The Amazon Effect

“Amazon is looking at getting into our industry.” That is one phrase that is sure to strike fear in almost every executive. I have seen a company’s stock drop significantly just because rumors surfaced that Amazon was going to start competing in their market. The rise of the online merchant has changed how many of us choose to shop.  This past Christmas, it was estimated that 51% of consumers purchased at least one gift online with a growing number choosing to do all their shopping without leaving the comfort of their home.

I must admit that even in my family, we have started thinking of checking Amazon first, when we have a need, instead of heading to a brick and mortar store.  So, what does the “Amazon Effect” mean? There are several key points to consider.

  1. Focus on the Experience. If a physical store has any hope of surviving in this new online era, they must focus on creating a positive shopping experience so that their customers actually enjoy visiting their store.  One of my pet peeves is going to a store and the only way you are going to check out is if you use their self check out lanes. There are times when I am totally fine with checking out myself, but there are others when I have a full cart and prefer to have a person scan my items.I once overheard an upset customer complain to a store manager by saying: “If I wanted to do all the work myself, I will just start shopping at Amazon.”Traditional retailers must reinvent themselves and double down on training their employees to provide exceptional customer service. If you are greeted by a friendly clerk when entering a store, asked if you need any assistance as you stare at the aisle signs, and thanked for your business as you check out, you are much more likely to return because it was a positive experience.

    If you attempt to compete only on the items you sell, you will eventually lose the battle to Amazon. Even in a grocery store, the employees must be trained that they are selling the experience, not just the product.

  2. Stay on top of your stock levels. On several occasions recently, I went to a store with several specific things in mind to purchase, only to find the shelf empty for one or more of the items. It is even more frustrating when the same item was still not available when returning to the same store later in the week. With today’s technology, there is no excuse to not keep up with your inventory levels.  Most stores have the ability to auto replenish items when the on-hand quantity dips below a certain level.On more than one of these outings, I went home and ordered the item from Amazon. The more often that happens, the less likely I am to even attempt to purchase my items from the physical store.Even when an organization does not have sophisticated inventory software, stocking clerks need to do their job with perfection. Instead of moving similar items over to cover an empty spot on their shelf, they should leave it empty so it is easier for someone doing the ordering to spot the missing product.

    I went to a store around Christmas time to purchase an item my wife used for baking some of the seasonal favorites. As you can probably predict, the shelf was empty. I found an employee and asked him about the empty spot only to hear him say: “We run out of that item every year at this time.”  Obviously, no one has enough sense to make a note of that fact and adjust their ordering when that season approaches the next year.

  3. Make it easy to do business. One thing that is true in our busy society is that everyone seems to be in a hurry and there are never enough hours in the day to get everything done. That is the primary driver behind all of the online grocery ordering and retail online shopping. When is the last time you stepped back and took an objective look at what your customers experience when doing business with you?One of the fun aspects of my job is being asked to perform a mystery guest or shopper engagement. With over 30 years of focusing on the customer experience, I can spot things that most employees at a location walk right by every day. This could be as simple as the signage that helps someone find your establishment to the flow of traffic in your store. One thing that is almost universal is no one wants to wait in line to hand over their money. Stores must train employees to be hyper sensitive to long lines at the checkout counter, calling for backup before a customer brings it to your attention.This applies to non-retail business also. Is it easy to identify a part number when you need to reorder? Do you support electronic order approval instead of requiring a fax of a signed document? When you need help, can any member of the team assist you, or do you have to wait for your “assigned” team member to become available?

    When making a change to a process or any aspect of your business, ask yourself: “Does this make it easier or harder for my customer to do business with us?”

    When price and other quality aspects are similar, people will do business with the company that makes it easy on them.

Amazon has been a wakeup call for traditional retailers. If they don’t raise the bar on the customer experience they provide, they will most likely be out of business soon. There is still a place for physical stores as many people still enjoy the human interaction, but if the experience in not a positive one, the customers will start ordering online.

It would be a good discussion topic for every executive team in any industry to answer the following question: “What can we do better in our customer experience so that we can survive if we have to compete with Amazon?” How do you “Amazon-proof” your business? Unless you end up having to call Amazon for support, your shopping experience will not include the opportunity to be pleasantly surprised by the way you are treated by an employee. Amazon may always be the most efficient way to purchase a product, but it will not address the need that many of us long for, and that is to be treated with respect and for our need to be met. Strive to “Wow” your customers with every encounter.  That will keep them coming back and avoid them turning to online shopping.