Prime Day And Beyond: Amazon is Disrupting Retail For Good

Boasting 150 million cubic feet of storage capacity, $100 billion in annual sales in 2015 and 300 million customers, Amazon is the competitor that keeps retailers up at night. And this e-commerce giant has become integral to the daily lives of consumers in the U.S. According to data from Consumer Intelligence Research Partners, the number of Prime members in the U.S. has grown from 25 million in December 2013 to 63 million in June 2016.

There is no question that Amazon is disrupting and changing the retail industry. Amazon even created its own holiday in the middle of July that gives Prime members an experience that emulates Black Friday. Prime Day, as it is called, takes the rush and excitement of holiday shopping to the next level with fully personalized experiences, appealing deals and free two-day shipping.

In terms of sheer numbers, Prime Day 2016, which took place on July 12, was the company’s best day in history. In fact, the online retailer said worldwide orders rose more than 60% compared to the previous Prime Day, and in the U.S., orders spiked more than 50%. Further, The Benchmark Co. raised the price target on Amazon shares to $915 from $750 after Prime Day, and the company earned more than 6 million new Prime members.

But the wild success of Prime Day isn’t just about numbers and revenue. Prime Day is a monumental opportunity for Amazon to fuel the experience it provides to customers on a holistic level. Prime Day drives spikes in Prime membership, and therefore, brand loyalty. Further, the increase in traffic, account creation and Prime membership enrollment means Amazon has seized its self-created holiday to gather and increase its arsenal of valuable first-party customer engagement data – just in time for the busy holiday shopping season. Retailers have a lot to learn from Amazon, and there are three distinct ways the company has become a serious disruptor in the industry:

1. Stellar Loyalty Marketing

Amazon knows more than a thing or two about customer loyalty. To start, its loyalty program provides tangible, individualized value to customers. For a mere $99 per year, Prime members enjoy free two- and same-day shipping with qualifying orders, access to thousands of movies, songs, games and audio books for streaming and free returns. And even though the company loses an estimated $1 billion to $2 billion per year in shipping costs, the long-term loyalty and retention strategy is certainly paying off. According the CIRP research, [tweetable]Prime members spend an average of $1,200 per year on Amazon[/tweetable], while non-members spend just $500.  Amazon’s loyalty program drives long-term customer devotion and engagement.

 2. One-to-One Personalization

Of course, Amazon knows that a highly effective loyalty program isn’t enough to drive long-term customer devotion and retention. The e-commerce giant knows the relationship between loyalty and the customer experience, and has achieved high-level one-to-one personalization at scale by mastering the use of its first-party customer data. The fact of the matter is, Amazon knows its customers on an individual basis, which means the minute a consumer goes to the site, he or she is presented with an entire experience tailored to his or her needs, interests and shopping habits. For instance, visitors are presented with customized suggestions when they go to the site. Additionally, Amazon displays items that other people purchased in conjunction with the items the visitor is browsing. And consumers have taken notice: According to research from BloomReach, 75% of consumers said Amazon offers the best personalized experiences, followed by Walmart with 9% and eBay at 8%. As far as these figures are concerned, no brand has achieved what Amazon has with regard to personalization, but today, consumers expect retailers to give them these tailored experiences at every touch point.

 3. Cross-Device Seamlessness

Not only has Amazon achieved personalization in ways no retailer ever has, the e-commerce giant has also mastered the use of technology to ensure the customer experience is seamless across all devices and channels. Through Amazon, customers can expect to be recognized and greeted with their own tailored experiences on the site regardless of whether they are logged in or not, and no matter what device they are using. But with Amazon, it’s not just about switching devices. The company has managed to continuously innovate in ways that make consumers’ lives easier, from Amazon Dash Buttons that allow customers to instantly re-order household items, to one-click purchasing on mobile devices and customer service interactions that are integrated and informed.

Retailers: The Time is Now to Become People-Based

What really sets Amazon apart from other retailers is its focus on the individual. This focus is embodied in the company’s leadership principles, one of which is “customer obsession.” While other retailers are busy spamming online users with cookie-based ads and irrelevant retargeting strategies, Amazon is delighting its customers with helpful recommendations that are relevant to their lives. And while not all retailers necessarily strive to be just like Amazon, every brand can take a hint from the company’s success and begin to leverage its first-party customer data to provide one-to-one, personalized marketing and experiences.

What it all boils down to is people-based marketing. By knowing and recognizing customers across devices and channels, retailers across the globe will be better positioned to meet the demands of Amazon-loving consumers.

Originally published July 15, 2016

Jon Padilla

Jon is a data-driven marketer who's passionate about using technology to deliver innovative media strategies and create meaningful digital measurement. He the former Director of Product Strategy at Signal.

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