On Thursday last week, Amazon officially opened its first AmazonFresh Pickup locations in Seattle.
These stores enable customers to order groceries in advance, with as little as 15 minutes notice and grab them on their way home. The service also has no minimum purchase requirements and is a complimentary service for Amazon Prime users.
Amazon revealed plans for the stores back in March. The pilot of this new program is limited to Seattle, Amazon’s hometown for now.
Amazon has impacted retail in a huge way, leading the eCommerce charge. With this in mind, let’s take a look at how retailers are facing this challenge.
What does it take to compete with Amazon?
According to Internet Retailer, 33.8% of retail website visits during November and December 2016 were on Amazon. Also, 40% of shoppers start their product hunt on Amazon.
In a recent survey by CPCStrategy, they took a look at why shoppers are so loyal to Amazon. The survey, which ran in December 2016 featured 1500 men and women to answer just that. You can access the full study here: Amazon Consumer Survey 2017.
This survey has highlighted several key tactics that retailers can employ to compete with the eCommerce giant.
Price and Shipping
Pricing and Shipping remain huge priorities for Amazon shoppers.
Consumers enjoy the low prices and Prime shipping options. According to the survey, convenience of shipping was the top factor for ages 55-65+, while the price was the most important for the younger group (ages 18-24).
In 2017, it’s going to be more important than ever for online retailers to offer competitive prices, with fast and effective shipping.
Consumers also favor Amazon for its easy return policies. This is another great tactic for retailers to employ.
Shoppers Compare Prices Off Amazon
If you can’t beat them, join them?
54% shoppers compare your product on Amazon, on your site and on other places like Google Shopping. You may be missing out on a segment of consumers by not selling your items on Amazon.
You may decide that you want to remain off Amazon. In the digital world, you will need to invest in optimizing your site and taking advantage of advertising channels such as those offered by Google Shopping and Facebook.
Traditional Retail Holidays Might be Obsolete
Traditional Retail Holidays like Black Friday may now be obsolete thanks to online shopping, which offer low prices anytime. Online retailers like Amazon and Alibaba are creating holidays of their own.
Amazon Prime Day boasted a 50% increase in orders on Amazon vs the same day the previous year. Black Friday did not return the same rewards.
Black Friday is losing its appeal and it’s a trend being witnessed by the whole industry. While more shoppers came out to shop in stores during Black Friday, they spent less in 2016 than they did in 2015.
Retailers need to come up with fresher ideas, not just rely on the same-old.
One brand that has done this expertly, with an anti-Black Friday campaign called #optoutside. In 2015 and 2016, REI shut down stores and paid employees to take the day off. This stunt won them the Grand Prix prize at Cannes Lions International Festival of Creativity in 2016.
Brands need to not look at their retail promotional calendar too closely!
Shoppers are Value-Focused
Around 49% shoppers admit that they try out new brands or products through Amazon. This has opened up a huge opportunity for newly-launched brands or private labelers.
However, shoppers do tend to favor familiar brands and products still.
Retailers looking to compete with Amazon need to build up an audience, to prevent them moving towards Amazon.
How is Wal-Mart taking on Amazon?
The Wal-Mart vs. Amazon battle has been raging for some time.
Wal-Mart launched 2017 with a vision, to create a shopping experience to rival that of Amazon’s and maintain its market share.
It began with the acquisition of key eCommerce retailers, such as the purchase of online megastore Jet.com for $3.3 billion. This purchase led to hiring of Jet.com founder Marc Lore as CEO of Walmart.com
Next came an executive shuffle, broadening the roles of two key executives, Jeremy King’s role, previously the chief technology officer of Walmart’s e-commerce operation in the U.S., was expanded to oversee technology teams for Walmart’s physical stores in addition to its online stores. Tony Rogers’ role was also expanded. Previously chief marketing officer for Walmart U.S. stores he was also given responsibility for leading the marketing efforts of Walmart.com and Jet.com.
Wal-Mart also announced the departure of two executives, Michael Bender, the e-commerce division’s chief operating officer and its chief information officer, Karenann Terrell.
Next, the world’s largest brick-and-mortar retailer removed the membership fee on its two-day shipping option, answering the consumer need for fast delivery. Wal-Mart also lowered its free shipping order minimum from $50 to $35. This equated to more than two million items becoming available to consumers via the new, free express delivery service.
Marc Lore, CEO of Walmart’s U.S. e-commerce division, said in a statement at the time of the initial announcement that “in today’s world of e-commerce, two-day free shipping is table stakes.”
Now, the company is making waves by investing in technology. For example, a $ 2 billion investment in additional technology and logistics capability to increase its e-commerce sales and improve its supply chain.
Wal-Mart and Amazon are watching each other closely, and it will certainly be interesting to see who comes out on top in 2017.
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