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How UK shoppers engage with Amazon – and how other retailers can compete

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When nine in 10 UK shoppers buy from Amazon, and 70% of shoppers say the site is their first port of call online, what can other retailers do to fight back?

A study from Mintel this week suggests that 86% of Brits are Amazon shoppers – with 70% buying from the retailer at least once a month. Just under a fifth (17%) use the retailer at least once a week, and more of its customers (21%) have increased the amount they buy from Amazon than have reduced it (13%). More than half (51%) of users assume that the retailer is the cheapest, and 59% say they are loyal, while 70% say it’s the first place they go online. 

Some 39% of consumers have access to Amazon Prime, with 26% members n their own right and 13% using someone else’s account. Among them are 63% of those aged 16 to 24 and 52% of those between 25 and 34. That implies, says Mintel, a 15m UK membership of Amazon Prime.

Nonetheless, says Mintel associate director of retail Nick Carroll, the retailer, ranked Elite in IRUK Top500 research, is not the threat to high street retailers that many assume. That assumption is illustrated by the Mintel finding that 45% of its users assume that the retailer is responsible for physical stores closing, and 75% say they often check the prices of products they see in shops on Amazon. 

“Amazon’s growth has no doubt wounded rivals, but it is not the ‘high street’ killer that it is often painted out to be,” said Carroll. “It has certainly led on, and to a degree enforced, many trends that have come to define 21st century retail, however it is not all conquering at present. Indeed, even if the retailer accounted for roughly 50% of the online market held by online-only retailers, it would only account for around 9% of all UK retail sales. And despite the popularity of online retailing as a whole, the vast majority of all retail sales (82%) in the UK still come through physical stores. This leaves much room for its own growth but equally for rivals to fight back.”

That’s echoed by Adrian West, director, commercial sector at Fujitsu. “In this digital age, retailers should not forget the a large majority of shopping still takes place int he traditional brick-and-mortar world of the high street,” said West. “This provides an opportunity to reinvigorate the high street by doubling down on its unique characteristics – its social nature and personal touch.

“To drive this, shops need to turn their operations inside-out, empowering staff to create the kind of store that truly reflects what shoppers want. The people who serve customers everyday on the shop floor are those who best understand their shifting desires and needs, and need to be able to make adjustments to layouts and stock accordingly. Moreover, they need the time and headspace to engage and inspire shoppers, providing that all-important personalised experience.”

Angel Maldonado, founder at EmpathyBroker, says that Amazon has won popularity because of the customer experience that it offers – but that will not last forever. “What I believe will challenge Amazon is the notion of a ‘better service’ that evolves from the concept of convenience and efficiency to another kind of advancement. It will be one that delivers an emotionally rich experience, treats users as subjects as opposed to objects and is designed to evoke the emotions and feelings that technology is also capable of triggering when people feel like people, not just users.”

Delivery expectations: the Amazon effect

Speedy next-day delivery is a key perk of the Prime service, and 66% of those with Prime membership say they use this feature regularly – although 44% of those who have never been members say it is too expensive. That raises expectations for shoppers when they go on to buy elsewhere. 

Chris Greenwood, CIO at nursery retailer Mamas & Papas says that’s something that he’s heard other UK retailers say. “The perception is that Amazon is driving up expectations,” he said. “In actual fact, it’s making it challenging for retailers and placing pressure on them to mirror delivery offerings that are either not necessary, or impossible. Without using data from customer purchases to inform what kind of delivery options brands should have at the point of checkout, delivery becomes ineffective and it can also become difficult to manage if retailers try to do everything themselves.”

But he argues that retailers are missing the point if they believe that free and fast delivery is most important to customers. “Recent market data from GFS and IMRG shows that 40% of consumers say a lack of convenient delivery options in 2018 was a reason they abandon online purchases, which is a 25% increase from the previous year. If you’re representing a luxury brand, with luxury products, the same strategy will not align with your brand values. In my experience, delivery strategy needs to be led by three things: your customers, your brand and your product.”

Greenwood added: “When overhauling the delivery function in ecommerce, retailers need to ensure technology supports and integrates with their existing services. For a retailer, their ecommerce business never stops, particularly as they can’t afford a lengthy carrier onboarding process. We have 10 major product categories, plus subsets of those, and 13,500 products to ship, however we’ve been able to drive down cart abandonment rates just by transforming what we offer at the point of checkout and delivery.”

Fujitsu’s West says the Amazon figures suggest that almost half of the UK market may well be used to unlimited one-day (and in some cases same-day) delivery. “It’s never been easier for people to browse and buy, and for other retailers the bar has been irrevocably raised, presenting both a challenge and an opportunity.

“With expectations transformed, retailers can now seek to gain a competitive advantage on convenience and/or experience. For the former, retailers need to invest in the operational back-end that powers a seamless system that enables them to get product to customers wherever they are. That could involve using something as sophisticated as supply chains analytics that enable rapid and flexible delivery or simply using cloud computing platforms that enable the website to deal with sudden peaks in traffic.”

Image courtesy of Amazon

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