Free Shipping & Fast Delivery are not Amazon's Secret Sauce

Amazon has influenced digital commerce, and shaped consumer behavior, in ways that no brand or business ever has.

It's easy to believe that the prolific growth of the Amazon marketplace has been driven solely, or at least primarily, by the promises of free shipping and fast delivery that accompany every Prime membership. There is no doubt that free shipping and fast delivery are important contributors to Amazon's rise through the retail ranks, but they are not the secret sauce to Amazon's success. Far from it.

Many millions of Americans love shopping on Amazon. You probably love shopping on Amazon. Do you know why you love shopping on Amazon?

You love it because you know exactly what you're going to get each time you do it.

It's the same reason why you love going to Chick-fil-A and hearing a 17-year-old say "my pleasure" after taking your nugget order. It's the same reason why your spouse insists on a haircut from the same stylist time after time. It's the same reason why children pick Kraft Mac and Cheese over every other dinner option, always. And it's the same reason why your neighbor, the Ford truck guy, always chooses to drive - you guessed it - a Ford truck.

Consumers make buying decisions based on whether a reasonable expectation exists that a particular product or service will meet their needs, and consumers are loyal to businesses that consistently meet or exceed their expectations. That's like two years of economics-for-business at the collegiate level in a single sentence.

The Secret Sauce

Rest assured the intent of this article isn't to write yet another profile of the $1.2 trillion, 800-pound gorilla in the room. The intent is to let every hard-working e-commerce entrepreneur in on a little secret: There is no magic behind Amazon's success in online retail. There is no secret sauce. And free shipping and fast delivery have less to do with Amazon's success than most realize.

Amazon is successful because their company is positively obsessed with customer expectations. Amazon considers itself to be Earth's most customer-centric company.

Remember when the idea of an online bookstore selling more than just books seemed odd? Remember when the idea of free shipping with two day delivery seemed crazy? Remember when the idea of next day, same day, or Sunday delivery sounded far-fetched and impossible? Remember when the idea of ordering with nothing more than your voice sounded a bit too sci-fi to be believed?

Jeff Bezos and his team are not afraid to set expectations around how e-commerce can and should be done, just as Steve Jobs was not afraid to release a product no one asked for because he simply believed consumers didn't know yet that they needed it.

There are no surprises left when shopping online with Amazon. That's by design. That's why Amazon is so successful.

66% of consumers begin their product searches on Amazon. They search, shop, and purchase on the marketplace because they know, with the utmost certainty, precisely what experience they're going to get each time they visit the Amazon site or open up the Amazon app. Consumers prefer comfortable, "low risk" buying decisions. Full stop.

The Five Elements

The expectation management master class that can be derived from Amazon's example over the past decade and a half is built upon a foundation of five distinct, and equally vital, elements.

1. Price
2. Reviews
3. Shipping
4. Payments
5. Returns

Retailers should aim to understand how these core focus areas connect to the ways in which buying decisions are made, while always striving to deliver their own customers a more "Amazon-like" online retail experience.

Let's explore each of the five elements with an eye toward understanding how they drive both conversions and loyalty. We'll also take a look at how some retailers may already be beating Amazon at their own game.

Price

There are countless stats and studies touting the importance of price in e-commerce, but we don't need a single one of them here. Consumers are a cost-conscious lot to be sure. Price matters a great deal. Amazon has known this since the company's inception and that is why Amazon's marketplace uses a robust catalog system where different sellers offering identical items compete for the "buy box" with price serving as a determining factor.

On Amazon, little matters as much as the buy box as more than 90% of orders on the marketplace go to the seller who commands the buy box. Amazon has, over the years, allowed shoppers to develop an expectation that the seller with the best price always gets the buy box.

Is this expectation a perception or a reality? Is the buy box always the best price on Amazon? Is it the best price online? The answers would surprise most. Research done by Northeastern University has confirmed that, "Amazon is much more likely to feature sellers in the buy box who use an automated practice called algorithmic pricing, even though their prices may be higher than those who do not."

Frankly, though, it doesn't much matter. If consumers have come to incorrectly expect that they're always getting the "best deal" by shopping on Amazon, Amazon will be happy to let them continue on their merry way.

How can smaller retailers deliver an Amazon-like experience when it comes to price? How should retailers fight back against the inaccurate expectation that Amazon always has the best deals?

The answer is transparency.

If a business can be competitive on price with others in their category, that should be promoted. It should be screamed from the rooftops. Tecovas, a direct-to-consumer brand that makes top-quality boots and other leather goods is a case study in how to do this well. Check out the product page for their large presidio-leather duffle bag. The bag is $395, but Tecovas is not shy about telling shoppers that the bag should be compared to others on the market costing nearly double with their inclusion of "Traditional Retail: $695". A click on the small icon to the right of $695 even provides a pop-up, 20-second study in the economics behind this comparison.

Tecovas does not pretend that they ever sold the bag for $500, $600, or $695. And they don't need to do so. This is a confident brand letting shoppers know how the price stacks up against the competition. And just how good they feel about their value proposition.

Brilliantly done, Tecovas.

Reviews

Shoppers shop because they have a need to fill. When shopping online, consumers are unable to touch, test, or try-on a product but the desire to know if the product meets their needs does not subside.

Why do you pull your smartphone out when shopping for small appliances in a traditional retail shop and then proceed to read product reviews on Amazon before making your in-store selection? You simply know beyond any doubt that Amazon will have reviews. Plenty of them.

Why does practically every retail site on the internet use a five star system? That's because Amazon uses a five star system.

Why do we so rarely buy products online with an average rating below four stars? That's because Amazon gives less-than-optimal placement to products with a rating below four and because we know that consumers prefer comfortable, "low risk" buying decisions. Remember?

Why, and how, should small retailers deliver an Amazon-like experience in terms of reviews?

Excellent question. Let's take a look at Jane's story.

Jane drinks a ton of coffee. A little too much coffee. Jane has decided she needs to replace her coffee habit with something else. A friend recommends tea. Jane has never been a huge fan of tea but figures it is a healthier long term habit. Jane is ready to buy some tea.

The problem? The boxed tea at the grocery store is a bit too dull, though. Too boring. Jane needs something bold. Something that will make her say, "woah!" Jane pulls out her smartphone and quickly stumbles upon August Uncommon Tea. It's a sleek website filled with bold choices. Her curiosity is piqued.

The trouble with shopping for tea online? Jane cannot smell it. Or sample it. She's going to have to rely on the opinions of others - in the form of ratings and reviews. This is known as social proof.

Fortunately for Jane, August Uncommon Tea has detailed ratings and reviews by the dozen. The company has collected and consolidated social proof from their own customers, then showcased that information prominently on each product page.

Painted Desert, a spicy black tea that combines the flavors of chili and chocolate, has nearly 100 reviews and catches Jane's eye. Many customers give it five stars. Many customers even give Painted Desert four or five stars despite conceding it's not a flavor profile to their liking. The company makes no effort to hide unfavorable reviews and responds, authentically, to everything that comes. It's social proof at its finest. It's everything Jane needs to reach the tipping point - the point at which she becomes confident in her expectation that this particular product will fit the bill.

Retailers don't need reviews by the billion, a la Amazon. They simply need reviews. Reviews that ooze authenticity. Retailers need to amplify efforts to deliver confirmation that other customers love their products, love their service, and find tremendous value in their brand.

Shipping

Amazon has been the gold standard in e-commerce for many years when it comes to setting and exceeding customer expectations related to shipping. (Fun fact: Amazon Prime was first offered in the U.S. in 2005 making it older than nearly half of Generation Z!)

Jeff Bezos and team recognized long ago that simply telling a customer, "it will be there in two business days" was not enough. They recognized that all shoppers are time-sensitive shoppers and millions are willing to pay an annual fee to get clear-cut expectations around delivery!

Online shoppers have grown exceedingly demanding over the past 15 years. Amazon capitalized on this trend by doing a better job at setting "day-definite" delivery expectations than any online retailer on the planet. Prime shoppers visiting an Amazon product page on Monday will see, "Wednesday Delivery." Or perhaps, "Checkout in the next 2 hours, 16 minutes for Wednesday Delivery." Or possibly something as bold as, "Checkout in the next 2 hours, 16 minutes for Same Day Delivery by 9pm." Woah.

Amazon has not hesitated to set an aggressive bar. For themselves and for Seller Fulfilled Prime shippers. The best metaphor to sum up the past decade? Amazon has been Usain Bolt running against a middle school track team.

Fortunately, for consumers, many retailers have caught on and caught up. Many of those with stronger physical retail footprints are even now beating Amazon at their own game.

Think about how some customers buying, say, camping gear online will be incredibly time-sensitive (I need it ASAP!) and others will be more price-sensitive (I definitely need free shipping or I'll just pick it up in-store!) as you check out the screenshot below from Target.com.

Target is providing a day-definite shipping expectation with a clearly-established cutoff time, free shipping (not pictured but on the right side of the screen), a premium same day delivery option via Shipt, and even in-store, same day pickup. There's something here for every type of consumer. All on a simple, clean, not-too-text-heavy checkout page.

How can small and midsize online retailers deliver an Amazon-like experience without a massive fulfillment network?

The first key is to understand that speed is almost entirely irrelevant to shoppers. Customers care about whether or not their purchase will arrive in time to meet their need. Period. Someone buying camping gear for an upcoming trip has a day and/or time in mind when the goods must be in hand. It generally doesn't matter if the sleeping bag is dropped off by a carrier pigeon. It matters that it arrives on time. Delivery ambiguity equals cart abandonment.

Retailers should find out what it will take, from a technology standpoint, to put day-definite delivery expectations in the shopping cart. For those without API-savvy, all-star developers on staff, there are brilliant service providers like ShipperHQ offering plug-and-play solutions compatible with Shopify, WooCommerce, BigCommerce, Magento, and other platforms.

It's also important for retailers to use Ground or Express transportation services from major carriers that are day-definite. (USPS services are, aside from Priority Mail Express, not day-definite.)

Last but not least, retailers need to offer just enough choices in the shopping cart to have something for Impatient Irene and something for Cheapskate Charlie but no more than that. Choice paralysis is very real and also a contributor to cart abandonment.

Payments

Speaking of cart abandonment - it's painful. All of that hard work by the product, design, and marketing teams to bring the customer just inches from the finish line with a cart full of goodies only to see the possible sale squandered as the customer flips out of the browser and over to the Amazon app. It is a complex issue. There are literally dozen of contributing factors to cart abandonment and countless mountains of content have been produced on the topic.

Amazon has kept cart abandonment issues at bay, and optimized their marketplace for conversions, thanks in no small part to something most retailers give little thought to after their first day with the doors open - payments.

Everyone knows mobile traffic continues to dominate the digital space. Our phones are infinitely better at rendering the digital world than they used to be. Websites are built responsively now so they look great on any screen size. We are always on the go. (Except for when there's a pandemic.) And, frankly, mobile traffic continues to dominate because we simply never put our phones down. Ever.

Stop right now and think about the last time you got up from your couch to get your credit card from your wallet, or purse, to complete a purchase on your phone. One of two things will be true:

• You haven't done it in a long time.
• You did it recently and grumbled about it.

That's precisely why Amazon gets so much business. When you shop Amazon, you never need to pull your credit card out. Amazon's combination of 1-Click Ordering and Amazon Pay has made the checkout process as painless as possible. 1-Click Ordering sounds far more impressive when you consider that Crazy Egg reports the typical checkout for a Top 100 online retailer has more than five steps!

By securely preserving card data and shipping information, Amazon has created an expectation many millions of times over that you, Mr. or Mrs. Customer, won't have to get up off the couch to finish your transaction. The expectation of a frictionless experience is a significant driver of loyalty and ultimately Amazon's growth.

It must be stated that Amazon is not the only retailer that has honed in on the importance of payment processing and a frictionless checkout.

Note in the screenshot below how Allbirds, a popular DTC brand, gives the customer a shortcut to the finish line by putting three express payment options front and center. One of which is Amazon's own payment option. Allbirds is smart enough to know that many of their own customers are also Amazon customers. These options remove the need to enter credit card or shipping information and provide an excellent experience for the customer.

What should retailers do to deliver an Amazon-like experience in terms of payments and checkout?

Retailers should start by building their checkout with the mobile user in mind. If it's easy for a mobile user, it will be easy for a desktop user. They will also want to ensure that several of the most popular express checkout options (Amazon Pay, Apple Pay, Shop Pay, Paypal, etc) are available so the doesn't-want-to-get-off-the-couch-crowd is covered.

Last but not least, the simplicity of payments should be promoted early, subtly, and often on the website and in relevant marketing materials. Payment processing options are not sexy and don't need a neon sign, but customers appreciate the quiet reassurance early in the shopping process that they won't be forced off the couch later.

With retailers like Shinola saying that one in four mobile shoppers to their site opt to checkout with Amazon Pay, it's a wonder any retailer would dare to sell online today without payment options that remove friction at the most critical moment of all.

Returns

Humans love second chances. And that's why consumers love returns.

A return is a big fat rewind button the customer can hit at any time within a given post-purchase window. The luxury of undoing a purchase, often at zero cost, drives consumers to shop more often and buy significantly more when they do shop.

According to data from Narvar, 63% of US online shoppers said that they would not make a purchase if they couldn’t find the return policy. Guess who understood the critical importance of returns long ago? Amazon.

Jeff Bezos and team were among the first in online retail to recognize two important truths about returns.

• Flexible and/or generous return policies, and the perception of a painless returns process, positively impact the conversion rate in a big way.
• The post-purchase returns experience is strongly correlated to customer loyalty. A good returns experience bring them back for more. A bad one is fatal.

Amazon has, for years, offered quite generous return policies. Heck, they even allowed one customer to return a waffle maker with a waffle still inside. Amazon has aggressively promoted their flexibility on returns, empowered their customer support team to authorize returns with little hassle, and made the actual act of returning as close to painless as any retailer has to date. Partnerships with the UPS Store network and Kohl's, Amazon lockers, and the acquisition of Whole Foods have given Amazon the ability to boost convenience and reduce friction.

Retailers have come to understand the importance of returns and are quick now to handle both the pre-purchase and post-purchase elements well. Allbirds, again as an example, puts a subtle but not too subtle mention of "30-day returns, no questions asked" just a fraction of an inch below their add-to-cart button. That's expectations set perfectly. And tastefully.

Retailers like Anthropologie (their returns policy page pictured below) have gone so far as to provide prepaid returns labels with most of their outbound shipments in addition to offering a self-service return label generation solution on their website and an in-store return option.

While the approach to returns taken by Allbirds, Anthropologie, Amazon, and others may not be one that small retailers can mirror precisely, it's important for them to understand that consumer expectations around returns are here to stay. The demand for the big fat rewind button is not going away anytime soon. Amazon has set the expectation that returns are a luxury that shoppers should always have available.

The Game Plan

Master class concluded.

Now that, hopefully, a robust understanding of Amazon's unwavering commitment to customer expectations exists - let's turn this into a plan of action for the retailers in the room.

1. Be transparent about pricing. If you're competitive on price in your market, tell customers. Tell the world. And if you're not as competitive on price as you'd like to be, start stacking up the value-adds. Be sure to quantify those value adds. Convince consumers that an apples-to-apples comparison based solely on price is impossible.
2. Share, highlight, and promote all aspects of social proof. This includes on-site reviews and ratings, media coverage, customer success stories, user-generated content, and more. Amplify it. Never leave a shopper with a shred of doubt that your remarkable product meets their needs.
3. Set crystal clear expectations early and often about shipping. This includes expectations around delivery as well as cost. There should be shipping options for the cost-conscious consumer as well as the time-sensitive shopper. Remember that ambiguity on the checkout page makes it impossible for a time-sensitive shopper to make a buying decision.
4. Offer payment options on the checkout page that reduce the number of taps or clicks needed to complete a transaction to nearly zero. (Amazon Pay and Apple Pay are perfect examples.) If you incorporate popular payment options that ensure a seamless checkout, promote those options early and often. It's essential to mobile shoppers.
5. Understand that the various aspects of returns impact, tremendously, conversions and long-term loyalty. Return policies should be simple, transparent, and readily available on an e-commerce site. The actual returns process should be as seamless as possible.

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John Bishop is a digital strategist from Dallas, Texas with a soft spot for innovative small businesses looking to change the world and a love for the Explain-It-Like-I'm-Five approach to everything. As a digital commerce consultant for one of the world's most recognized transportation brands, he leverages 15 years of experience as both an online retailer and founder of a boutique e-commerce consultancy to take the complexity out of selling online.

Please note that all opinions expressed are entirely, unless otherwise attributed, the opinions of the author and do not represent the opinions of any other party or company.