Doubling down on digital in the Amazon age

Craig Herbison’s advice to retailers with limited online experience or capability is to find ways to integrate digital into stores, so they can do what Amazon doesn’t.

Amazon’s arrival is one of the biggest potential disruptors to Australasian retail in recent times – even if the Australian store launched with a slightly damper bang than expected. 

ASX-listed retailers lost billions of dollars of value off the back of Amazon’s announcement in May, and one of the biggest talking points is of course how to compete with the international giant.

Towards the end of 2017, major New Zealand retailer The Warehouse Group, laid out its plans to combat the Amazon invasion, specifically, by throwing more resources at digital commerce. Acknowledging that the competitive landscape is even more intense than before – and only going to get more so – the company is doubling down on digital.

The Warehouse is now experimenting with artificial intelligence as a way to improve customer experience, while improving delivery innovations such as an express delivery trial and testing of a chatbot at Noel Leeming. In addition, the business has also had to invest in creating a mobile-first platform to build personalised offers, digital capabilities and ecosystems to respond to customer needs. 

On the e-commerce front, online powerhouse Mighty Ape is preparing to meet Amazon head-on, continuing to focus on experience, supplier relationships and speed of delivery to keep its hold on the local market. 

Mighty Ape has had a lot of experience countering Amazon with a local flair. Amazon offers fast shipping to the US but relatively slow and expensive shipping to this end of the world. However, Mighty Ape offers next-day shipping for a few dollars and slightly pricier same-day shipping to main centres. Mighty Ape also has stock on hand rather than having to source from often risky third parties. If you’re in New Zealand, who would you choose? 

Physical retailers mostly all have an online presence, but progress has been patchy. It will take more than just an internet browsing option to keep your customers engaged in the age of Amazon. The Warehouse and Briscoes have had online shopping for years, but Farmers and Kmart have only recently opened their online doors, product selection is still limited and stock management seems to often be a hit and miss affair. 

While Farmers will let you check in-store stock online, Kmart customers have been complaining about online orders being cancelled after a payment is processed due to lack of stock. Communication between online and physical channels is obviously still a work in progress.

If retail brands’ strengths are clearly offline rather than on, wouldn’t it make sense to concentrate on creating a more relevant and rewarding in-store experience rather than trying to beat Amazon at its own game? 

Offer online shopping certainly, but retailers shouldn’t be fooled into thinking that’s all there is to do to stay competitive. Putting half of your catalogue on a storefront and hoping nobody orders the items you don’t have in stock, is quite simply not going to cut it.

Amazon’s potential breadth of product is staggering; it may have started with books, but we’ve seen the US business diversify across categories online and in the real world. There is little chance of competing on range or price, so retailers need to make it their business to help customers find what they need, rather than leaving them to get browse online.

For most physical retailers, that is going to mean optimising the in-store experience through smart staffing, merchandising, experiences, and connectivity. The idea is not just to get people into stores, but to make store visits so rewarding people can’t help but come back. For example, if you’re a quick service restaurant (QSR) you might encourage dine-in with premium menu items; if you’re The Warehouse, you might direct nearby shoppers to on-sale items from their online wish list. 

Other ideas on how to compete by adding digital tools to retail: 

1. Present personalised offers to customers via mobile and connected signage.

2. Update in-store stock online so customers can see what’s on the shelf before they come in.

3. Allow in-store trialling and ordering of items that are out of stock.

4. Offer free in-store pickup for online orders to maximise up-sell and cross-sell opportunities when customers do come in.

5. Promote free home delivery for in-store purchases, especially for heavy or bulky items or at times where store traffic is especially heavy.

6. Connect your loyalty program so you offer rewards people actually want.

7. Make shopping a friendly experience; give associates connected tools to help them recognise and deliver personal service to customers.

8. Be sure to build those supplier relationships so you can get products to people without making them wait for it. 

Minimising time to fulfilment is going to be a key differentiator when competing with Amazon, and there’s nothing faster than getting your hands on something in an actual store. 

If you’re a physical retailer with limited online experience or capability, don’t worry about matching what Amazon is doing. Instead find ways to integrate digital into your stores so you can do what Amazon doesn’t – creating an essential in-store experience that gives customers what they need and keeps them coming back. 

Craig Herbison is CEO of Plexure.