Retailers: What You Need to Know to Win Against All-Powerful Amazon

January 04, 2017

Many retailers are beginning to feel like competing with a dominant force like Amazon is a losing battle.

In the recent article “What Challenged Retailers Must do to Survive The Amazon Effect?,” CEO Mike Edwards examines the struggle for vendors and retailers to remain profitable in the shadow of the online retail giant. Amazon offers lower prices, convenience, a wide selection, product recommendations, a range of shipping options and a personalized customer experience. They’ve set the standard for customer expectations, and if you ignore that standard, you won’t succeed.

But there is reason for hope. In fact, as Edwards points out, smaller retailers, especially those with brick and mortar locations, have distinct advantages over ecommerce giants like Amazon.

Our research of five major brick and mortar retailers plus Amazon indicates that the natural advantages for brick and mortar stores lie in three key areas of the buyer journey.

The Buyer’s Journey

Traditionally, we’ve thought of the sales funnel as a linear process consisting of six steps: awareness, interest, consideration, intent, evaluation and purchase. But the buyer journey is not linear at all—it’s a very convoluted, self-directed path based on what the customer is trying to achieve. In order to understand the buyer’s journey, we therefore have to understand the buyer’s end goal.

Every CMO needs to first and foremost be asking: What job is the customer trying to do?

We have therefore defined the buyer’s journey through the lens of the jobs-to-be-done theory. With this approach, there are 15 steps through which the buyer advances to choose, acquire and use the product he wishes to hire to complete his job.

15 steps of the buyer’s journey

Brick and mortar stores are uniquely positioned to improve the experience for—and grab the business of—customers at following steps in the buyer journey:

  1. Product identification
  2. Product selection
  3. Returns

1. Product Identification

Product identification is the step in the buyer’s journey when the consumer is determining which solution(s) to consider to solve his problem or complete his job—and a retailer can help the consumer decide which products to consider. Brick and mortar’s have the advantage here because they are able to provide problem solving experts.

For example, if someone is going skiing for the first time, he may go into a store to buy or rent skis. He may not know that he also needs poles, goggles, boots, nice socks, hand warmers and more. The store expert can help this buyer make sure he has everything he needs to make his first skiing experience enjoyable. It is difficult to find a comparable problem solving experts online—looking at the “Customers also bought…” just doesn’t cut it.

2. Product Selection

This is the step of the buyer’s journey in which the buyer chooses the solution to acquire. There are some products that consumers really want to evaluate in person. Try them on, hold them, feel them, test them out or consult with an expert (e.g. Apple Genius) before selecting an item to purchase. Scott Neslin, Professor of Marketing at Dartmouth, calls these products fit products.

Brick and mortar retail stores have a distinct advantage when it comes to the selection of fit products. Customers can sit on their prospective sofas, try on jeans, ask questions about how their climbing gear should fit, etc.

The Samsung 837 store in New York does a wonderful job helping customers test out Samsung products. The store offers the opportunity to try out and play with the latest Samsung products without having to purchase them. It also offers customer care services with troubleshooting and workshops for new and existing users. Finally, the store has an impressive VR tunnel where customers can step into a virtual world and be transported anywhere—a studio, a kitchen, a playroom, a living room—all where customers can see how Samsung products would fit into their everyday lives.

Samsung helps customers to picture products in their lives to win against amazon
Virtual reality in Samsung 837 store. Image Credit: Samsung

3. Returns

Unfortunately for retailers, returns are also part of the buyer’s journey. We all know that if the product a customer buys doesn’t meet his expectations (or satisfactorily complete the job he is hiring it for), he may return it. What our research discovered, however, is that customers are more likely to buy an item when the prospect of returning it seems easy and convenient. Repackaging and mailing an item back seems cumbersome, which is why retailers with a physical location have an advantage at this step in the journey.

Further, our interviews indicated that, while an easy return process increases propensity to purchase, it do NOT increase returns—most people do not end up taking the products back. Simply knowing that they can easily do so if they choose to makes them more likely to buy.

Retailers should therefore allow for—and even encourage—in-store returns and aim to make the process as simple as possible. The best return policies are those with no questions asked.  Kohl’s takes this approach: they have no time restrictions on returns, and they don’t care if you have a receipt. Athleta also has a great return policy. Unlike at sister companies Gap, Banana Republic, and Old Navy, you can return lightly used items to Athleta any time to receive a refund. The store offers a give-it-a-workout guarantee so that customers can try out the performance wear before committing.

good return policies help to win against amason
Athleta upstages sister companies with its return policy.

Find and Optimize Your Advantages

While it may seem impossible to compete with the likes of Amazon, what makes your business different may also make it better. As eBags CEO Mike Edwards says, “The biggest weakness of Amazon is they do not have stores or OMNI partnerships that make sense.” Forbes agrees. According to a recent article, “Retail companies with a physical store presence capture the majority of retail sales” (which is why Amazon has jumped on the bandwagon, trying to catch up to you).

We believe that understanding the buyer’s journey through the lens of the jobs-to-be-done model allows retailers to find their biggest opportunities to improve their customer experience—and compete against the giants like Amazon.