amazon doing to become omnipresent?

What it does best — experiment.

The Omnichannel Amazon

While the word omnichannel has been floating around in the retail industry for a little more than 3 years not many have been successful in converting themselves into omnichannel retailers. That’s because the concept is often viewed as a piecemeal strategy. Often it involves getting a few store items online, making a phone app and calling it a day — till the next crisis hits.

Amazon on the other hand has rarely said anything about omnichannel but has been pushing in that direction very aggressively for the past few years.

[1] Acquiring physical retailers

Earlier this year Amazon acquired Whole Foods, a move that many did not see coming — whether the acquisition was ‘conventional’ or not is still being debated. There is little doubt though that the move is just one among many in Amazon’s unrelenting march towards physical retail.

In addition to the Whole Foods acquisition moves into the physical realm include Amazon Go stores, physical bookstores, partnerships with retailers like Kohl’s and plans to open lockers for drop-offs.

Wikimedia Commons

The latest this month has been news about Amazon India’s purchase of a 5% stake in Indian retailer Shoppers Stop. 99% of of Shoppers Stop revenue comes from offline retail which makes the customer base a very attractive one for Amazon India. The deal gives Shoppers Stop $28 million in pocket money and a space to list on Amazon. For Amazon it brings access to physical stores — plans include setting up ‘experience centres’ in 80 Shoppers Stop stores with 20 more to be added at a later date. In order words it is a great way to train people to shop online via an already trusted brand.

The interesting thing about Amazon’s foray into physical retail is that each strategy is unique and in line with its philosophy — make many bets to see which one works.

[2] Alexa, Echo, Dot

The unpopular Amazon Dash. While this didn’t take off Echo and Dot have been quite popular.

Amazon is thinking beyond the realm of just ‘physical retail’. Instead the aim is to be embedded in a customer’s life via Amazon Dot, Amazon Echo and Alexa. And it’s miles ahead in the game than any other retailer. While companies like Google provide alternative options like Google Mini and Google Home, it won’t be able to provide an embedded seamless shopping experience like Amazon will.

Let’s take 2 scenarios:

Buying over Amazon:

“Alexa, order — —”Know you’ll get your order in 2 days.

Buying with another retailer:

Pick up your phone to open the app or open your laptop to load the website.Scroll through options and choose the preferred version.
Find and enter credit card details (if not already saved).
Wait for package and login using custom means for tracking etc.

Which one sounds easier?

[3] Betting big

In a 2014 interview with Business Insider Bezos talked about his philosophy on betting big.

“Experiments are, by their very nature, prone to failure. A few big successes compensate for dozens and dozens of things that didn’t work. Bold bets […] they pay for a lot of experiments.”

Amazon Go, Kindle store and Prime memberships are all examples of experiments that were spectacular successes. Expanding their availability to clients as well as bundling all benefits in a one-for-all system with Prime memberships makes customers deeply embedded in an ecosystem that they fully control. Add in the compound effects of a physical presence in people’s home and on the streets and the impact on customer behavior will be incomparable to any other company.

What next?

What does this mean for retailers?

It means that nothing is safe.

There are 2 implications of Amazon adopting omnichannel

  1. Firstly, it is that it spells really bad news for a lot of bigger retailers that don’t have their omnichannel strategy in place or aren’t moving fast enough.
  2. Secondly, smaller retailers will feel the pinch too because Amazon will control and shape a customer’s complete journey. People’s expectations and experiences of how they shop will change completely based on a single (gigantic) company.

A lot of retail analysts have rightfully pointed out that stores with strong physical presences have a competitive moat against Amazon. But as evidenced by Costco — which saw it stocks slide despite reporting strong Q4 earnings — a strong offline presence might not be enough anymore.

And Amazon is moving very very fast to reduce that moat — just look at Whole Foods.

Once that competitive moat is lost Amazon will be able to build a comprehensive picture of a users shopping habits at any point and place in their life.

Then it can continue doing what it does best — quietly serve the needs of its customers while operating a behemoth machine under the hood.

So, how are retailers (you) going to fight back?

This is not the time to shift a business online ‘brick by brick’

Retail is undergoing a sea change and companies that still rely on slow supply chains, patchy customer service and archaic business practices are failing.

Customers are learning to expect instant access to product catalogs and fast delivery of goods regardless of where they are.

What were traditionally viewed as “retail channels” are fusing into a continuous spectrum of customer interactions.

For a retailer or brand this means that everything from physical stores, websites, apps, pop-up shops and trunk shows must ALL be synced with each other. That also means data infrastructure needs to be connected across all channels and easily accessible to employees and customers.

Omnichannel is the only strategy left now

A while ago, omnichannel used to be a “nice to have”, not a “need to have”.

Not anymore.

Retailers have three final cards to play — their physical locations, their access to supply and delivery chains, and their physical connection to shoppers. The only way they are going to be able to fight back is to merge their physical operations with an online / multi-channel shopping experience — a.k.a the Omnichannel Shopping Experience.

In order to create the ultimate omnichannel experience, they need a keystone — enriched, clean, normalized, categorized product data for an online experience.

Having better product data improves everything. It makes for a better search experience, it builds trust in an online brand, it moves the conversion rate up.

It’ll even make your tea if you let it.

So why let poor product data hold back your retail omnichannel ambitions? Let it soar with Semantics3’s Product Catalog Solutions for Retailers!

Get in touch with Semantics3 to discuss futuristic retail solutions — from instant product catalog enrichment to AI-driven product categorization.

Get a demo of our Artificial Intelligence solutions for retail.