In the Age of Amazon, All Hope is Not Lost for the Modern Retailer
Fifty percent of total U.S. e-commerce. One hundred million subscribers. Five hundred individual grocery stores. Its own distribution networks. Dare we talk about drones? For most, if not all U.S. retailers, Amazon.com represents a threat to the future retail landscape.
But how long can its lead last? Amazon may command the current e-commerce marketplace, but the footsteps behind it grow louder with each passing day. Most of the world’s retail activity still occurs offline in physical stores, while the rise of new technology options has powered more sophisticated online commerce. With these factors at play, legacy retail brands may gain the traction needed to take back the reins.
Google and Microsoft have developed new digital ad formats, including Product Listing Ads, that tap into evolving consumer behavior. These small, dynamic formats feature individual products targeted to particular consumers. This allows retailers with hundreds of thousands of SKUs to easily advertise specific products to specific people at scale. Factors include product margin, expected customer lifetime value, and competitive marketplace considerations. The result? A more customized advertising experience that allows individual retailers to shine, driving market share away from Amazon.
Now, imagine you're traveling and forgot your dress shoes. It’s the day of your brother’s wedding. Suddenly, you need to know which nearby stores carry your specific size in a style and color that suits you. In moments like these ones, local inventory ads become a game changer. This approach leverages the modern online ecosystem’s targeting capabilities by combining geographic presence with real-time inventory feeds. Featured items remain limited to products currently in stock at store locations within a 30-minute drive of the targeted individual. Inventory, consumer location, and current traffic patterns all undergo analysis in real time and at scale before an ad gets served. This specificity has helped the offline side of the retail business gain traction, driving more and more people to physical stores.
To maintain — and accelerate — this momentum, retailers must leverage the treasure trove of customer data built up over years, if not decades, of business operations. Amazon may be quickly closing the gap with its own customer data gathering, but major retailers have a distinct and entrenched advantage: legacy. These retailers have captured information about customers for years manually, then digitally. While this first-party customer data often sits in disparate and varied internal systems, it carries high value when used to target and personalize online advertising. It sits there, just waiting to get leveraged and deployed.
Driving online sales and offline store visits should be the goal. With new digital ad formats and first-party data at the ready, retailers can now engage former — and likely future — customers through targeted commerce ads at scale. Retailers alone hold the power to survive and thrive in the age of Amazon.