Why Retailers Should Worry Even More About Amazon

Retailers have the data. They aren’t using it. The consequences could be dire.

Amazon will close the gap with traditional retailers. If retailers don’t pay attention they could wind up marginalized. Last year, Amazon purchased Whole Foods, with 400+ locations. It is opening up book stores in several cities. It is testing a couple of new Amazon Go stores. Physical stores and localized merchandising are a huge advantage for retailers. Amazon knows that and they want to win at that game too. As per Amazon’s playbook, they are experimenting on behalf of the customer experience. They will get it right and then they will scale up. It is everyone's job today to figure out how to stay ahead of our customers.

Leveraging the local advantage

Over a decade I’ve regularly asked retailers “do you take the analytics from your website and share them with the local stores?” I’ve asked it many times during keynotes at Shop.org, and other conferences, to retailers over the years. No hands go up (maybe a couple of hands have gone up over the years). I understand silos and management issues. Why do these issues need to be overcome desperately?

Please understand that I am not dismissing the art component of merchandising. Yet, few stores use the data-driven science of merchandising like Amazon.

When you first walk in to the Amazon book store in Austin, you are greeted by this at the first table.

1. Does it work? As you walk in, this is the first thing you see since they opened the store months ago. Notice that a couple of slots are “sold out.”

2. What are they doing? They are using the data of the most wished for merchandise from people in Austin. Any retailer, if you have one store or a thousand should be using their web data to influence their merchandising. Check out your most viewed products, your most purchased products, your products people dwell on their pages but don’t purchase and use that data to plan your merchandising.

3. Why it works? If people visited the website and did not convert, they likely needed something else to help them on their buying journey. By putting it front and center, they get an opportunity to examine the book. Customers are likely delighted to find it as soon as they walk in and see something they’ve wished for. If not, the “social currency” that most people are wishing for these products invites people stop and explore them. It is not just putting the most wished for products in the front of the store, it is also the power of labeling it that way. This is also why using rating and review tags work in store as well.

How Retailers can take advantage of their data:

Imagine what a Macy’s would look like if every store used their localized data as you entered the store. How would a store in Austin, TX differ than one in New York City or Plantation, Florida?

I’m passionate about helping businesses benefit from customer centric innovation. I’m frustrated that the hundreds of retailers who have heard me recommend this years ago have not taken advantage of it.

What might motivate them now? It was an opportunity then, now it’s an imminent threat.