How Amazon continues to build a loyal customer base that keeps them coming back
Written by Matt Mullen, Senior Vice President and Managing Director for Neopost Commerce & Shipping
To be featured in USA Today's Future of Retail Issue on March 30th, 2018
“The new generation is killing the [insert X] industry.” It’s a topic we hear about almost every day, but in reality, times have changed and businesses need to react quicker, more intelligently and on a much larger scale in order to stay alive. So what’s the magic equation?
Let your business evolve with and by your customers to create the perfect experience.
None of this is demonstrated more clearly than by Amazon.
It seems like every day I see a story about a new service, product or feature that Amazon is bringing to the market. But all this news can be summed up in one way: Amazon doesn’t follow the leader, they are the leader. They consistently transform their business to match what their customers want, and they do it quickly.
"We're always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices," said Kristen Kish, an Amazon spokeswoman.
Most recently, Amazon made headlines when news broke that they are further expanding their “seller flex” trial (now called Fulfillment by Amazon Onsight), meaning the company is increasing initiatives that allow them to ship directly from their merchants’ warehouses. This permits Amazon to provide additional conveniences to their customers (aka faster and cheaper shipping of groceries, cleaning supplies and more) without adding extra inventory, complexity and operational efficiencies to their own warehouses. And why are their merchants buying into the program? Because Amazon is enticing them with lower delivery costs, logistics software and warehouse inspections and recommendations. The downfall? Amazon would have quite a bit of control over their shipping operations, and it might affect their merchants’ carrier relationships.
Also making news is Amazon’s roll out of a new service called Shipping with Amazon, or SWA, in the next couple weeks starting in Los Angeles. The mission begins with sending SWA drivers directly to Amazon’s third-party retailers and warehouses to pick up parcels and deliver them direct to customers, reaching into the pockets of other delivery services such as FedEx, UPS and USPS.
All of this is genius, right? I’ll agree it’s smart, but it’s actually something that all retailers have the ability to do. Right now, e-commerce companies are being challenged to manage the competing objectives of keeping costs down while pursuing a significantly faster fulfillment network that meets the needs of their customers. You might not be able to build your own fleet like Shipping with Amazon, but you do have options.
Reframe Your Thinking - 50% of consumers say they’re likely to switch brands if a company doesn’t anticipate their needs.
You don’t have to be the biggest company in the world to come up with innovative ideas that create the perfect customer experience; however, you must reframe how you think about your customers’ needs. Amazon’s number one core value is “customer obsession”. Why? Because it matches their objective to create a loyal customer base, keeping them coming back time and time again. That’s how they create these fulfillment ideas and why we, as consumers, love them so much. Through this obsession, Amazon realized that their customers wanted their products quickly and cheaply, which got them thinking about what they needed to do in order to create this experience. And voila, we now have Amazon Prime, Fulfillment by Amazon Onsight and Shipping with Amazon.
To Amazon, shipping isn’t valuable because it saves them money or ultimately gets the package on the porch - it goes beyond the box. Shipping is valuable to Amazon because it’s valuable to Amazon customers, meaning they treat shipping as a competitive advantage in service and experience, not price or operational efficiency. For example, if we think of Amazon Prime as free two-day shipping for your best customers (how another retailer might see as a business rule), then Prime loses money every time. But if we think of Prime as a competitive advantage in service, it wins. Did you know Amazon’s best customers spend 186% as much as non-Prime every year? It wins.
The gap between customer expectation and shipping capability is ever growing. We see Amazon bridging this gap, but how can you?
You Have Options
You may not have the massive distribution profile of Amazon, but you do have options. Bringing your stores into the shipping mix can significantly reduce transit times to the end customer without the need to add additional infrastructure. Other possibilities?
- Do you have high volume and want to get orders out the door quickly? Utilize zone skipping.
- Have you thought about adding last mile carriers to your network? This can be especially advantageous in improving your speed of delivery, giving your customers more options to choose from.
- Is peak season a pain point for you? Take advantage of seasonal carrier offers and conditions (such as expanded delivery days) with Advanced Date Shopping, an extension of rate shopping, to move more product and delight customers.
- Do you have temperature-sensitive products? Enable weather restrictions and gain the ability to determine the high/low temperatures at a customer’s destination. This automatically upgrades services to make sure your customers will receive their order as expected.
- Worried about carrier busyness? Utilize Carrier Volume Balancing in order to turn off a carrier service if it’s too flooded to guarantee deliveries to certain locations.
The list of features and business rules available for enablement is endless. But in order to be successful in choosing the right options for your business, you need to put your customers first. Which options enhance the customer experience at the cart level? The transit level? The delivery level? If your best customers spent more money and your site visits had less cart abandonment – what would that mean to your business? Choose the features that build a loyal customer base, and you can win like Amazon too.
Old Industry, New Opportunity
We’re living in a different era. Today, it’s all about the customer experience, and the mobility of commerce has inspired a new generation of shoppers - a generation that is united by their collective desire to experience the world on their own terms. In other words, today’s consumer is driven by an “I want it now” mentality. Your job? Chances are your customers already love the products you have, so find the spaces in which you can improve. Find the ways in which you can keep those customers coming back. Evolve with and by your customers. Invest in your customers’ wants: getting their orders to them quickly and cheaply. Invest in the shipping experience as a service, not a back-of-house operation.
The future belongs to companies who capitalize on the opportunity to turn shipping and fulfillment into a weapon.
Matt Mullen is Senior Vice President and Managing Director for Neopost Commerce & Shipping, where he and his team focus relentlessly on delivering value to leading retailers and commerce supply chain participants. Prior to joining Neopost, Matt held executive roles with Epicor and Visa, where in both cases his primary focus was on enabling the improvement of global retailing. Matt lives in the San Francisco Bay Area with his wife and two children.