If you work in retail, I'm willing to bet you're fed up of hearing about Amazon. I'm also willing to bet that some of what you think you know about Amazon may not be right.
Here's why I'm saying this.
Over the last few weeks I've spoken with more than fifty retail executives, at conferences and speaking events, about their perspective on Amazon’s launch of physical retail operations in Australia. Here are my most striking observations:
- Around six in every ten retail executives have shopped personally with Amazon and understand how it works as a customer.
- Fewer than 10% are confident they understand how Amazon operates and its retail strategy.
- Many executives are unaware of key areas of Amazon’s strategy that will have huge relevance for Australia over time: for example, that 50% of its retail sales will soon come from third party sellers, or that it has a fast-growing range of own-brand products - including cookware, furniture, batteries and electronic items.
In addition to there being a lot to learn, people find it hard to know where to start.
Here’s a simple step to help you think about your business in a new way for a changed landscape – while building a knowledge about Amazon and getting to understand how it thinks.
I’ve observed that almost all retailers miss a crucial step when considering the future structure of their retail channels – the need to understand the specific ‘jobs’ customers need done...or in other words, WHY your customers are motivated to buy.
Identifying these 'jobs' is different from the traditional way many of us look at customers by using characteristics like age, income and products bought. One customer can have several jobs-to-be-done, depending on their situation. The approach draws on the work of Harvard professor Clayton Christensen who developed the body of work around “disruptive innovation”.
OK, so here's what you do...
Clarify and pinpoint which jobs are best done online and which are best done instore. This will help you to predict how different retail sectors will evolve over time – and to start preparing your Amazon-ready strategy.
So far so good. But how do you achieve this? The best way to answer this question is by using an example, say of buying clothes. Most people usually buy clothes for one of these four reasons:
- Repeat. You know in advance exactly what you want to buy. Perhaps you're looking for a repeat purchase of a brand and size such as socks, jeans or a work shirt.
- Urgent. You urgently need a replacement item.
- Inspiration. You're looking for an inspired outfit for a special event such as a wedding or party. You want to be confident you've made a good choice and would like to try a few outfits and get feedback.
- Refresh. You want to refresh your wardrobe, maybe for a change of season or a holiday. You know roughly what you need, and are not attached to brands, items or colours.
Some customer jobs-to-be-done lend themselves naturally to an online purchase and home delivery.
For example, if you already know what you want and there's no urgency about when you get it, it will likely be more convenient to get it delivered to your home.
Over time, as innovation enables home delivery to become more efficient and convenient, these sorts of simple repeat purchases will increasingly be made online. On the other hand, it seems less likely that you'll choose to shop online for a special occasion outfit where you need to be certain it will fit and look right—while looking for some style advice.
Ask yourself 'what are the customer jobs-to-be-done in our sector?' and 'does our strategy reflect changes in the way customer jobs-to-be-done are being met?' Understanding the different 'jobs' your customers need done is the starting point to understanding why Amazon thrives in so many different sectors, and how you can thrive too.
Are you ready for Amazon? Learn how to embrace the changes that will transform Australian retail and prepare your Amazon-ready strategy. Click here for more details.
Like to design the perfect e-commerce fulfilment model for your business and keep improving your performance? In partnership with Sealed Air, I’m offering Australia’s first e-commerce fulfilment boot camp. Click here for more details.