FOCUS

Four things online retailers can do to compete with Amazon

Amazon has nailed logistics and shipping—but that’s not the only way to win retail.
Amazon has nailed logistics and shipping—but that’s not the only way to win retail.
Image: Reuters/Phil Noble
We may earn a commission from links on this page.

It’s easy to imagine why e-retailers think they need to compete with Amazon on traditional retail dimensions—price, assortment, transactional ease, logistics—that’s not what’s separating Amazon from the pack. The really remarkable thing about Amazon is its willingness to think broadly about the experience it delivers to its customers. With drones, lockers, the Prime subscription model and American Express points integration, Amazon is demonstrating a relentless ability to experiment with portions of the typical shopping journey. In order to survive, other online retailers need to do the same.

We won’t see successful Amazon competitors getting hung up on matching prices or offering better free delivery (though these things do matter). The smart e-retailer will realize that doing so ultimately results in a race to the bottom, and in that scenario, Amazon wins. They have to focus, instead, on the total experience they deliver to their customers and the values that actually matter. Competing solely on speed and price is not a winning strategy.

Based on some of our recent work helping top retailers address these very issues, we’ve developed four key principles that successful e-retailers need adopt to compete with Amazon.

1. 

Know what customers really want

When e-retailers focus on the needs and values of the customers they have, and what it is they’re trying to accomplish, it gives them newfound insight about the experiences they need to provide. When they start focusing on their own customers—and not Amazon’s—it will become clear how to tailor and adapt the services they provide.

Tirerack.com has won a loyal following by thoroughly demystifying the tire-buying process. Customers are given tire recommendations based on the type of vehicle they drive. Answering a few questions about their driving style or typical driving conditions provides even more guidance. Survey data collected from current TireRack customers provides a critical, real world perspective to someone trying to determine what makes all these pieces of rubber different. Once customers have picked their tires, TireRack will help them find a local installer and will ship their tires there directly. That saves consumers the trouble of figuring out how to get the service they need once they have their product.

2. Leverage the brand’s expertise

Customers are looking for expertise—and something really powerful happens when retailers can incorporate their product expertise through every aspect of the customer experience.

It’s not typical to think of Mint.com as a retailer, but it is in the business of selling financial products. In order to help match customers to the right products, Mint needs to know what works best for their personal financial situations. Conventional wisdom would be to feature surveys, questionnaires and comparison tables, but what the website has done is use free, online money management as the lead-in to more tailored (paid) recommendations.

3. 

Developing personal-assisted selling

As online shopping becomes more sophisticated, there’s still a need for people to be able to talk to someone when they need help, have a special request, or need a problem addressed. These are the types of moments when a retail site can really shine. As one online shopper said to us about his merchant of choice, “I need someone to be able to yell at when things go wrong.” Sometimes it’s just that shoppers need confidence that they’ve found the right store. In those moments, it really helps to talk to a living, breathing person who knows what they’re talking about.

Bonobos realized that fit is a crucial challenge for selling clothes online. To support sizing, it has gone so far as to establish brick-and-mortar Guideshops with expert staff to help shoppers understand the cut and size of Bonobos clothes are best for them. It empowers consumers to shop from home knowing that the site’s clothes will work.

The personal support doesn’t end there. Bonobos depicted its customer support staff less as an anonymous team, and more so like a personal fashion consultant and named them the Ninjas. They also insert business cards into every outgoing order and feature persistent live help windows throughout the online experience.

4. Think beyond the transaction

Retailers need to think about opportunities to create value across all phases of the customer experience. Amazon’s potential use of drones is about increasing the speed of delivery, but that’s just one way to help customers.

Crutchfield built its brand as an online provider of DIY car stereo equipment. In order to help ensure customer success, it developed a library of vehicle-specific installation instructions that explain how to install those new speakers—complete with correct wiring and mounting adapters—in your own car. It’s this kind of thoughtful approach that saves people time and frustration—and that’s something quite worthwhile. Warby Parker also does this well with its try 5, keep 1 program for eyewear, where consumers can order five pairs of eyeglasses to try on for free at their homes. It’s a brilliant, convenient means to introduce consumers into the concept of buying eyewear over the internet.