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Three Ways Retailers Can Compete Against The Amazon Effect

  • Written by  Rick Amari, Columbus Consulting International

Today, you can’t have a conversation about the current state of retail without mentioning Amazon and the effect it’s had on the entire industry. Not only Amazon, but a growing number of companies following in its footsteps, like Uber and Airbnb, are continuing to steal consumer share away from traditional retailers and service providers based on the agility, accessibility and overall innovative offerings provided in their business models.

Recent reports indicate consumers increasingly shopped on Amazon during the holiday season last year. Slice Intelligence, a provider of actionable commerce, reported that out of 1.7 million onlineshopping receipts collected from Nov. 1, 2016 through Dec. 16, 2016, the majority of those online purchases went to Amazon, with Amazon taking a 46% share of the marketduring the season.

This is the Amazon effect.

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But what exactly is the Amazon effect and what is it doing to retailers? Consider Amazon a catalyst of the “Business as a Platform” model, where it’s no longer sustainable to only have a website, mobile app or mobile website to go along with your brick-and-mortar locations.It’s now necessary to have an entire business model, where the retail ecosystem is seamlessly connected from touch point to touch point, and the power of purchase is a simple swipe away on theconsumer’s screen.

It’s also no longer just about one single market. Consider Amazon’s journey, for example. Amazon began as a bookseller and has continued to steadily disrupt the entire retail industry, culminating in this year’s recognition as Fast Company’s ‘Most Innovative Company’ for being faster and smarterthan the competition. In the world of Amazon, those who trade and innovatethe quickest own the customer.

That is not to say all is lost for traditional retailers. To compete and continue to draw their own share of consumers, retailers need to make themselves nimble. They need to develop a competitive Amazon strategy, and examine what technologies they need to implement, define whichC-level roles they need to add, and identify a clear strategy to push toward innovation.

Additionally, as retailers continue to innovate, they must stay cognizant of the impact on traditional planning practices. During every important step of a major transformation, retailers must ask, “How do we change the planning and allocation processes to specifically accommodate a holistic omnichannel strategy?”

As we’ve seen, ease of technology on the consumer front is key. And while mostretailers’ business strategies and technology priorities do not follow thatof Amazon, there arekey strategiesretailers can focus on to enhance their consumers’ experience and deliver a seamless shopping experience. 

Perfect your order management system

Consumers will gravitate towards a purchase if their journey to find the product they are looking for is simple, yet connected. For example, recent research from cloud-based commerce platform solutionproviderKibo indicates two-thirds of consumers are less likely to buy from retailers unable to confirm product availability, and one third are less likely to buy from retailers unable to offer in-store pickup and extended payment options.

To compete against Amazonand provide the complete inventory visibility consumers desire, retailers need to perfect their order management systems (OMS).Retailers need to ensure the solution they choose to implement provides consumers with real-time visibility of all inventory at hand, in addition to keeping all internal departments connected in order to provide accurate information across all departments and eliminate friction.

Build an IT roadmap

The continuous introduction of the latesttechnologies such as VR/AR and robotics provide a numberof opportunitiesfor retailers to innovate. However, implementing a new technology solution for technology’s sake is not the point.To truly innovate and create a retail technology environment that benefits both the consumer and retailer, retailers should look to create a roadmap for their technology adoption. To do so, analyze key priorities within your organization includingareas that would benefit the overall customer experience and the retailer’s bottom line, and develop an appropriate timeline for these new implementations. 

During the roadmap development,be sure to identifyareas where the help of additional vendors or consultants will be needed.Be aware that you may face cultural hurdles when trying to transform from a traditional retail model into a complete omnichannelecosystem. For example, compared to the Silicon Valley breed of businesses that do not carry a legacy of existing practices and traditions, some retail organizationsmay be shackled due to an existing hierarchy and organizational considerations that aren’t easily altered. Be sure to examine these factorsand work with the entire organization to create a clear understanding of the need for change and theeffective next steps to do so.

Adapt your organizational design

With new technology comes new responsibility. As retailers adapt and innovate through technology, ensure you align new implementations withappropriate leadership roles. For example, in an omnichannel retailing environment, a retail organization will require the addition of a chief data scientist or director of customer analytics and a chief customer experience leader at the very least. Ensure that whichever direction your IT roadmap takes your organization, the appropriate staff and leadership are in place to execute priorities and drive a path to success.

There is no question that due to the Amazon effect,consumers expect to be able to shop when, where and how they want, and always get what they need, on their own terms.Retailers must move quickly and nimbly, to embrace the technologies and processes that can help them compete against the Amazon juggernaut.

Rick Amari is the founder of Columbus Consulting, which is currently recognized as the largest boutique consulting firm in North America that serves retail. Amari focuses on strategic IT practice, assisting retailers with IT assessments and strategy. He brings over 30 years of experience in the retail industry, specifically in the information technology discipline. Prior to starting Columbus, Amari held various positions over a 12-year career with L Brands (The Limited, Limited Brands) including CIO at Victoria’s Secret Stores and Group CIO with responsibility for cross-company Information Technology functions; including Express, Lane Bryant, Limited Too, and Lerner NY. 

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