Study: Digital commerce sites competing and collaborating with Amazon

Discussion
Source: Amazon
Jan 06, 2020
Tom Ryan

Having physical stores is often touted as a primary differentiator against Amazon.com. A survey of digital commerce decision-makers, however, identified a number of other ways to compete. 

The survey of  500 U.S. and UK senior digital commerce decision-makers from Wunderman Thompson found 61 percent having confidence they can compete directly with Amazon.

Asked which areas “they can win” against Amazon, the top answer was loyalty, cited by 27 percent, followed by customer service, delivery and packaging — all at 24 percent. Other areas where digital commerce leaders felt they can compete against Amazon were innovation, cited by 23 percent; choice of products, 22 percent; sustainability, 21 percent; creating a community, 19 percent; and standing for something (e.g. a purpose), 18 percent.

Yet the study found online players have a conflicted relationship with Amazon.

Thirty-four percent of digital commerce leaders considered Amazon their biggest competitor, 56 percent viewed Amazon as a barrier to their organization’s growth and the same 56 percent said the digital commerce industry would be better without Amazon. Sixty-seven percent said their organization is concerned that consumers want to buy all their products in one place.

At the same time, most found benefits in Amazon as a partner and as digital’s leader:

  • Sixty-seven percent agreed they need to work with Amazon if they want to remain competitive;
  • Seventy-two percent said they need to invest more money in Amazon because that’s where most products are searched for;
  • Seventy-seven percent believe Amazon has been inspirational to their business, and their organization uses its innovations to drive its own strategy;
  • Eighty-one percent agreed that Amazon has been good for the digital commerce industry.

Raghbir Rana, senior marketplace consultant at Wunderman Thompson, said in the study, “Amazon should be viewed by brands and organizations as an integral part of a balanced commerce strategy. However, working with Amazon is very different to traditional retailers, so to be successful, organizations need to ensure they plan for this.”

DISCUSSION QUESTIONS: Which of the areas identified in the Wunderman Thompson survey will best enable online retailers to compete with Amazon? What advice would you have for online players about partnering and competing with Amazon at the same time?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Consistently stellar service, personalized marketing, subscriptions and private label products are ways retailers will encourage consumers to keep coming back."
"In the age of Amazon, brands and retailers need to find a way to not just compete but thrive alongside the e-commerce giant."
"The key to the 2020s is a robust channel diversification strategy, where companies have a presence on Amazon but also have a DTC approach..."

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20 Comments on "Study: Digital commerce sites competing and collaborating with Amazon"


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Carol Spieckerman
BrainTrust

The Wunderman study is a bit more bullish on Amazon collaborations than I am. After a few years of coasting along with mutually-beneficial collaborations in order to build its platform, Amazon is putting on the clamps and exerting its power as never before. Brands like Nike are exerting their right to just say no and focus on owned D2C capabilities. Sure not everyone has the brand equity and leverage of a Nike, however over-reliance on Amazon is a precarious strategy. Balance will be key for some. Opting out a fine option for others.

Gene Detroyer
BrainTrust

To what is Nike saying “no”? There are lots of Nike products on Amazon and Zappos.

George Anderson
Staff
Carol Spieckerman
BrainTrust

Gene, see the link George provided but you are calling out one of the problems. Even when brands like Nike decide to cut ties in direct relationships with Amazon, they have no control over third-party sellers and, indeed, Amazon has been known to ramp up alternative sources for brands when it learns of potential brand defections.

Gene Detroyer
BrainTrust

I actually buy my sneakers thru Zappos (Amazon). Even if I were specifically looking for Nike, Zappos has over 300 men’s styles to choose from. Short of Zappos, I would go to Amazon and put in “Nike men’s sneakers” and I would get 100s of choices. It would never occur to me to go to Nike.com or any other branded site.

Suresh Chaganti
BrainTrust

Coopetition is a given with Amazon or any other marketplace that the brand operates in. For new brands and new product categories, Amazon provides a great platform – at a price to gain momentum. Smart brands understand the nuances of dealing with Amazon and calibrate their strategies so that their brand positioning stays healthy. Amazon often has significant leverage in the relationship and they don’t hesitate to use it. Brands will do well to build their own differentiators so that they can have an equitable relation with Amazon.

Casey Golden
BrainTrust
20 days 15 hours ago

2020 will require a customer service strategy, “support” is not enough for online businesses looking to maximize conversion and LTV. Retailers should be looking at stronger retention strategies that keep shoppers coming back for more.

Dave Bruno
BrainTrust

I certainly hope this study does not indicate where these retailers will be investing in their attempts to compete with Amazon. While customer service is without question an excellent opportunity for differentiation for any retailers with stores, I question several other items on this survey. Choice of products? Ummm, no. Delivery? No way you can out-Amazon Amazon on delivery (the only way you beat Amazon in fulfillment is by leveraging the stores as fulfillment centers). Innovation? Other than the very few largest retailers, none will have an innovation budget anywhere close to that of Amazon. I would much rather see things like “creating a community” and “personalized services” rank higher on the list than “product choice” “delivery” and “innovation.”

Jeff Sward
BrainTrust

All of the areas mentioned fall under what I would define as having a clear and differentiated brand promise. A brand goes on Amazon with eyes open. All brand-selling data goes into the Amazon vault. If your product or service is easily replicated by Amazon, then Amazon is happy to be a student of what sells and what doesn’t. If your product or service is not easily replicated by Amazon, then Amazon offers a pretty amazing audience. Having a clear, differentiated and not easily replicated brand promise is a pretty good formula for sleeping at night while selling on Amazon.

Lisa Goller
BrainTrust

Loyalty is the word of the year in retail. Following recent investments in technology to stay relevant and agile, retailers now seek to deepen their relationship with consumers. Consistently stellar service, personalized marketing, subscriptions and private label products are ways retailers will encourage consumers to keep coming back and give consumers alternatives to Amazon’s e-commerce dominance.

Jeff Weidauer
BrainTrust

Naming loyalty as a way to compete with Amazon is puzzling. Creating loyalty takes many of the other tactics shown: customer service, innovation, choice, standing for something, etc. The greatest challenge is to get shoppers to go somewhere other than the Amazon default. That requires a value proposition that checks boxes Amazon can’t or won’t, with consistent follow-through on that proposition.

Ananda Chakravarty
BrainTrust

For online competitors the game is already skewed against them – especially if they don’t have a physical presence. The survey left out some critical options — most important being the one that successful online vendors have taken advantage of, partnerships and deeper vendor relationships with physical store chains. Partnering like Disney and Target, Macy’s Story, Petco and JustFoodForDogs, and Nordstrom and Nike, et. al. have taken advantage of pop-up stores, store-within-stores and relationships with larger chains to engage customers where Amazon can’t. As a matter of fact, Amazon has done the same with Whole Foods and Kohl’s. None of the items on the survey list are defensible (for growth) for an online retailer and only options where they can own the relationship with the customer will matter. Loyalty is the closest to this, but also the most difficult to attain for an online vendor. Finding and creating partnerships is a key factor for success. Coopetition is real.

Ken Wyker
Guest

From the list of ways to compete I would choose loyalty, but I also think that the term doesn’t mean the same thing to everybody.

Transactional loyalty, or shopping a site regularly, would be an area where I would say Amazon dominates.

Emotional loyalty, or the desire of a customer to shop somewhere even when other options are available, is an area where I think other retailers can do well. Even shoppers that go to Amazon for everything probably don’t feel much of an emotional connection to Amazon. Retailers can leverage their brand positioning and sense of community to encourage customers to stay with them despite the power of Amazon.

In fact, I think brick-and-mortar retailers should look at this list and consider what they might have that Amazon can’t match. That consideration will likely lead you right back to emotional loyalty, which is an area where Amazon is at its weakest.

David Zietsma
Guest

Amazon provides easy access to product. That’s what customers want for some purchase occasions but certainly not all. It is not where a customer goes to learn about how to use a product or for services and support for a product or, in most cases, to learn about new products that will best meet their needs. And it is definitely not where you go to connect and share with others with similar interests. There is no question Amazon shrinks the pie for other retailers but there are many ways to add value for consumers beyond access to product. The right answer depends on your category and the type of customer you are targeting but in all cases – you need to offer more than just easy access to product.

Gene Detroyer
BrainTrust

I found it a bit difficult to come up with an answer for the survey. I asked myself which of the ideas in the list would make be buy from an e-tailer other than Amazon. I could only come up with two. Innovation — the site offers something so compelling that it delivers ease and convenience greater than Amazon, which is hard to imagine. Special products — I will look beyond Amazon if I can’t find what I am looking for there.

Cynthia Holcomb
BrainTrust

What? The survey suggests all online retailers commoditize their brand to Amazon? Partnering and competing with Amazon all at the same time? Welcome to the roaring ’20s and Amazon World! To the retailers and brands the survey says “hang up your spurs, Amazon won.” This survey must have Jeff Bezos smiling. Conflation to confuse. The problem of buzz for the sake of buzz. Brands and retailers remember the “buzz” of the 2010s. How did that work for you?

Brandon Rael
BrainTrust

Competing directly with Amazon is a zero-sum game, as retailers and brands would be hard-pressed to challenge the e-commerce giant’s scale, reach, capabilities, assortments and brand affinity. With that said, retailers and brands have to by default have some sort of marketplace-like presence on Amazon’s platform. However, going all-in on an Amazon strategy has its own minefield of risks and challenges.

The key to the 2020s is a robust channel diversification strategy, where companies have a presence on Amazon but also have a DTC approach where they can control the branding, messaging, and overall customer experience. Very few brands are at the size and scale of Nike where they could completely drop off of Amazon. There is a co-dependency, and companies should tread carefully to not fully commit to one digital marketplace.

Liz Adamson
BrainTrust

In the age of Amazon, brands and retailers need to find a way to not just compete but thrive alongside the e-commerce giant. Amazon does see an opportunity to be a key player in a brand’s direct-to-consumer strategy and has been rolling out more and more tools to help brands create and manage their presence in ways not possible a few years ago. Understanding how to leverage this opportunity while minimizing risks will set brands up for success as Amazon continues to grow and innovate.

Herb Sorensen
BrainTrust
Several years ago I spelled out the details of “Selling Like Amazon… in Bricks & Mortar Stores!” – October 25, 2013. Since then I have identified the UNASSAILABLE advantages of both bricks and clicks: For bricks, it is 1. IMMEDIACY – you get what you want right now, right here – zero delay. 2. 360 EXPERIENCE – the physical presence of displays, other shoppers, staff, etc. For clicks, it is 1. ALGORITHMIC – selling focusing immediately, and exactly, on the single item you want. 2. “INFINITE” LONG TAIL – right at your “elbow.” Costco achieves something along the “algorithmic” line by offering — mostly — only 3 choices for whatever you might want to buy. However, with only 3800 items in the store, compared to 40,000 items in the supermarket, they make no in-store effort to match Amazon. However, Amazon itself doesn’t “Sell Like Amazon…” In THEIR bricks stores, with the exception of the Amazon-GO format, more of a “checkout-free” convenience store. If “GO” technology ever gets to the scalability capability of a supermarket, “Katy… Read more »
Peter Charness
BrainTrust

And then there’s hoping for antitrust action…. Building strong brands is really the best bet. Much of the rest of the discussion is around distribution channels and choices, but if you have no differentiation, you have no control over your success.

wpDiscuz
Braintrust
"Consistently stellar service, personalized marketing, subscriptions and private label products are ways retailers will encourage consumers to keep coming back."
"In the age of Amazon, brands and retailers need to find a way to not just compete but thrive alongside the e-commerce giant."
"The key to the 2020s is a robust channel diversification strategy, where companies have a presence on Amazon but also have a DTC approach..."

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