The Amazonization of retail: What does this mean for merchants?
Updated: May 19
It’s no secret that Amazon is the retail industry’s number one influencer. Ever since it first entered the fledgling ecommerce marketplace, Amazon has totally reshaped consumer expectations for the online shopping experience.
Whenever Amazon introduces a new service offering, whether it be two-day shipping or order tracking, it quickly becomes industry standard. This so-called ‘Amazon effect’ means that the bar to great service is always being pushed higher - and many smaller retailers are finding it harder and harder to compete.
As we talked about our first podcast episode, this trend has led to the ‘Amazonization’ of ecommerce at large - and it affects more than just how quickly customers want their parcels.
So, we’re going to dive into this concept in a bit more depth.
What exactly is ‘Amazonization’?
We all know about the seismic disruptions that Amazon has caused in the world of brick and mortar. Department stores in particular have been experiencing declining foot traffic due to the allure of easier browsing and cheaper prices online.
But the disturbance within ecommerce is talked about much less - even though the changes brought about by Amazon’s dominance have been no less significant.
Because while Amazon has definitely made the online shopping experience easier to navigate, it’s also made it a lot less exciting.
Let us explain.
You go onto Amazon and place an order with a brand that sells through the marketplace. It has its own identity and brand story that’s totally separate from Amazon, but as a consumer, you won’t experience any of it.
You browse through Amazon to reach their product offerings and use Amazon’s checkout and payment portal to make the purchase. The packaging you see when your order arrives on your doorstep? That’s Amazon too.
This means that you have no meaningful touchpoints with the brand you're actually purchasing from.
But this issue isn’t limited to Amazon itself. As the pressure for fast delivery has increased, the experience in ecommerce at large has become neglected. Whether it’s outsourced order tracking, third-party returns portals, or plain packaging, consumers have few post-purchase opportunities to actually build a relationship with a brand.
‘Amazonization’ is the growth of generic, wholesale retail experiences that have few distinguishing features in the mind of the consumer. But when building brand awareness and loyalty is the name of the game, this is a major problem.
Merchants are already struggling against a tidal wave of similar offerings. And if your shopping experience is identical to that of your competitors, what incentive do consumers have to choose you?
So, what does Amazonization tell us about ecommerce?
Delivery is a massively under-utilized touchpoint
If your orders are signed and sealed in ubiquitous brown cardboard, you’re not going to have much luck building brand recognition with your customers. Why?
Because there’s nothing to separate your parcel from the hundreds of others they’ve received in the past.
But if you make the effort to turn your unboxing into a piece of theatre, you can leverage this moment of engagement to build an immersive brand experience that keeps your customer coming back from more.
Remember: First impressions matter, but the final impression you leave your customer with is what will reinforce their initial decision to purchase - or not.
We’ll be discussing the value of unboxing experiences in a future blog, so watch this space!
Brand identity promotes trust
Consumers are more likely to trust a brand if they know who they’re dealing with. Because vertically integrated direct-to-consumer brands can offer transparency over supply chains and customer care, they’re in a much better position to meet expectations - and also understand what consumers want.
This is why the best D2Cs, with their ability to tap into rich data insights gleaned from across the shopping journey, are able to avoid Amazonization. They have the ability to create a customer-centric brand story from end-to-end that truly resonates, something that large-scale retailers often struggle to do effectively.
What can brands learn from Amazon’s success?
We can typecast Amazon as a boring and unimaginative retailer, but the proof is in the pudding.
The pudding being that whenever any of us complain about Amazon - that it’s a behemoth, it undermines competition, its vast operation is bad for the environment - we still know that we’re more than likely to be browsing our way through its hallowed product catalog this time tomorrow.
Why? Because Amazon has achieved the holy grail in retail. It’s positioned itself as the no-brainer default across just about every product category and consumer segment.
How? Amazon understood long before everyone else that when push comes to shove, online shoppers are brutally utilitarian. When so many of us are time-poor and looking for an easy solution, our purchasing criteria often narrows down to two things:
By delivering seamlessly on both fronts, Amazon has been able to dominate the marketplace - even in the face of retailers with arguably better-quality offerings. Because when it comes down to a decision between Amazon and an unknown retailer that offers a similar product, the majority of consumers are going to opt for the former.
The Amazon experience might be lackluster, but it’s predictable - and consumers like knowing exactly what they’re going to get.
This is the unsettling truth for smaller retailers; you can offer the best customer experience packaged up in a unique brand identity and engaging socials, but unless you also nail those two criteria above, you’re going to have a hard time convincing consumers that you’re the better choice.
In 2021, being a successful merchant comes down to your ability to offer customers a frictionless shopping experience that combines memorable branding with speed and efficiency.
Sound challenging? That’s why we’re bringing you the very best industry insiders every episode to explore how you can give your business the best chance of success. Click here to listen to the rest of our podcast and gain more valuable insights.