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Eight Lessons Online Retailers Can Learn from Amazon


A new study released this week finds that 86% of shoppers use Amazon, while a majority begin their shopping on the site.
We look at some of the ways other online retailers can learn from Amazon’s success…


Loyalty and Retention

The Mintel study found that 39% of UK shoppers have access to Amazon – 26% are members, while the other 13% use other people’s account to place orders.
Amazon does a lot to improve retention and increase customer lifetime value in other ways, but its Prime account plays a big part.
According to CIRP, Amazon Prime retention rates are more then 90%, once the free 30 day trail period expires (it’s around 70% before this).

Prime encourages retention as users can get free and faster delivery than elsewhere, while saved payment details make checkout smoother and repeat purchase easier.


A Focus on Customer Service

Amazon realised the importance of good customer service from the start, and is generally very effective at solving customers’ issues.
Good service leads to more satisfied customers and potential brand advocates, while the reverse can mean more negative reviews and word of mouth from unhappy customers.
The key to good service is to deal with issues and resolves them quickly. It should be easy to make contact, and staff should be able to deal with any issues.
More fundamentally, Amazon puts the customer at the centre of its strategy, knowing that customer satisfaction is behind its success.
Sometimes, Amazon doesn’t even bother asking for returns, as in this example. It’s a little touch which leaves the customer happy by saving them the effort.

This customer service focus is shown by the fact that CEO Jeff Bezos makes his email address public, and customers can email him directly.
He then forwards complaints and concerns to the relevant manager, accompanied by a simple ‘?’. I’d guess these complaints are dealt with pretty quickly after that.


Personalization

Amazon gathers lots of data from customers about their purchase and browsing habits, and uses it wherever possible to provide product and category recommendations.

Personalization is used in email marketing and much more, but the Amazon (logged in) homepage provides
Customers are welcomed by name when they arrive on site, and Amazon provides quick links to customers’ accounts and any items added to shopping carts.
In addition, it recommends top product categories and videos, as well as plenty of other product recommendations further down the page.
This ensures that at least 50-60% of the homepage contains recommendations that are relevant to a customer’s previous on-site behavior.


Pricing Strategy

51% of shoppers in the Mintel survey believed Amazon always has the lowest prices, and this perception is important for Amazon.
It’s widely perceived to be cheaper than elsewhere, and this has helped to make it a destination for price-conscious shoppers.
It has also become, much to the frustration of high street retailers and online competitors, a key destination for price comparison.
This perception of cheaper pricing doesn’t stand up to closer scrutiny. A recent study found that Amazon was no more competitive on pricing than many other online retailers.
What Amazon does is to identify some of the more popular products on its websites, and others like popular seasonal products and ensures its prices are competitive on these items.
As these are often some of the most searched for products, this helps to create the perception that Amazon is cheaper.
There are other strategies too. For example, a best selling TV may be very competitively prices, but key accessories such as leads and speakers may be relatively expensive.
Here is the lesson for other retailers. Its not about competing with Amazon by discounting, as this can become a strategy which harms profit margins.
Instead, selective and smart pricing can help to bring customers to your site without having to compete too heavily across the board with Amazon and other competitors.


Use of Urgency

Urgency can be used to speed up the customer’s decision to buy by providing useful information.
For example, information on shipping cut-off times can help customers to avoid problems with goods arriving too late for birthdays or special events.
Amazon’s messaging around shipping is a great example of urgency in action. It informs customers they can have the item by tomorrow, with a countdown timer for ordering.


Use of Reviews

Reviews were introduced by Amazon back in 1995, and have played a big part in its success.
According to MarketingProfs, 63% of consumers are more likely to purchase from a site which contains ratings and reviews.
Just having reviews helps, but Amazon provides a lesson in how to make them more useful to shoppers, and how to make organise large numbers of reviews.
No-one is ever going to read 540 reviews, but by showing stats like average review score, charts showing the distribution of review scores, and by picking out key features, people can find the information they need.


Delivery

Amazon has innovated around delivery over the years, and has helped to change customer expectations in terms of delivery choice and speed.
A few years ago, ecommerce delivery was relatively standard – three to four day delivery times being the only option on many sites.
Now, customer expectations around shipping time are higher than ever, and that this is partly driven by Amazon Prime, according to data from Alixa.
Even when shipping is free, customers still expect relatively fast delivery, and Amazon Prime members even more so.

Customers want a choice of ecommerce shipping options. Some want free or cheap options, others are prepared to pay more to receive their orders quickly. Amazon provides this choice.


Fast Checkout

Last but not least, the speed and ease of checkout makes repeat purchases almost too easy on Amazon, especially for Prime members.
For new customers, it’s not as easy as some other sites, purely because Amazon insists that new shoppers create an account before checking out.

Amazon is focusing on getting customers registered, perhaps calculating that the benefits of being able to sell to registered users outweighs the risk of deterring shoppers at this stage.
Once people have saved details, and perhaps a Prime subscription too, purchases are easy, often just two or three clicks between product selection and completing a purchase.


Graham Charlton

Graham Charlton is Editor in Chief at SaleCycle. He's been covering ecommerce and digital marketing for more than a decade, having previously written reports and articles for Econsultancy. ClickZ, Search Engine Watch and more.