Getting Inside the Mind of Amazon
A lot of retailers’ nerves (as well as excitement) around Amazon’s arrival to Australia involves the element of the unknown. The need for new processes and procedures. Not knowing what’s expected. Not knowing how the market will react. But in reality, it is known. To really leverage the opportunity, Australian retailers can look globally to understand the impact Amazon will have and, most importantly, can know how Amazon thinks before it arrives.
Understanding what Amazon wants
Some large retailers have been vocal about Amazon competing on price alone. Yet we’ve already seen that this isn’t the case. Amazon is all about the customer. Obviously, price is a large factor when it comes to giving consumers what they want. Great value is always going to be front of mind when it comes to the customer journey. But that’s not the whole picture.
It’s no secret that winning the Buy Box is crucial to success when it comes to selling on Amazon. Buy Box placement is the key to increased sales. But how do you win the Buy Box? The main factors are price, fulfilment options and seller ratings. Why? Amazon is clear in its reasoning: to give customers the best possible shopping experience.
“Our focus is on customer obsession rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, the patience to think long-term, and the taking of professional pride in operational excellence,” Bezos wrote in his annual letter to shareholders last year. And that’s the key. While retailers are obsessing over the competition (and obsessing over Amazon!), Amazon is obsessing over the customer.
Getting on board
Amazon makes it easy to join its mission for customer satisfaction. And sellers are rewarded when they do.
One example is Fulfilment by Amazon (FBA). This program offers retailers the option to store their products in Amazon’s fulfilment centres, where they are picked, packed and shipped directly. While it is still not known when or if this will be available in Australia, a big drawcard for retailers overseas is that FBA provides customer service and returns for these products. This means that they know without a doubt that they are meeting Amazon’s customer service standards because Amazon is providing the customer service! This fact is at the core of why those who utilise FBA are treated favourably when it comes to satisfying the ‘fulfilment criteria’ in Buy Box preference placement.
Upholding the standards
We’ve seen global trends of the ‘Amazon Effect’ — how retailers adapt their business practices to keep up with Amazon’s arrival. Essentially, at the heart of this is customer service. Whether it’s free shipping, simpler returns policies, faster delivery, transparent pricing, increased communication options, streamlined processes — it’s all about the consumer. And this, at the end of the day, is what it means to think like Amazon. It’s all about finding ways to increase customer satisfaction. It’s not a new concept in e-commerce and it’s not a new concept in retail. It’s just that Amazon now sets the benchmark. Each time Amazon has arrived in a new global region, the e-commerce industry in that area has benefited from a large uplift in activity. If you view Amazon’s arrival as a chance to streamline processes and ensure customer service meets expectations, the benefits are clear. If you follow Bezos’ advice and start obsessing about the customer rather than about the competition, you’ve already got a head-start.