Amazon.com accomplished more in 2017 than most businesses hope to achieve in their existence, from winning Oscars to buying Whole Foods — and what a year it was.
It seems as though Amazon is putting its foot in every open door, from healthcare to grocery to streaming services. The retail giant's vast resources, trusted name and existing digital capabilities have created an environment where nothing is off the table. This is great for consumers, but it leaves many smaller retailers unable to keep their heads above water.
Already, Amazon’s aggressive business model is forcing mediocre retailers out of business. American retailers are closing stores at an unprecedented rate, in large part due to Amazon’s majority share of e-commerce sales growth.
Fortunately, there are ways for retailers to chip away at the Amazon monopoly. And thanks to the advent of new digital solutions and customer experience capabilities, price doesn’t have to be the battleground.
Don’t Compete on Price
Feeling the pressure from big-name companies like Amazon, smaller retailers may feel that their only option for staying competitive is slashing prices. This is certainly not the only or best strategy, and playing the price game will only ever be a recipe for disaster. Lower prices may monumentality boost sales and alleviate concerns, but competing on price isn’t a long-term answer. Rather, it’s just a race to the bottom.
Considering that Amazon can also offer every type of product and fast shipping, competing on convenience is even less of a viable option. Amazon Prime, the retailer’s loyalty program most well-known for its free two-day shipping service, currently has 90 million users. These shoppers have an established loyalty to Prime’s delivery standards and low prices that other retailers will find hard to outshine.
So, what’s a retailer to do? In the age of Amazon, successful retailers will be those that can offer shoppers value outside of price and convenience.
Compete With Personalized Product Recommendations
The best way for retailers to remain successful in the age of Amazon is by ensuring they help customers find the right products at the right prices, not any product at the lowest price. This philosophy takes into account that consumers are much more than their wallets, and their buying journeys go well beyond transaction.
Discovering, browsing and learning are equally important steps on the path to purchase. In fact, 92 percent of consumers visit a brand’s website for the first time to do something other than make a purchase. Retailers should focus on these areas and offer more personalized experiences and product recommendations to compete with Amazon’s appeal.
Furthermore, calls for personalization among consumers are loud. Nearly two-thirds (59 percent) of shoppers are interested in personalization as a part of their online shopping experience, and over a quarter (28 percent) actually picked personalized content as one of their top three contributors to a great digital user experience. Despite this expressed interest in personalization, however, over a third of shoppers (35 percent) still feel that brands do a "poor" or "very poor" job of personalizing online shopping experiences.
Previously unsuccessful personalization efforts shouldn't dissuade retailers from trying again. Rather, retailers should take consumers current dissatisfaction as an opportunity to recommit to delighting shoppers with more valuable and unique experiences. Part of that process involves uncovering exactly where consumers crave personalization most.
When it comes to specific product categories, consumers expect personalized content when shopping for personal entertainment, apparel and travel. As far as price, shoppers say personalized content is most important when purchasing products/services within the $51-$100 range. These trends aren't universal, but they serve as guideposts for retailers looking to get their personalization programs up and running.
It’s also useful to explore the depth of personalization shoppers are interested in experiencing. While retailers’ reflexes are to personalize with demographic information like age and name, this strategy is no longer enough. Consumers only ranked demographics as their third most important thing retailers should know about them to best personalize their experiences. The top two factors are purchase history and personal information, indicating that today’s shoppers expect retailers to go beyond the basics.
Price will always be a variable consumers consider, but the rise of personalization capabilities means it’s no longer the only place where retailers can compete. Greeting shoppers with personalized experiences and product recommendations not only helps retailers win sales they might otherwise lose to price comparisons, but it also helps shoppers see them as valuable, helpful and educational partners.
Finally, retailers can punch at Amazon’s level by personalizing each stage of the consumers buying journey. The technology now exists to personalize products displayed in email marketing, display advertising, search results pages, category list pages, product detail pages and cart pages. Each of these experiences requires specific algorithms that predict the best products to recommend at each stage of the buying journey and the individual’s behavior compared to all other visitors.
Personalization Efforts Start Now
The results are positive for retailers willing to invest in personalization. Twenty-one percent of shoppers are more likely to purchase again from brands that do more to personalize their digital experience than those that do not, and nearly the same number are more loyal (17 percent). Episerver customers that use automated product recommendations typically see their average order value increase by 35 percent compared to experiences that aren't personalized.
These numbers are only likely to grow as competing on price becomes even less of an option for today’s retailers. The other thing likely to keep growing? Amazon.
That’s why it’s important for retailers to lay the foundations for personalized e-commerce now. This includes adding new digital experiences technologies like content management systems (CMS) or e-commerce platforms, as well as learning more about target shoppers. Together, these efforts will help retailers deliver personalized experiences in real time, no matter the device or channel.
Ed Kennedy is senior director, commerce, at Episerver, a company that unifies content and commerce in one platform.