Photo by Digital Trends.
Amazon recently announced the launch of Fire, their proprietary smartphone, which comes equipped with Firefly, a feature that allows users to scan and identify over 100 million items, and purchase them from the Amazon website. While much of the look and feel of the product is not a huge leap forward compared to smartphone products currently on the market, the Firefly and Mayday apps, when combined with other Amazon advantages, have the potential to shake up the retail industry.
In their press release, Amazon’s Firefly is described as a combination of Amazon’s deep catalogue of physical and digital content with multiple image, text and audio recognition technologies. Firefly brings showrooming to a new dimension. Consumers can scan a bar code, QR code or product image to immediately learn more about the product, check competitive prices and order them from Amazon immediately.
For Amazon’s reported 20 million Prime members, the reasons to buy Fire are greater. Amazon Prime gives members unlimited 2 day shipping but, with Fire, at no additional cost, they will have access to unlimited streaming of tens of thousands of movies and TV episodes, over 500,000 books to borrow , and unlimited streaming and download of more than a million songs and hundreds of expert-programmed playlists. With estimates that Prime members typically spend almost 2.5 times what non-members spend, making spending easier with the Fire will only grow that differential.
Implications For Retailers & Merchants
Amazon Prime members trouble retailers. With the product recognition, retailers may never get the opportunity to make the sale as Firefly will allow consumers to shop from your store windows. With free speedy shipping and the convenience of home delivery, many are using the service to save themselves a trip to the store. As Amazon adds value added services like Firefly, the $99 annual membership looks like better value, especially when compared to services like Netflix which only provide part of the Amazon suite of services.
Amazon’s Mayday service is a brilliant way to build loyalty among Fire users. Mayday allows Fire users to quickly connect to an online video chat with an Amazon customer service representative who can not only help users get the most out of Fire, but also demonstrate by controlling the phone. Consumers that understand how to use their technology will use it more. For Amazon, that use will translate into more customer engagement and greater sales. Mayday demonstrates that Amazon understands that the best way to build loyalty is through a great customer experience. Mayday allows them to remove customer pain points to deliver a better end to end customer experience.
How Can Retailers Stay Competitive?
With the challenges posed by Amazon Fire, how can retailers stay competitive? Here are Retail Category Consultants’ tips:
1. Focus on the in-store experience.
While the adoption of online shopping and showrooming is unmistakable, customers still care about the in-store experience and will rave about exceptional customer service. Retailers that do a great job of allowing customers to experience their brands first-hand and who excel at the human touch will create an impact that translates into sales and continued loyalty.
2. Don’t compete on price—compete on loyalty.
One of the main incentives to showroom and shop from Amazon is its perceived better value, so retailers need to build superior loyalty offerings—equipped with great employee training—to convince consumers to shop in-store and on their own websites. Remember, with loyalty, it’s all about personalizing the experience, so retailers that can instantly generate a customer’s profile and customize great deals according to their preferences and shopping history will triumph, like Sainsbury’s Scan & Go mobile app.
3. Develop killer private brands.
If Amazon can’t offer it, consumers have to buy it from you. Developing a global best practice in private brands requires a brand architecture that is deliberate, strategic, and insights-driven. Product formulations must deliver consistently on the brand promise which is highlighted by world-class creative branding and packaging in order to resonate with consumers. And your associates must embrace these brands and become your ambassadors.
4. Use mobile technology to drive foot traffic.
Most consumers are attached to their mobile phones and tablets all the time, so the responsibility is on the retailer to create a mobile-friendly shopping environment that drives sales through mobile apps that help customers learn more about a product, blast department-specific deals depending on where they are in the store, and even order products for home delivery if the store is closed. A warning: delivering these deals may require some in-store customer tracking, so make sure you do it right!
5. Small retailers and merchants can consider joining the Fulfillment By Amazon program.
Amazon’s fulfillment program releases small retailers from the burden and expense of picking and shipping, letting them focus on providing quality products to sell online. Customers that buy your products through FBA will receive great shipping, and most customers new to your products may prefer to buy from Amazon because of its recognized brand. However, if you are a small business considering FBA, make sure you understand the fine print and make sure that your products are in compliance with Amazon rules and that you understand the tax implications.
Amazon shook up the retail industry with their distribution network. Now, they are challenging their competitors again by shaking up the purchase cycle and the loyalty spectrum. But retailers and merchants can take the example set by Amazon to engineer more competitive service and products. At the end of the day, customers of Amazon and brick-and-mortar stores all want the same thing: convenience, great deals, and a seamless shopping experience.