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[14 comments]

Retail TouchPoints: What E-Tailers Can Learn From Amazon.com

August 24, 2011

Through a special arrangement, presented here for discussion is a summary of a current article from the Retail TouchPoints website.

According to the 2011 Social Shopping Study recently released by PowerReviews and the e-tailing group, shoppers spend 75 percent of their time online conducting research. The report notes that consumers are gravitating to powerhouses like Amazon, regarded as "the defacto retailer for comparison shopping."

What are some of the "lessons learned" that retailers can implement to foster a streamlined path-to-purchase?

In an interview with Retail TouchPoints, PowerReviews VP of marketing Nadim Hossain pointed out two things that Amazon does well. First, all Amazon's product page content is indexable by search engines.

He added, "This might sound basic, but 60 percent of the Top 20 retailers fail at it. Just look at the cached version of a product page from Office Depot, Best Buy or Dell -- the review content is nowhere to be seen. And this is what Google sees."

With the study showing that 90 percent indicate that reviews have an impact on their purchasing decisions, retailers at a minimum should offer reviews and ratings on their sites. Question and answer capability can also be a very powerful form of consumer insight in driving buyer confidence and increasing conversions.

"But all this pre-supposes that the consumer even comes to your site. Most shopping journeys begin on a search engine, usually Google. So in order to be found while the consumer is researching or shopping, you have to have decent SEO.

"User-generated content -- such as reviews and Q&As -- is keyword-rich, so that's one way to boost this. Ensuring you provide search engines with social signals, i.e., Like, +1 and Tweets, is another."

The second thing Amazon does well, he contends, is social.

"They've built a rich, two-way Facebook Connect integration that pulls in your friends' birthdays and Likes into your Amazon account," says Mr. Hossain. "From this information, Amazon is able to infer which products you could be interested in and make more informed product recommendations."

But Mr. Hossain said social isn't primarily about research in the traditional sense, but about product discovery, or finding out about a product when you had no idea it existed.

"So your goal isn't to have someone search Facebook for your product," said Mr. Hossain. "Rather, it's to have a happy customer share her glowing opinion about your product -- and a link to the product page and an attractive photo -- with her hundreds of friends. Forever21 and Etsy do this well, and they're seeing upwards of 15 percent of their traffic referred from Facebook, exceeding their Google referrals. Even Amazon saw 8 percent of its traffic come from Facebook. The average is probably in the 1-5 percent range, but this number will only grow."

FINANCIALS:     [NASDAQ:AMZN]

Discussion Questions:

Discussion Questions: What can brick & mortar retailers and e-tailers learn from Amazon.com? Which companies do you think have a chance of becoming strong Amazon rivals?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which of the two web traffic drivers mentioned in the article -- SEO (search engine optimization) or social -- is more critical for traditional brick & mortars to enhance in the near term?

Comments:

Amazon does a couple other noteworthy differentiators. Having lots of reviews is important, so Amazon encourages shoppers to review items, create lists, upload photos, etc. All that user-generated content attracts other users.

Second, Amazon is great about persisting my shopping cart. When I see something I might like, I just add it to my cart, and move it to "saved for later." Most other websites clear the cart when the session ends. To me, this is indicative of the shopper/retailer relationship -- Amazon is in it for the long haul.

Walmart might be able to catch up if they continue to encourage user-generated content.

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David Dorf, Sr. Director of Technology Strategy, Oracle Retail

Many or most brick and mortar retailers are behind the curve when it comes to digital. Take a reasonable search term and see which retailers show up. For example, Google "kitchenware." No Sears, no Bed, Bath and Beyond. The big mental switch that needs to be flipped is that someone doesn't become a shopper only when they enter your store. They become a shopper the minute they start lean-forward activities which increasingly are starting with digital/mobile activities.

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Joel Rubinson, President, Rubinson Partners, Inc.

Amazon.com is by far the "first on the mind" site for general purchasing, so naturally it is the place to go for comparisons, reviews, and product information. The lesson that other retailers can learn, in a more general sense, is that if you build and create a "first on the mind" image, you will be well rewarded on many levels.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

There is at least an entire book's worth of lessons that brick & mortar retailers can learn from Amazon. Beyond the keyword rich environment, merchandise assortment, pricing and social assets, Amazon does BIG thing better than everyone: focus on customers.

The intense focus that Amazon has on customers starts with Jeff Bezos, its CEO. This sounds like an easy enough thing to learn but it's incredible how so many large retail CEOs spend so little time thinking about customers. This customer-centricity extends to the ways that Amazon smartly uses customer data to craft the entire customer experience.

While almost all retailers are competing with Amazon, some more directly than others, only the best and most niche customer-obsessed retailers stand a chance against Amazon.

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Phil Rubin, CEO, rDialogue

Right now, I don't see anyone knocking on Amazon's door with the breadth and depth to compete.

Brick and mortar retailers first have to be found. If you can't be found, it doesn't matter.

I have always believed that for B&M retailers, the biggest failure has always been utilizing the web and a means to through the door. Most fail at having full product information, a full listing of what's available and enough information on any level to drive you to their door.

Nevertheless, being top of mind means you have to be visible and found. Accomplishing that is an absolute necessity. However, once your found, retailers have to have the ability to transfer the sale from web to through the door.

It's sort of like the most common thing I have always chuckled about with local television advertising. It amazes me how many TV ads never mention the retailer's locations!

Being found is critical. Having enough to lure the visit is equally as critical if you can be found. But, if you can't be found - easily - it just won't matter.

'Scanner'

Walmart has committed to become the world's #1 online retailer. The chance of them catching Amazon is questionable, but given Walmart's track record, don't bet against them. There are no current U.S. retailers that have the strategic mindset to approach either. If there are other challenges they will come from non-retailers, like Google or international operators, possibly one that hones its skill in China.

What can brick & mortar retailers learn from Amazon? Everything! Amazon provides convenience. Customer service. Reasonable price. Easy to deal with. Great selection. A personal connection. Extraordinary logistics. They are almost everything a brick & mortar store is not.

To repeat yesterday's comments...all retailers should start thinking about their in-store business as an adjunct to their online business and, if they do, their entire business will increase substantially and they will be well poised to grow in the future.

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Gene Detroyer, Professor, Independent

I agree with Joel--65% of in store customer experiences begin online. What bricks and mortar retailers need to understand is that the purchase begins online via product research and reviews, continues in-store when the person interacts with the sales person and purchases the product and ends online with the customer rating or reviewing their experience. Amazon understands this concept. Many retailers collect information via customer experience management programs which are great at operational improvement but lack transparency. These customers need to be asked to rate or recommend their experience on the company's website and to share that recommendation with their social networks to drive SEO for the brand and provide unbiased information to other consumers. The other thing Amazon does right that most bricks and mortar retailers miss is the longitudinal view of the customer. Amazon knows what you've purchased in the past and what your friends have purchased and uses this information to drive product recommendations back to its users. Retailers need to develop this approach to develop a singular view of the consumer's online and in-store behavior to better understand his shopper behaviors and preferences.

Julia Staffen, Product Evangelist, Empathica Inc.

One thing that retailers (in any forum) can learn from Amazon is the art of identifying the customer from the get-go. Most shopping is anonymous until check-out, where only a percentage of shoppers are identified. Identifying shoppers when they enter the shopping process (Think ShopKick!) is a real advantage.

As it stands, Amazon does this automatically for most of its customers who have a login ID. Identifying the customer helps upsell and cross-sell shoppers ("You might also like...." suggestions), in addition to gathering insights about customers.

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Liz Crawford, VP, Strategy & Insights, Match Drive

Amazon has:
- critical mass,
- customer familiarity and trust, and convenience to "get around to it" while coming back to the site for other transactions because of the ability to buy anything from their site (well actually, I've seen some gaping holes there...their high quality sheet collection is inferior for example)
- you don't need to remember a login for amazon...you know it by heart
- you're going to get mailings anyway...no reluctance for fear of additional spam
- amazon has found a balance in the intrusiveness of their cross promotion
- they already know a lot about you so you're not just letting another person in
- perception that Amazon is more of an agent, not a promoter of their own products (reality might be somewhat less than that, especially with their members sneaking in with assumed names to try to boost their own sales with good reviews).

Retailers who don't want to use Amazon need to find some cross platform like Facebook or yahoo, or some yet to be developed association--perhaps team with a cnet or something that already does such reviews and have them expand into wider types of products.

I think people could be open to a single cross-product review platform not run by individual retailers.

thomas norian, broker, investment management

Amazon's reviews have been around since the beginning. But Amazon Prime is its most recent breakthrough--perhaps the best loyalty system (not just a program) in e-commerce and a teachable moment for e-tail. Why?

1. Shipping has chronically been one of the top reasons for cart abandonment. Amazon Prime guarantees delivery within 2 days for $79 annually, clearing the obstacle.

2. Prime members boost Amazon.com purchases by 150% after they join and may generate 20% of Amazon's US sales, according to BusinessWeek.

3. The Prime "club" entices shoppers to try new services such as Amazon Instant Video. This gives Amazon an advantage in cross-selling categories.

Amazon is uniquely positioned to capitalize on this convenience given its wide selection (including 3rd party merchants). However, other e-tailers can benefit as well, by going alone (adopting a "how can we enable free shipping" mindset) or joining with complementary retailers (as Barnes & Noble, Sports Authority and TRU tried with ShopRunner).

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Dan Frechtling, Vice President, Global Product Management, hibu, PLC

Amazon does many things right as an e-commerce provider. As a marketer, I admire them for incorporating all the right elements from searchable product reviews and ratings, product suggestions based on shopping patterns, one-click buying, and the ease and simplicity of their user experience design. Brilliant.

As a consumer (and Amazon Prime user), the experience of shopping at Amazon is easy, and often fun. We don't live near family so we've had Wish Lists for our kids since I was pregnant with my first. I love that I can even add items not from Amazon to the list, though I rarely do. They make shopping for friends and family a breeze with this functionality. With the UPC barcode scanner on my Android, we build Christmas wish lists for my kids last year by spending 30 minutes in a local toy store.

Amazon's product reviews have become the industry standard and the first place many shoppers visit to see what others think about a product before buying. I like that I can see what people who love or hate the product say about it.

Product recommendations have always been spot on for us - I'd say within 85% accuracy! When they've been off, it's usually because they're basing the recommendation off a gift we purchased, or something my child has developmentally outgrown. They're that good.

And they just got better at recommendations when I allow them to tap into my social graph. Still in beta, linking my Facebook profile to Amazon has already been a positive experience. The more they know about me, my interests and likes, and my friends, the more personalized my experience is at their site. I only share information I'm comfortable brands access in order to create a better experience.

Amazon is hands-down a leader in the commerce space but other innovators are rising up - Target, Etsy, Sears, and member sale sites like Rue La La and Gilt come to mind. Online, retailers must find a way to make it both fun and easy to shop their sites online while adding value. They also have a huge opportunity in front of them to know their shoppers across all channels by gathering data at each touchpoint. Adding a social layer to their website, mobile app and other channels helps them develop a 360 degree view of shoppers to improve the shopping experience, product recommendations and sales.

Gina Rau, Marketing Communications Manager, Janrain

I am the Amazon Queen. They give me the same "feeling" of level of service I get when I go into a high-end boutique that asks me what beverage would I like, as I am made to feel welcome...and spend as much time as I like browsing be being shown great products. Amazon also shows me suggestions as my personal shopper - again a high-end boutique attribute while I am in the comfort of my bunny slippers. It is the customer focus/service and many B&M cannot do that right now, nor will they - takes staff.

'palestar'

I think a lot can be learned from Amazon, most importantly, their continuous effort to thrill the customer with improved services.

But as an internet commerce sight, brick & mortar retailers have to look at advantages they offer over eRetailers. Let's first stop calling 'real' stores 'brick & mortar.' In the real world of store design, so few designers and retailers work with those building materials any more (check out the A & P story on the NRF Newsbrief website today!).

Stores today are tactile, sensory, graphically and visually more exciting then ever. There are humans ready to interact with you and answer your questions without putting you on hold. You can try out your desired purchase, and find accessories that would make your purchase decision seem even smarter. Most importantly, you can probably walk out of the store with your purchase. For luxury shoppers, you can be 'seen' by others shopping in Gucci or Dior, for 'smart shoppers' you can be 'seen' shopping in Costco.

eRetailing,eShopping Research,and Reality-based retailing each have advantages. The seamless merging all forms of consumer engagement will prove to be the best.

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Jerry Gelsomino, Principal, FutureBest

All of the factors mentioned are significant, but the #1 thing Amazon does is tell the shopper IMMEDIATELY what Amazon's best guess is as to what the shopper wants to buy. Then follows it up immediately with suggestions as to what the #1,2,3,4 . . . items that OTHER shoppers in this situation are buying. This is massive social marketing - what your peers bought in what we think is your situation, without all the fancy smancy "social marketing" otherwise discussed here. I have written on this extensively at www.shopperscientist.com.

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Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Adjunct Senior Fellow, Ehrenberg-Bass Institute

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