Amazon and other online retailers are apparently responsible for the dwindling numbers of stationary customers. But is this really true and are “classical” stores really struggling?
What is the “Amazon Effect”?
The “Amazon Effect” describes the changed buying behavior due to digital retail which apparently negatively affected stationary stores in the last couple of years. Customers expect different and more things from their in-store buying experience which results in declining revenues.
Based on the marketplace Amazon, the Amazon Effect describes the impact online retail has had on stationary retail.
Stationary retail is on its way up
For a long time, the Amazon Effect resulted in many closures of small and big retailers. But since then, stationary retail is back up again. According to PWC, 60% of all German customers buy in a store at least once a week. Two years ago, it was only 46%. This number doesn’t decline across age groups, by the way, so there’s no need to worry about Millennials and Gen Z customers changing this trend back to the analog experience.
However, the numbers are declining when it comes to the customer satisfaction in stores. Customers feel that they don’t get enough information from store personnel. Additionally, in 2017, every second customer was fine with the store design. Nowadays, only 39% feel comfortable in a store. Globally, the outlook is equally positive. Whereas the revenue from eCommerce has inclined from 2016 to 2018, so did the revenue from stationary stores (source: via digitalcommerce360.com).
Whereas the revenue from eCommerce has inclined from 2016 to 2018, so did the revenue from stationary stores
The modern customer journey combines digital with in-store experiences
The end of the brick & mortar-stores is not nigh, it seems. It seems, the Amazon Effect is less Pandora’s Box and more a new age that demands digital strategies to enhance the analog buying experience. Stationary shops also profit from the fact that the online buying experience is far from perfect. Even Amazon can’t fully prevent delivery-issues, logistical bottlenecks or confusing prices. Amazon’s experiments with stationary stores showed, that even the ecommerce giant knows that in-store experiences have their advantages.
Customers can touch, try on and test products in a store. If retailers manage to connect this physical experience with digital services, it can drastically optimize the customer journey. Because this is fact: no matter where the customer buys, they do their research online and this is exactly where the Amazon Effect comes into full force. More and more customers use Amazon as a starting point for their product research, for customer reviews and comparisons.
But just because customers start their journey on Amazon, doesn’t mean that it ends there.
Enter: ROPO customers
According to Deloitte (PDF), every digital interaction with a retailer influences 56 cent of every earned US-Dollar that a stationary store makes. The addition of a digital channel, whether it’s via Amazon, Social Media or your own website, is worth it.
Your digital channels should not be competition
One of the reasons why the Amazon Effect has been felt by many stationary stores is the fact that store managers see digital offers as competition to their own revenue. Chains therefore need to give in-store personnel the right tools and information to work with the digital channels when they help customers.
Otherwise, customers assume it’s lack of service, if they don’t get any info on online specials, etc. After all, most customers will come into the store already informed. If in-store personnel doesn’t know what’s on their website, they will be at a disadvantage in conversation with customers.
Find out, how to create a customer journey that is convincing online and offline.