The veteran online retailer is still setting the standard for customer engagement, writes Chloe Rigby
How Amazon engages with its customers today very often sets their expectations of other retailers for tomorrow. Shoppers whose early online experience with Amazon led them to expect free delivery are often still loath to pay for fulfilment today. Since Amazon moved onto the Prime subscription scheme, a paid-for customer membership scheme offering benefits that include free delivery, movies and music downloads, millions of shoppers have signed up. In 2017, more new paid members joined the scheme than in any previous year since its launch in 2007. Last year, according to Amazon, also saw more than more than 5bn items shipped using the service, in countries around the world. The figures speak for themselves and a number of other retailers have, in the last 10 years, launched their own subscription schemes, safe in the knowledge that customers will pay for free delivery. Since what Amazon does can so often set the pace, it seems sensible to consider what the retailer is doing now, in order to see what that may say about the future of customer engagement.
Amazon’s Alexa Voice Service powers a range of its own devices, from the Echo to the Dot, and also comes installed in range of third-party devices, notably cars made by manufacturers including Toyota and BMW. Customers can use it to control their homes, stream their music and shop online from retailers including Amazon and Ocado. The success of the service outstripped Amazon’s own expectations last year and suggests that customers are more than ready for a future in which they speak, rather than type, their online orders.
“Our 2017 projections for Alexa were very optimistic and we far exceeded them,” said Jeff Bezos, Amazon founder and CEO, at the time of the online giant’s recent fourth-quarter figures. His comments came as the retailer posted sales of $177.9bn (£126.8bn) in 2017, up 31% on the previous year. Bezos said: “We don’t see positive surprises of this magnitude very often — expect us to double down.” The scale of Alexa adoption is reflected in the fact that so many third-parties are now helping to grow the technology. “We’ve reached an important point where other companies and developers are accelerating adoption of Alexa,” said Bezos. “There are now over 30,000 skills from outside developers, customers can control more than 4,000 smart home devices from 1,200 unique brands with Alexa, and we’re seeing strong response to our new far-field voice kit for manufacturers.”
Famous for being online-only, Amazon has nonetheless made two significant moves into stores lately. It bought natural and organic food store chain, Whole Foods Market, in 2017 and has gone on to launch free two-hour order delivery for Amazon Prime members in parts of the US. At the time, Whole Foods Market chief executive John Mackey emphasised the growing convenience of its service for Prime members. “Together, we have already lowered prices on many items, and this offering makes Prime customers’ lives even easier.” This emphasis on ease and convenience extends to the new Amazon Go store, now open and running in Seattle. That store does away with the need for customers to check out – rather the goods that they add to their baskets are automatically registered on the Amazon Go app on their mobile phone. The approach appears aimed as reducing the friction of the in-store shopping experience. But does this suggest that one future of customer engagement is to do away with human interaction as far as possible, even in the store?
Internet of Things
There is no human involvement in Amazon’s Dash Replenishment Service, which enables connected devices with screens to place their own one-click orders for the consumables they use when supplies run low. Thus a smart printer that is enabled to use the replenishment service can reorder ink automatically and a washing machine can order detergent. The service works, says Amazon, as connected devices measure how much of a refill has been consumed through inputs including infrared, pressure flow, weight and other sensors.
In recent months, a range of new devices has been added to the scheme. Among them is the Kenmore brand, with appliances from a fridge to a washer, dryer, dishwasher and a water softener, all capable of ordering their own supplies. “Most of us inevitably forget to restock the consumables we need – like laundry detergent and dishwasher tabs – until we’ve run out,” said Chris McGugan, general manager, innovation and Kenmore at Sears Holding Corporation. “By integrating Dash Replenishment with our home appliances, we’re using innovative technology to automate reordering and make sure our customers always have the supplies they need to keep their homes running smoothly.” Again, Amazon puts the emphasis on the convenience, which it argues is improved if shoppers need to take no action at all in order to buy.“We’ve all felt the frustration of realising we’re out of something we frequently use, so it’s no surprise customers are loving the convenience of Dash Replenishment, which makes shopping for every day consumables completely disappear,” said Daniel Rausch, vice president of smart home, Amazon. No doubt many customers will agree. Yet other retailers will no doubt be looking at how they can use the IoT in their own businesses in order to encourage such auto-reordering.
In one notable approach to engagement, Amazon is appealing to customers’ human side – while still emphasising the importance of convenient shopping. When shoppers buy through AmazonSmile (smile.amazon.co.uk) the retailer donates 0.5% of the net purchase price to their nominated charity. The scheme recently expanded to the UK market from the US, where Amazon has already given more than $69m (£49m) to charities via the scheme. “We think our customers will love the opportunity to support a wide variety of charities up and down the country without having to change the way they shop,” said Jessica Blum, UK manager, AmazonSmile.