How Amazon’s Innovations Are Impacting Online Retail

Last month, Clavis Insight hosted Euromonitor’s Tim Barret and Clavis Insight’s Danny Silverman in an engaging discussion about Amazon’s nonstop innovations. Below is a small part of the Q&A section of the webinar, which has illuminating answers covering Brick and Mortar, Purchase Behavior, 3P sellers, and more!

How Amazon’s Innovations Are Impacting Online Retail

Q: What can brands really do to keep up with Amazon and their innovations?

A: First and foremost, keeping up with Amazon’s innovations really means you are getting the basics right so you can quickly react as innovations arise. This makes understanding the 6 Ps of eCommerce all the more important so that you have those different levers optimized, and you have a plan to prioritize against each of them. That ultimately is going to drive your performance. And that's going to be what Amazon is fundamentally looking for at the end of the day. They're a retailer. They're looking to drive revenue and margin. And their close partners are the ones who are thinking holistically about their ecosystem and how best to be that strategic partner that's going to help them grow.

Q: Certainly there's been a lot in the news about the demise of brick and mortar; there's been a lot of closing there. So why do you think Amazon has taken such an interest in brick and mortar?

A:  At the end of the day, the majority of shoppers are still going to a physical store. That's our current state and it's important to win there. And it may always be the case that there's an import segment of shoppers who are going to go to the store. They want to pick out their own meats and cheeses; they want to test their fruit and make sure it's the freshest; and they're not going to trust anyone to pick it for them. Or they're on their way home and they just thought of something and they want to pick it up; and they're not going to wait even 30 minutes or an hour for delivery. And the other piece of that too is thinking about from a distribution and delivery network standpoint having those physical stores as delivery nodes or pickup points. We're seeing the rise of click and collect in the U.S., which is very dominant in the U.K. and France and other parts of the world. For a lot of shoppers it's just more convenient than waiting for that delivery because they can pick it up on their own terms and timing rather than waiting for a delivery person or having the packages left unattended. So there's a number of different strategies there where one size doesn't fit every shopper. And Amazon is recognizing that brick and mortar is an important way to capture a larger share of the consumers’ wallet.

Q: Is Amazon able to track purchase behaviors back to customers for profiling?

A: Yes, they are well known for having powerful algorithms that profile shopper behaviors and preferences, and then use them to customize offers and target media from Amazon Media Group (AMG). For example, one thing I've noticed on the 'Today's Deals' page is that sprinkled throughout the real Lightning Deals or ad blocks of products I've viewed previously that aren't necessarily on deal! I might add, however, that they aren't perfect at it - I also often see targeted ads for products I purchased already.

The next question is probably whether they give manufacturers access to that data. The answer is for the most part, no. They have tools to create or help create look-alike segments for building media and advertising campaigns, but otherwise they closely guard their data.

Q: Are you aware of any shared innovation that Amazon is taking part in?

A: Most of Amazon’s innovation is vendor led, meaning they are often working with category leaders to identify how to improve on the customer experience. They are always ready to review any consumer or shopper research you may have. However, each Vendor Manager may be managing thousands of vendors and the next level of leadership can't make time for too many vendors. So breaking through and standing out with an interesting proposition may be the first challenge!

Q: Do you have any hints on how to manage 3P sellers?

A: This is a very common question and issue and unfortunately the answer isn't an easy one. If you are facing 3P sellers selling below cost and winning the buy box, you may need to work with your supply chain and sales strategy teams to trouble shoot possible ways these sellers are acquiring product at a price low enough to undercut Amazon and still make a profit after shipping! Could it be liquidated product? Excess inventory a retailer sold off? Damaged or expired product that was meant to be destroyed? Or even stolen product? Often an investigation is helpful to purchase the product from the sellers and research the lot numbers. 

If the sellers are behaving badly in some way - poor customer service, introducing content that violates brand trademarks or is otherwise problematic, or you can prove they are selling stolen, damaged, expired or counterfeit products - you can appeal to Amazon to have them removed. 

Last, consider looking at Amazon's new Brand Registry program. This offers some protections, though the program is new for most brands.

Learn More!

Get more insights from Euromonitor’s Tim Barret and Clavis Insight’s Danny Silverman by watching the on-demand recording of How Amazon’s Innovations are Impacting Online Retail.

Danny Silverman
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Danny Silverman
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