The ‘Amazon Effect’ & On-Demand Delivery: The new Battleground for Retailers

February 28, 20197min

Changing shopping habits and ever-increasing consumer expectations have led to decreasing profits, a sharp decline in footfall, and numerous high-street store closures.

Meanwhile the internet retail giants, such as Amazon, have gone from strength-to-strength, increasing their market share and customer retention rates year-on-year. With high-street retailers left scrabbling to reimagine business processes in an effort to win back customers, on-demand delivery is rapidly emerging as the key strategic pillar for them to compete across an increasingly digital landscape.    

Innovation might win the battle

In an attempt to entice customers back to the high street, many retailers have made significant investments in innovative technology, from augmented reality in ‘smart mirrors’ – allowing customers to ‘try on’ and flip between different outfits – to virtual reality in ‘Holo-Rooms’ enabling customers to experience products before they buy. While these technologies go some way to evolving customers’ experiences with a brand, retailers might be putting the cart before the horse – these advancements do not necessarily address the real reasons consumers are no longer flocking to high street stores.

Today’s consumers are time-poor and are in need of retailers whose purchasing model suits their individual lifestyles. There’s too much choice and it’s too easy to walk away – it could be anything from that fact that the goods they are looking to buy seem a little too heavy to carry home or the payment form online is too complex. Technology is the key to retailers being able to provide a service tailored to modern-day consumers, but it must be applied with purpose and strategy if it is to have the impact retailers desire.

Convenience will win the war

Take Amazon, for example. Subject to ever-more public scrutiny following corporate tax scandals and questionable product selections, it’s not just a strong brand affinity that’s driving people to shop with them. In fact, the value of brand image is slowly being eroded throughout the digital age in which Customer Experience comes out on top. The truth is, brand loyalty is no longer as influential as it once was in purchasing decisions or customer retention.

As a result, consumers are switching from beloved household retail names to purchasing goods from internet giants. Through the right delivery models, these companies can power a level of immediacy and convenience for customers that other retailers have so far found difficult. Convenience is a commodity customers are willing to pay for – 40 percent of consumers are willing to pay premiums for same-day or instant delivery. And so, retailers should hone in on the services that consumers actually want.

Tremendous take-up of Amazon’s ‘one-click checkout’ service proves that convenience wins every time and has caused Amazon to roll-out Prime Now, in which products can be delivered as quickly as an hour after placing an order. Amazon’s business model has not only capitalised on consumer behaviour but created consumer expectations and now, rapid convenient delivery has become an expectation that all retailers have to contend with – the Amazon effect.

Naturally, technological advances can help brands offer new services. But a business’ strategy for customer retention, acquisition, and experience must be rooted in solving your consumer’s problems. It is this consumer-first approach, with technology facilitating the needs of consumers, that is key to the future success of the British retail industry.

A whole new world

It’s a difficult time for the high street retailer. It’s a whole new world out there and one in which Amazon is quickly swallowing up the high street. Earlier this month, the executive chairman of New Look said that retailers “have been defending instead of attacking”, but if they are to thrive in this new, uncertain world, high street stores need to take a proactive approach in making the impact of both their physical store offerings and online channels more powerful. On-demand delivery is the place to start.

Amazon, truly ‘gets’ what 2019 consumers need – and they need it now! Its business model has not only capitalised on a shift towards impulsive shopping behaviour, but driven it, and now the Amazon effect has made rapid convenient delivery the new normal. Failure to adapt will see the prophecy of a dying retail industry come true in 2019.

Santosh Sahu

Santosh Sahu

Santosh Sahu is CEO of On the dot UK.

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