Should retailers emulate or differentiate from Amazon?

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Mar 26, 2018
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Steve Rowen

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.

In discussions with 10 different retailers, RSR found strong agreement that Amazon.com is the enemy. But a debate then ensued on whether retailers should try to be more like Amazon or try to be nothing like them at all.

From the “To Be” camp, a recently retired CIO at a $2 billion specialty retailer stated: “You need to determine which things are part of the waterline now. I was shopping the other day online and told that I needed to spend more money to get free shipping. Really? I expect free shipping from everyone all the time now.

“Every day you have to look at Amazon and admire what they keep realizing — that there are all these ways to exploit enabling technologies to make the customer experience better.

“I hear people always saying, ‘Don’t try to compete with Amazon.’ But remember this: if they are doing something they are doing it because it works on your customers.”

These are valid points.

But from the “Not To Be” camp, a tech leader at a $800 million specialty retailer stated about his company’s approach:

“I want to know exactly what Amazon is doing, but not to do it — to stay out of their way. If I try doing what they are doing, there’s no way I’m going to win.”

This makes perfect sense, as well. A mid-size specialty retailer is never going to have the might to compete in the same fight.

Having heard their detailed viewpoints on the future, I think they are both right. They have the correct answer for their brand, specifically.

The choice of “to be like Amazon” or “to be anything but Amazon” is an entirely personal decision for each brand involved. More importantly, no matter who you are, your size or what you sell, this is a decision that needs be made right now. It will likely not only determine whether your brand will still be viable 10 years from now — it’s the question that shapes strategy. And people who successfully compete against Amazon a few years from now will not have done so by happenstance.

DISCUSSION QUESTIONS: Should retailers attempt to be more like Amazon or completely different? What advice would you give to a retailer looking to compete against Amazon?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"The overriding lesson that Amazon teaches that we forget from time to time is that retail is always changing, and we must keep adapting."
"At the very least, all retailers should emulate Amazon’s passion for using data to drive all dimensions of their business."
"There must be a healthy dose of adapting to the new retail environment that Amazon is creating."

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22 Comments on "Should retailers emulate or differentiate from Amazon?"


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Mark Ryski
BrainTrust

There’s no question Amazon is pushing the bounds in retailing with what seems to be moon-shots every other quarter. However, traditional retailers need to remember that Amazon generates an enormous amount of its profit from its web services business and therefore can make investments and experiment in ways that most retailers simply cannot — Amazon Go is a good example. My advice to retailers is to focus on their customers and the unique value proposition they bring to the market. It’s sensible to monitor Amazon’s activities (as well as those from other leading retailers and brands that are doing interesting things), but don’t get too carried away trying to replicate or beat Amazon — they’re playing an entirely different game.

Art Suriano
BrainTrust

There is only one Amazon, and all retailers need to know that. That said, smart retailers are those who are fully aware of what Amazon is providing customers, don’t try to copy it exactly and instead offer something similar or entirely different as long as it is appealing to the customer. We already have too many “me too” retailers copying one another, and many of them are failing. In a world where competition is extremely tight those that stand out are the brands that are unique, offering customers something different than their competitors. To be different works best when it’s a blend of product, price and service. Find that niche that makes you unique. Then be the best you can be, and you will succeed!

Neil Saunders
BrainTrust

Retailers should focus on what their customers – and those customers they wish to attract – want. Therein lies the path to success.

Phil Chang
BrainTrust

The overriding lesson that Amazon teaches that we forget from time to time is that retail is always changing, and we must keep adapting. To me, that’s the only thing that you really emulate from Amazon. After that, Mark and Art are right — follow your customer. Be laser-focused on what they want, what they need and be sure to know why you’re in business. After that, “copy,” “emulate” and “differentiate” are all just implementation terms for making your customer happy.

Shep Hyken
BrainTrust

The answer is “yes and no.” Yes, you should learn what Amazon is doing. Take away the competitiveness and, if they are doing something to create a better CX, then it may be worth adopting and adapting. However, if you want to go head-to-head with Amazon in many other areas, you may not win. There are many ways to compete against Amazon (and any other major competitor) and thrive. You have to find your place — your uniqueness — and exploit it. The customer must know what your difference is, and it should be something that the customer wants. Several areas of opportunity include the people-to-people interaction, being local, contributing to and be more involved with community charities, and many more.

Amazon may have an amazing online/digital experience. A local retailer may have an amazing in-store experience. There is room for both in this world.

Max Goldberg
Guest

Amazon has led the market in e-commerce, setting standards that have become industry norms: free shipping, one-click ordering, speedy delivery. etc. In many market segments, these have become minimum rules for staying competitive. Amazon also offers great customer service and many benefits from Prime membership. Other retailers don’t have to be Amazon but, in order to stay competitive, they must adapt to the marketplace that Amazon has changed.

Nikki Baird
BrainTrust

I think “they’re both right” is the right answer to the question. You have to meet the minimum bar of customer expectations and, like it or not, Amazon is the one setting that bar right now. So in that sense, you can’t ignore them. But you can’t win by just emulating them, either. Amazon’s retail operations don’t have to turn a profit, and you do. That means if all you do is try to copy fast, you’ll run out of money sooner than later. Retailers need to find ways to do things that Amazon may never do well, for example, provide excellent customer service. The hard part about that is doing that in a way where customers are willing to pay a premium for it.

Dick Seesel
BrainTrust

Few retailers outside of giants like Walmart are prepared to match Amazon when it comes to breadth of assortment and competitive pricing. In fact, trying to follow Amazon’s lead in areas outside of a store’s core strengths could be a trap.

But there is one overriding competitive advantage of Amazon that every retailer can learn from: Its delivery of a convenience strategy that underlies much of its consumer trust. Not every store can master Amazon’s logistical network or data science, but most stores can “execute” better than they are doing today.

David Katz
BrainTrust
There is an important difference between correlation and causation. Amazon’s success and the disruption of the legacy retail market are certainly related, this does not mean one caused the other. Amazon did not overturn the traditional retail model: Macroeconomics drove this disruption. Amazon is strategically and significantly investing in brick-and-mortar retail. Further, the company provides valuable tools to third-party retailers to help them succeed and, critical to its own success, Amazon needs other retailers to thrive. This is more than, “if you can’t beat ‘em, join ‘em.” Amazon is an incubator and catapult for retailers: a test environment, launch pad and destination. In 2017, Amazon Marketplace enabled over 2 million sellers to become online retailers. Marketplace provides access to hundreds of millions of Amazon consumers, along with one-day, or same-day, delivery to 8,000 cities and towns. Through Marketplace, Amazon allowed these third-party retailers to provide best-in-class online experiences, to sell more than 2 billion products, and to generate many billions of retail revenue dollars. Amazon is part of retail’s evolution. The company is satisfying and… Read more »
Phil Masiello
BrainTrust
Retailers should learn from Amazon. Amazon is a customer-focused company who reinvests back into the systems that will mean something to the customer. 49 percent of all U.S. households have a Prime membership. Prime began in 2005 with Free two-day shipping and now includes over 25 other benefits to the user. Prime is a retention weapon that Amazon has been allowed to build while other retailers paid zero attention. Case in point, it took Walmart until 2017 to respond with free two-day shipping and they added a minimum to it. Sixty percent of all product searches begin on Amazon today. Which shows the trust that Amazon has created with their customers. So retailers can complain about Amazon and they can call Amazon the enemy. But their complacency towards the consumer has allowed Amazon to prosper. Brands who want to thrive, need to sell on Amazon. Why? Because that is where the customer is now. You can look at Amazon as the enemy, or you can look at Amazon as a way to expand your brand,… Read more »
Ken Lonyai
BrainTrust

It’s impossible to be completely the same or completely different. Some aspects of being a merchant are universal. However, copying Amazon, Walmart, or the corner store is absolutely a weak strategy which will ultimately lead to mediocrity or failure. Being a follower is being a follower, never gaining an advantage, just trying to keep up. That means every time the leader zigs, the follower has to zig, Same for zags.

And a leader with resources that catches on to that can make life hellish if they choose to. Look back to Walmart in the ’90s and ask Marc Lore about the ultimatum Quidsy received from Amazon.

Imagine a high school commencement speech where the honored speaker implores the students to go out into the world and be followers. It wouldn’t be acceptable.

There is always room to lead if you look for the opportunity.

Tom Dougherty
BrainTrust

You will never out-Amazon Amazon. Differentiation is not an abstract idea. It is the space that prospects and customers see between your brand and that of the competitors. Without differentiation you are simply competing on price.

However, you should learn and copy Amazon’s best business practices. They have become table-stakes in today’s retail world. But differentiate your brand in an emotional way. Do a better job of telling the prospect HOW they are different and better than the customer who shops at Amazon.

This is where brands screw up. They think differentiation is a rational support and is about how they, the retailer, do business. It is not. It is all about the prospect.

Ian Percy
BrainTrust
My short answer is: differentiate. The problem is how on earth does one do that? There are two marketing principles that retail seems to ignore. The first is, “find the weakness in your competitors greatest strength and exploit it.” The second is, “always paint your problems in bright colors.” When it comes to Amazon, the first principle is quite the challenge since they do most things so well. I bought a vacuum from Amazon last week from an array of what must have been 22,374 vacuum choices. I noticed that customers had asked 363 questions about the vacuum I bought. It came quickly in one box with the assembly instructions being most unhelpful. See any opportunities there? What if you stocked only Consumer Reports’ three top-rated vacuums in three price categories? What if they could take their vacuum home already assembled? A competitor brags that you get your food order in 60 seconds or less. Yours takes five minutes not because you’re slow but because it’s personal. How about advertising that says “If you’re going… Read more »
Ron Margulis
BrainTrust

A wildcard here is the go-forward e-commerce plans of brands. Do they want to have 30 percent to 40 percent or more of their volume going through one company? They didn’t with Walmart and aren’t likely to want to be bound to Amazon. We heard some interesting strategies from several leading brands at Shoptalk last week and while the brands aren’t burning their bridges with Amazon they are looking for other channels so they can keep Amazon honest.

Christopher Jordan
Guest

No question — successfully competing against Amazon means taking a different route. Aside from the obvious innovations made by Amazon in supply chain efficiency and e-commerce UX/flow, at their core is a ridiculous breath of assortment.

What this means is they’ll capture the lion’s share of “search” traffic — instances where the user knows what they want. A number of large retailer have tried to join this arms race towards sheer volume of product over the past couple of years to poor result.

Where you’ll tend to see wins against Amazon is where competitors focus on the quality and narrative of their assortment (and not quantity). Take independent record stores as an example/analogue. The space has seen a resurgence over the past five years — due not to the volume of albums, but to highly curated assortments for the “browse” customer (“I go to XYZ Records because they KNOW what’s cool in electronic dance music.”)

Chris Petersen, PhD.
BrainTrust

If retailers emulate Amazon, they should copy their obsession with customer-centricity — making it as easy as possible for customers to shop, purchase and choose how they want to execute. There are also ways that retailers can differentiate from Amazon via end-to-end services, especially after the sale.

Sterling Hawkins
BrainTrust

I think this is the wrong question to ask. Either way you’re playing defense and trying to be like or not like the competition. Focusing on the shopper and how to serve them will always yield better returns. That said, Amazon and other competition may have great ideas for retailers to add into their customer experience. As long as it’s adding value to the consumer and not purely a competition play there is much to be learned from each other.

Gib Bassett
BrainTrust

At the very least, all retailers should emulate Amazon’s passion for using data to drive all dimensions of their business. The latest advancements make excuses such as a lack of data science skills and expensive technology much less legitimate than in the past. The challenge now is instead prioritizing use cases and focusing on what you can do best and most uniquely for your customers in a manner Amazon can’t match. Too much of retail middle management is in the dark about their company’s analytic strategy, if one even exists. This would make a great followup RetailWire discussion.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
1 year 5 months ago

The answer is both! While many retailers think of Amazon as the enemy, they do many things very well that are worth emulating: personalized online experiences, efficient delivery times, reasonable or free shipping costs (for preferred members), and easy checkout processes.

Retailers looking to differentiate from Amazon should focus on the benefits of their physical stores and store associates. Many consumers appreciate the theater of shopping and retailers that offer special events and unique, interactive shopping experiences can increase customer loyalty and compete with Amazon. Amazon is not invincible. Personalized experiences and services are the keys to beating Amazon.

Ricardo Belmar
BrainTrust
The answer is both! Retailers should be as much like Amazon as they can in one very important way — an obsessive focus on your customer. It’s not about the market or your competitors, it’s all about what your customers, and those you’re trying to attract, want. This means you have to understand what makes you special to your customer. It’s not just “what do you have” that they want, you need to understand WHY they will buy from you. This is what Amazon knows — they answer the WHY and everything flows from there. Where retailers should not be like Amazon is trying to copy each and every tactic and program they come up with. Let’s face it — if you’re not Walmart, Alibaba, or maybe Target (some will question this one) or someone of similar size, you’re not going to beat Amazon at being Amazon. Remember — they have AWS to fall back on and cushion any potential failures. Retailers don’t have that luxury. But if you really understand WHY your customers will… Read more »
Min-Jee Hwang
Guest

I think success in retail lies in the gray area between emulating and differentiating from Amazon. Any retailer would go out of business if they spent all of their time trying to follow in Amazon’s footsteps. There must be a healthy dose of adapting to the new retail environment that Amazon is creating. After all, if Amazon is pushing forward with new tech and setting new standards, any retailer that wants to stay relevant must pivot to play by those rules. But even more important, retailers must devote most of their time to solidifying their own raison d’etre. Why do shoppers love your business? How can you capitalize on those points of differentiation and improve personalization since Amazon is too large to do it properly?

Kenneth Leung
BrainTrust

Amazon has reset the expectations of consumers in online commerce, just like Walmart did for in-store prices and assortment years ago. I don’t think any existing retailer should try to outplay Amazon at its own game given it has deep pockets from its IT service provider business. Learn and take the best practices that you can affordably implement and look for differentiation in product and service offerings, that’s the only way to win in retail these days.

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Braintrust
"The overriding lesson that Amazon teaches that we forget from time to time is that retail is always changing, and we must keep adapting."
"At the very least, all retailers should emulate Amazon’s passion for using data to drive all dimensions of their business."
"There must be a healthy dose of adapting to the new retail environment that Amazon is creating."

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