First, it was Amazon Prime and two-day free shipping. Then, it was Amazon Go, a frictionless retail store experience. For those in retail marketing, that was already scary.
Now, it’s the Amazon Rewards Card, which offers cardholders up to 5 percent cash back with no annual credit card fee and a $70 sign up fee—enough to almost cover the cost of Prime service for one year. There’s also no foreign transaction fees, and a whole host of premium perks. How can other big-box retailers, such as Costco or Target, even begin to compete?
It’s not as hard as you would imagine: Amazon’s benefits are great, but there are also a number of drawbacks to shopping on the platform, and these drawbacks are a smart way for other companies to have an edge. Here are three ways brands can secure the upper hand (or at least, level footing) in the race against Amazon.
Know why there are always extremely long lines at Trader Joe’s, Costco, and Target? It’s because they’ve mastered the art of generic branding.
Target’s Up & Up line, for example, lists a number of quality products when compared to leading national brands—in fact, one study claimed that its sunscreen performed better than some top brands. Amazon, at least for the moment, suffers from rampant fraud and sellers who aren’t telling the whole truth about the items they’ve listed. Hundreds of customers have taken to the site to complain. Even for name-brand products, listed items can be deceiving—in terms of size, quantity, or both. There’s a reason why Amazon reviews have become such a joke: anyone can be paid to write positive statements about the brand, and five-star reviews don’t mean much unless there’s photo or video content to back up the quality. For consumers, this is extremely frustrating, and if you’ve had a negative experience with Amazon, it’s likely that even with its perks, the Amazon rewards card won’t be as appealing.
What’s more, though, is that Target has almost cornered a (rather large) niche of consumers with its consistent branding and retail marketing, not to mention stylish product picks—something that Costco and Walmart can’t claim to have done. For cheap, sensible—but modern—designs, Target can offer consumers everything from paperclips to large furnishings that don’t break the bank and look decent. Target’s partnered with interior designers, such as Nate Berkus, and has its own brand line, Threshold, where consumers can purchase designer-style pieces. While some retailers might consider these touches an added expense, Target knows that its customers will keep returning to see what’s new in-store, season after season.
If, as a retailer or marketer, Amazon Go scared you silly, you’re not alone. But rather than worrying about it, take a cue from the online giant and start investing in technologies that will help customers check out easier without the long wait. IBM is already working with Visa as a partner to ensure that in the future, a point of sale can be anywhere. This means that Amazon Go won’t be revolutionary for long, as retailers will partner with big tech and credit card companies to develop similar types of technology. Target, Costco, and other big-box retailers already have the advantage on Amazon in that sense, because they have physical stores and a POS system and sales assistants on the floor—the big expense of upgrading in-store technology will become a necessary one, but it will also ensure that Amazon Go won’t be a first choice.
Furthermore, retailers will also be able to reward long-time customers with this system, as well as customers that frequently use the retailer’s credit card. A connected system would be able to show where and when a customer picks up an item, which will go a long way to improving displays and the flow of foot traffic. There’s also the hassle of returning items to Amazon and waiting for the vendor to receive the item before being credited the amount—many customers would prefer to throw damaged or unusable items away then repackage and ship to an Amazon service center for inspection.
In a recent article, Nasdaq noted that Amazon’s new card could be a Costco killer, as many of their core consumers overlap, and carry both cards. But if everything else stays the same, why should Costco try to compete with Amazon’s offerings? Costco knows that it has a loyal consumer base—it could raise its percentages by a digit and still have its customers. Amazon, for now, doesn’t offer bulk selections, and Amazon Fresh is hardly a grocery competitor—the selection and the pricing can’t compete. Perhaps, as a last ditch effort, a consumer might order some Fresh or Pantry items, but Amazon has an annoying minimum that just isn’t worth it to many consumers.
Furthermore, as is with the case with other online grocery ventures, consumers love to pick their own stock and determine its quality for themselves. Amazon Go might be able to help in that department, but other grocers, like Costco and WholeFoods are still far ahead of the game.
So, maybe you can’t out-Amazon Amazon. But, for those in the retail marketing world, there’s another way to win. By bringing your brand up on level footing, then working your customer experience to your advantage, you can position your brand without succumbing to fear.
Featured image attribution: amish.patel