If you’ve attended a retail industry conference during the past several years, I’d be willing to bet something like this has happened to you. You’re at a session with a title that is some variation on “How A Retailer Can Beat Amazon At Its Own Game.” The presenter will cite the many statistics attesting to Amazon’s amazing growth and market dominance. Then he or she will ask the attendees: “How many of you are members of Amazon Prime?” Somewhat sheepishly, hand after hand goes up. Retailers may spend their time feverishly worrying about how to survive in an Amazon-dominated world, but even as they do, many are simultaneously lining Jeff Bezos’ pockets.
Are these people foolish, or hypocritical? Hardly. Like everyone else, retailers are also customers. And Amazon is a company that is “maniacally focused on solving customer problems,” according to Patrick Gauthier, VP of External Payment Services at Amazon. Gauthier spoke at the recent National Merchant Day event in New York City, revealing some of the reasons behind the industry’s love/hate relationship with the e-Tail giant.
“I’ll meet with two types of retailers: those that are focused on Amazon and are scared, and those that focus on their customers,” said Gauthier. “We work with a lot of retailers who want to understand what consumers want and how they’re changing, so they can answer the question ‘What do I as a retailer need to do?’”
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Amazon’s own unrelenting focus on the customer has been behind some of its most successful innovations, such as Fulfillment by Amazon (FBA). This service, used by an amazing 80% of Amazon’s marketplace sellers, handles upwards of two billion packages annually. “We started noticing that the number-one reason consumers were calling customer service was simply to find out ‘Where’s my stuff?’ from our marketplace sellers,” said Gauthier. Meeting two basic consumer needs — to have their order delivered in a boringly predictable way, and to be able to track its progress — was the motivation behind the development of FBA.
That ability to look just a bit beyond the surface content of what consumers desire is an important part of the Amazon mindset, according to Gauthier. “Henry Ford is supposed to have said that if he’d asked people what they wanted, they would have said ‘faster horses.’ But what they really meant was that they wanted a better form of transportation,” he said.
Retailers Should Play To Their Strengths
Retailers also need to have a realistic sense of their own strengths and weaknesses. “Retailers need to discover what they are good at and can own, and what they should partner in,” said Gauthier. “If you’re good at logistics, do that. But today there are so many services available that any company can decide where to concentrate their capital — and I’m talking about both human and financial capital — to be great at what they do.
In Gauthier’s area of focus, payments, he believes the Pay by Amazon feature is a net plus, particularly for SMB retailers. “There are a number of merchants who tell me that when they put Amazon checkout on their site, they get a halo of trust from our brand,” he noted. Gauthier admitted that brand cohabitation is a complex question, but that for SMBs, “it’s a no-brainer. At some point they simply need to be wherever their customer wants to be.”
That means retailers need to know their customers and understand their payment preferences, devoting just as much attention to this as they do to which products to offer. Being selective helps retailers avoid the “NASCAR-ization” of their checkouts — the condition where there are so many payment logos that the page resembles a race car plastered fender to fender with corporate logos. “It’s likely a page with too many buttons means most of them are underperforming,” said Gauthier. “Retailers need to have a platform where they can test, test, test, and be very brutal. If it doesn’t perform, don’t keep it. Don’t waste your customers’ time and attention.”
Retailers also need to acknowledge that Amazon is a dominant force, but they can also use that fact to their advantage. “If you have a web site today, 85% of your traffic is people who also buy on Amazon,” said Gauthier. “If you’re wondering what technology to use next, ask more questions, and find ways to experiment.”
