Relentlessly Focus On Customers To Beat Amazon

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As the dust settles on Amazon's official entry to Australia, we see that the sky has not fallen and retail is largely carrying on just as it was a month ago. But while businesses are able to continue operating, it's a good time to figure out what works best with your online store and what doesn't. The typical approach has been to conduct A-B testing to see if new ideas resonate with customers.

Dan Ross, from Optimizely, says a big part of Amazon's advantage is that the retail giant makes it easy to transact with them. They remove purchase barriers and simplify the process of putting buyers and products together. They also have a massive advantage through many years of online experience and they operate at a scale that allows them to source products at a lower cost than smaller operators. But Ross says you can still be successful as great customer experience is often more important than price and range.

"Price and range are symptoms of what Amazon does really well," said Ross. "But they rabidly experiment, iterate and improve upon nearly every facet of their business. That's a really hard organisational challenge that's hard for other retailers to compete with".

Optimizely provides tools for online retailers to conduct experiments with everything from design to algorithms to see what works best with customers. Ross says there are many stores that get large volumes of online traffic but struggle to convert enough of those visits into sales. The trick is to help customers find the products they want, get them delivered quickly and have a simple returns system in case there's a problem.

In other words, while price and range are factors, it's important to build a completely seamless customer experience.

Ross says he's seen some great examples of relatively simple changes people have made to their sites that have resulted in significant improvements in sales.

"One of the problems we see with Aussie shopping is cart abandonment. People find the product they want, add it to the cart but, for some reason, they never actually purchase. One company did some analysis and found that when people were filling in the personal details form, about 8% were getting an error in phone number formatting - putting the zero before the area code. Of those, a few were abandoning the purchase. At this company's scale, with tens of millions of visitors per year, this was a big problem. They ran a test to rearrange the form to make it easier to interact with. The result was this tiny change had a massive improvement".

In addition, Ross said the company took this to their phone sales channel and found the same issue was a big issue internally. The cost was not only in lost sales but also with operational inefficiency.

With recent research showing that customer expectations are exceeding the ability for online retailers to deliver, there is a need to keep improving at a rapid rate. This is why, Ross says, businesses need to keep experimenting and iterating in order to meet the needs of future, not just current, customers.

"Businesses that are more intuitive and streamlined are the ones that will reap the benefits," he says.

For example, an online pharmacy found customers were happy with price and range on certain products and they only had limited competition. But once customs found the products, this was not being converted into sales. After conducting some analysis, Ross says they looked at how people were interacting with elements on the page. They found customers were zooming in on product packaging to look at the product's ingredients. However, these were hard to read on the image.

In response, they conducted some A-B testing where some customers saw a plain text list of the ingredients with the product description. That single change delivered a $7M benefit in just one month.

Often, a small change can make a massive difference. The challenge is having the data to know where the problems are and the tools to experiment and iterate on a solution.

"If you start from the bottom up on margin and price, you're going to start doing what a lot of US and UK retailers did and cut costs elsewhere like bring cheaper talent who deliver poorer service or getting nit-picky about shipping and lower product quality. This creates a vicious, downward spiral," says Ross.

Using data in this way to transform a business can be challenging.

Looking at new technologies and options will not always work out. For example, many retailers are looking at using drones from deliveries. Ross says that while this is still a new thing, customers like it when their favourite retailers are bold and try new ways to make the customer experience better. And while not all those experiments will work, the fact they are trying to make life better for customers resonates strongly.

"This is beyond technology - this is an organisational culture challenge. How do you have the humility to admit that maybe what you think you know, doesn't matter as much as you think it does. How to find a way to leverage your customers at scale - this is hard for a lot of businesses to adapt to but ultimately, that what makes Amazon great. They built immense trust in their customers by doing the simple things that a retailer should do exceptionally well".



    Case in point: in the build up to Christmas, I’ve obviously been doing some shopping and checking my returns and exchange policies. Found out so many are terrible.

    From camera shops that won’t even do an exchange unless there’s a major fault, large national franchises that mess up click and collect and pre-orders, places that sell items in the thousands of dollars and don’t take Amex...

    Honestly it’s like they’ve not been doing anything for 20 years.

    Amazon right now is basically just Aussie resellers, but proper amazon is coming, with its returns policy and shipping, and payment system and it’s going to absolutely wipe the flaw with this lot if they can’t sort it out.

    Last edited 21/12/17 9:59 pm

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