Jeff Bezos had it all figured out well over a decade ago. Customers would buy stuff online, if they could find great service, selection and convenience. Since then, Amazon has grown into what will likely be in 2012, a $50 billion annual turnover business.
The recent ClickFrenzy – also sometimes referred to as ClickFail event demonstrated clearly to everyone who hadn’t known already; Australia’s online shoppers are hungry to purchase products from Australian retailers online.
Sadly, it also put the spotlight on the areas in which the Australian e-commerce industry still has a way to go. Particularly, if it is to meet big spikes in demand; and make online shopping in this country something that over delivers and truly delights customers. Maybe it’s time to have a look at what Amazon got right and see what we can do to address some of the industry’s challenges.
Firstly, how has Amazon managed to keep up the pace of innovation throughout its 18 years. And how have they been able to scale their operations, to a size where they can serve more than 20 million customers every day?
The years with Amazon from 1998 to 2002, where we launched three of its eight international sites, hundreds of new product stores and a host of innovative features, provided us with valuable lessons on what made this online commerce giant grow in the way it did.
If you are serious about online retail and digital innovation, I’d like to share a few of the core organisational philosophies and technical fundamentals that made Amazon what it is today.
We want Australian online retailers to not only close the gap with their international competition but leapfrog ahead of them.
Innovation for the sake of your customers
From its very early days in 1994 in a tiny garage in Bellevue, Washington state, Amazon set out to become the world’s most customer-centric company. Jeff rightly believed that by investing in Amazon’s customers, he would increase their loyalty and grow the total dollars they would each spend on his site.
Everyone has a voice in innovation
Amazon has always at heart viewed itself as a technology company that uses meaningful innovation to disrupt markets and gain market share. This strategy takes a shared organisational vision and above all else, an unwavering commitment from the company’s leadership team, to enable everyone within the business to promote their own ideas.
Cross-functional project teams were the norm back in 1998 and innovation would flow top-to-bottom, directly from Jeff Bezos himself, as well as bottom-up. Like it did from a tiny software development team that laid the foundation for the company’s now flourishing AWS cloud services.
Organisational transformation of this nature has to reach deep into the whole business, through sales, customer-service, buying, merchandising, finance, logistics and distribution center staff. Otherwise, the next time someone tries to return his or her unwanted online Christmas present in-store or calls up your hotline, they they don’t get handled in the way they ought to be; and the online experience is destroyed!
Each new hire at Amazon would at some point either pick up the phone in customer service or gift-wrap one of those lovely Christmas presents in a distribution centre. There’s nothing better than having to explain personally to a customer that it is absolutely not a problem to return the product ,for them to fully understand the end-to-end journey of online retailing and customer satisfaction.
Selection and support, close sales
Low prices are only one of a multitude of areas in which Amazon has been and continues to differentiate itself from its competition. It wasn’t just price, but selection and convenience that really set Amazon apart.
From books and music, to clothing and home, health, and personal care products, there are few items that cannot be purchased from Amazon, either directly through its own inventory or via its marketplace. But its not simply about the breadth of its offering that compels shoppers to make that purchase, it is the depth of the content that Amazon offers its customers, which makes the buying decision compelling.
Forget about product and customer reviews. Zoom in on that book cover; watch that trailer, read the first chapter before adding it to your basket or look through that interactive guide of your new smartphone.
What looks easy on the outside however, can be a massively complex undertaking from the inside. Just getting the basics right, such as supplying outstanding product images, is a huge challenge on its own. But it’s worth all the effort because every little bit of additional information you provide your shopper, can be the deciding factor in them making that click to commit and buying the product.
Simply scanning your existing catalogue in low- and high-resolution, is for example, not enough to compete with an Amazon or a Nordstrom on an equal footing.
Online is short for Convenience
Amazon has continuously outpaced others with the myriad of offers and tools that make it painless for customers to shop on its site. They take away many of the fears associated with not being able to physically touch a product or ask a store sales person a quick question. In fact, it has taken all the good things about offline shopping and put them into one concentrated package of goodness, online!
It’s all about convenience and putting the consumer in control. Find the exact status of your order or track it once shipped; see if an item can still be shipped to you, same day for Christmas; splitting shipments so that items that are in inventory will be shipped to you first; Amazon Prime and more recently Amazon Locker also allows packages to be shipped to secure pickup locations across the US.
Offering free shipping to increase conversion rates and sales should be a no-brainer but Australian online commerce sites must go beyond this to compete with their overseas counterparts. Larger bricks and mortar retailers, operating in the online space, could create offers similar to Amazon Prime – whose members are spending more than twice as much on the site than non-Prime customers.
Or why not offer same day shipping to customers living in one of Australia’s capital cities, something your international competitors can’t provide without a local warehouse?
While some of Australia’s grocery stores are piloting these services and Australia Post is to provide a similar secure pick up service, more retailers need to adopt these strategies fast or be left behind, again.
Set the pace, barely below breakneck speed
People don’t want to hear that you are about to revolutionize their world. They want it now and if you don’t deliver, they will move on and might not come back.
Write the following down as the mantra by which your organisation should live by; launch something new every day or at least every week. Not every month, quarter or year.
Being able to do this is no small feat.
Under promise and over deliver
It is incredibly hard to execute on this simple statement. In the world of online retailing, you need to do two things; firstly, remove any barrier that stops a consumer from purchasing; and secondly, be perfectly clear about exactly what will happen at each step of the engagement and how they can get help, if they need it at any time. Finally, put a little cherry on top and give them something they aren’t expecting. Delight them and you will have them coming back for more.
Australian retail executives need to step up or move on
To be truly competitive, a number of Australia’s leading bricks and mortar retailers need a clean out at the top. The industry has for the last decade been plagued by leaders who lack vision and are luddites. When it comes to the online and digital transformation sweeping the world they have delayed and dithered, putting the industry back years. With comments like those below, one wonders if they will ever understand what is really at stake.
“Sure, the website crashed. It crashed on the night, but it worked bloody well yesterday (Wednesday) and it gave us some tremendous sales,” CEO of a leading department store chain said, at an Australian Retailers Association breakfast, in Sydney, after the Click frenzy melt down.
“You never get things right first time. We are still in a nursery in online and sometimes in that nursery, the kids cry and sometimes they need to have a quiet sleep.”
It is certainly not what we would imagine Jeff Bezos or the head of any other international online or traditional retailer would say in such a situation. It’s no wonder the share price of many of Australia’s bricks and mortar retailers are plummeting.
Tomorrow, heralds another big opportunity
With Australians, adopting smartphones faster than their US and European counterparts and a whopping 47% of all website visits via a mobile phone, you would think that a mobile optimised shopping experience is a must have in 2013. However, less than half of the top Australian e-commerce sites do!
Instead of just closing the gap with international commerce sites, we should be developing and executing concepts that go beyond the bare minimum, providing additional benefits that come from having the power of a desktop, camera, GPS-device, accelerometer, payment gateway etc, etc, at our disposal. It’s a “shop in your pocket”.
Why not reach that in-store shopper before he catches a discount online by offering compelling prices with unparalleled service, an app that allows him to find his way around the store or displays current promotions? How about using the mobile channel as a way to actively communicate to your customer about new products and deals that they chose to be notified about? Maybe even while he is passing one of your stores, if you happen to have one, or at the point in time you know that he is visiting your online site?
There is still hope, yet…
One thing is for sure, someone is going to innovate and deliver if you don’t. Whether it’s an Australian start-up such as TheIconic.com.au, with its 3 hours shipping time in Sydney or a ToysRUs, who is now offering free shipping to 60 markets across 6 continents, including Australia. Innovation and change in online retailing will not stop. The consumers want more and it is up to Australian retailers to rise to the challenge if they wish to succeed. Where there’s change, there are always big opportunities.