Can anyone beat Amazon in e-commerce?
There’s little debate that in terms of e-commerce and customer experience (CX), Amazon dominates. While many companies were still trying to figure out how to transition to digital channels when the pandemic hit, Amazon simply shifted into cruise control and watched the revenues soar. That’s the benefit of being a global e-commerce market leader.
Many companies would love to emulate Amazon’s success and enjoy a position of strength and market advantage. It’s something that most digital leaders dream of achieving. But the reality is that Amazon is so far ahead and has such vast resources that other brands have little chance of catching up.
What if you don’t need to be like Amazon to compete in the e-commerce space? Could the route to e-commerce success be as unique as each of your customers?
Branding vs customer experience
For decades businesses have focused on building brands that people aspire to. Nike and Adidas are two examples of sporting apparel brands that have been very successful at this. The focus is on the promise that the brand will deliver an impactful experience:
- “Wear these shoes and you’ll run faster!”
- “Wear this perfume and you’ll feel more beautiful!”
It sells a dream which is a wonderful thing, but it doesn’t always connect with the reality of what customers want or need. Too often the customer experience falls short, because it simply doesn’t live up to idealistic expectations and creates a disconnect with the brand image.
By contrast, Amazon built its business model based on what it believed customers were looking for. The three core pillars of Amazon’s success are cited as:
- Having the largest selection of goods available
- Having the lowest prices on offer
- Providing the fastest delivery
While they dominate the e-commerce space now, Amazon was not an overnight success. It took many years to turn the customer experience dream into reality. The Amazon Flywheel approach was to create great customer experiences and people would return to buy more and refer friends which would result in more customers and more purchases. More customers would attract more suppliers. More suppliers would provide a greater selection of products at lower prices. More products at better prices builds better customer experiences… and so the wheel turns. It was a long term game but it paid off, because now Amazon is seemingly untouchable in the e-commerce space thanks to their CX.
Will Wayfair be the next Amazon?
Wayfair sees itself as a mega online store for all things home-related, but the major difference between it and other leading home retailers such as IKEA or the Home Depot is that it doesn’t promote itself as a brand. It’s taken a page or two from Amazon, choosing instead to focus on the digital customer experience.
Wayfair’s founders started out in 2008 selling speaker stands online, they subsequently developed over 200 websites selling different products online before deciding to consolidate everything onto one platform. Since Wayfair was formed in 2014, it has achieved 50%+ year-over-year growth. The business is currently valued at $14 billion. It’s not Amazon and it’s not a brand like Adidas… what’s the secret to its success?
Instead of focusing on marketing and building a brand to attract customers, Wayfair focused on engineering and user experience. It became the connection between the goods people wanted for their homes and the manufacturers who produced them. More importantly, they recognized that customers have different tastes and budgets and they need to cater for everyone.
There is deliberately no brand aesthetic on the website which gives customers an immense range of choice. Currently, Wayfair sells as many as 22 million different products. This alone attracts customers, because no matter what you’re shopping for, if it’s home related, you’re likely to find it on Wayfair—whether you’re shopping for luxury bespoke decor or a simple throw for your couch.
The final success factor is delivery. They’ve developed an extensive logistics network connecting suppliers and customers once again with the primary focus on customer experience and delivering on expectations.
What’s next in e-commerce?
Amazon and Wayfair may be leading the way in terms of customer experience, but the market is dynamic and customer expectations are constantly changing. Efforts to hone in on the unique online shopping experiences that customers are looking for need to be matured while at the same time keeping pace with change. Wayfair admits that there is room for improvement—navigating their site, for example, can be complex because there is just so much choice. Technologies such as artificial intelligence (AI) are ideally suited to managing all the complex variables that influence digital experiences. More importantly, AI-driven optimization can keep up with the rapid pace of change.
In 2020, e-commerce accelerated by 10 years in just 3 months and many companies had to scramble to generate a compelling online presence. Now the e-commerce space needs to mature. A wide selection, good pricing and fast delivery have become the expected norm.
If companies want to stand out, they need to do more. They need to optimize the online shopping experience from the minute visitors arrive on their site so that the customer journey is effortless. Then help customers find what they’re looking for easily and quickly, and reduce any points of friction so that customers won’t hesitate to click the buy button. Navigating all these complexities will require strategic thinking and a growth mindset. Advanced technology such as AI-driven optimization can help companies gain the competitive edge they need and keep it.
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