What Businesses Should Learn From the Amazon Effect

You’ve probably heard about the Amazon Effect while researching business and e-commerce topics. What is it, and how can you follow Amazon’s lead and keep customers happy while growing your business? Keep reading to find out. 

What Is the Amazon Effect?

Although people describe the Amazon Effect with some slight variations, they generally refer to it as the challenges all other e-commerce brands face if they want to compete with the company. For example, Amazon’s shoppers expect a massive selection, reasonable prices and fast shipping — just for a start.

Business model

Other brands can’t necessarily match what Amazon offers in every respect. However, the Amazon Effect pushes e-commerce companies to continually improve their operations in all possible ways. E-commerce store operators know that failing to pursue excellence like that will likely mean they’ll struggle to compete in an increasingly challenging market where Amazon already dominates. 

However, the Amazon Effect is not bad news for all other businesses. Virtually all entrepreneurs can learn from what the company does well and bring similar approaches to their enterprises. Many of the ideas discussed below could apply to all companies — whether your operations currently include an e-commerce aspect or not.

People Appreciate a Range of Shipping Options

Even if you shop at Amazon regularly, you may not have realized how many shipping options they offer customers. Several types of Prime Shipping get goods to people from two days to one hour after they order them. Consumers can even utilize smart technologies that give a delivery driver brief access to their homes and cars to leave packages inside them. 

People can select No-Rush Shipping, too. As you might guess from the name, it’s not the fastest choice. However, those who choose it enjoy immediate discounts or promotional offers to use on future purchases. Amazon knows that people like to have options when getting things shipped to them. 

You don’t need to have as many choices as Amazon, but see if you could provide at least a few. For example, you might offer a discount shipping tier as the slowest possibility, but also let people pay a bit more for your standard shipping speeds. Finally, provide costlier expedited shipping for the shoppers who are willing to pay a substantial premium to get their stuff sooner. 

Displaying Product Reviews Can Drive Purchases

Amazon has become such a well-known place to find product reviews that many people look there for feedback, even if intending to buy an item elsewhere. The most popular listings on Amazon regularly have hundreds or thousands of reviews for people to peruse.

Additionally, people can filter reviews by the top words or phrases that reviewers mention or type keywords into a search box. Amazon also uses a verified purchase badge system so people can see that a reviewer actually bought the product in question from the site. 

Many consumers hesitate to buy things without some idea of what to expect from them. Some often have specific questions, such as how long a phone’s battery lasts. Genuine product reviews can provide the clarification they seek. 

That’s why it’s wise to show product reviews on your site, too. When people can access information that alleviates their doubts, they’ll be more likely to finalize their transactions than shop elsewhere. 

Basing Business Decisions on Customer Needs Brings Success

Something that sets Amazon out from the pack is how its team frames its value propositions around the most pressing customer pain points, needs and conveniences. They work out the specifics afterward. 

The priority is to determine how to make products or services relevant to the target audience. Doing that increases the chances of people becoming loyal after realizing the company understands them.

Amazon’s original goal was to make the process of buying books more efficient. Moreover, people could use the site to find titles their local booksellers can’t offer, such as out-of-print versions. However, the company’s CEO Jeff Bezos and other leadership team members soon realized they could sell anything and everything to customers — provided they knew enough about them first. 

Take inspiration from that approach by specifically asking customers how you could better serve their needs. If you have a brick-and-mortar store, some people might request that you alter your business hours to suit their schedules. Concerning a website, customers might ask for international shipping options or a mobile-friendly search interface. Listening to what consumers ask for before making major decisions can help your business prosper. 

Accessible and Excellent Service Promotes Customer Loyalty

Another reason why Amazon excels in the e-commerce industry is that its team understands the strong link between great customer service and loyalty. If consumers feel frustrated, misled or otherwise upset by their experiences, they’ll find other providers to serve them. 

Amazon tries to mitigate that possibility by making it easy for people to get in touch. After shoppers select a few categories to describe the scope of their issue, they receive links to contact the company by phone, email or live chat. 

There is also a dedicated official @AmazonHelp Twitter account, plus a Digital and Device Forum people can use to get community support about products under that umbrella. Together, all these solutions increase the chances of people becoming loyal. 

Investigate what you could do to emphasize that people can reach out to your company representatives without encountering hassles. Consider how some individuals may prefer internet-based support options, but others like to pick up the phone and hear someone’s voice. 

Also, provide a time frame for all non-immediate forms of assistance. For example, you might say people should expect replies within 24 hours if they send their message between 9 a.m. and 5 p.m. from Monday through Friday. 

Periodic Goals Can Keep Your Company Positioned for Success

Continuous improvement is one of Amazon’s foundational aims. It’s a best practice for businesses to create five-year plans before they start trading. Those documents shape their ongoing efforts. However, it’s also best to break those objectives down into smaller goals. 

It can quickly become overwhelming to look at what you want your business to accomplish over the next several years. However, setting quarterly and yearly goals keeps pushing the organization forward. 

Amazon is a data-driven company, and many of its goals focus on process enhancement. That aim is particularly important for aspects like product development and delivery efficiency. The company operates a WebLabs division, too. Its team members work on carrying out split testing at scale to determine which changes will most likely resonate strongly with customers and help the company reach new milestones. 

Digging into your company’s data is an excellent way to achieve a clearer understanding of where weak points exist. Think about creating new data sources, such as automatically sending people feedback forms associated with orders and customer service interactions. Try to spot trends and shortcomings, then use those findings to create your short-term goals. Additionally, remember that each one should support your broader company objectives. 

Customers Respond Well to Customized Recommendations

Amazon was one of the first e-commerce companies to invest heavily in technology that provided personalized product suggestions. Visitors saw these suggestions based on factors like their previous purchases or items that people with similar needs and interests bought. It’s now common for other e-commerce brands to do that, too. The expectation is that such an approach could increase transaction sizes by encouraging people to buy relevant products they might otherwise overlook. 

Research carried out in 2018 showed that product recommendations do increase purchases, but not to the extent previously thought. More specifically, an analysis of millions of page views and visitor sessions indicated an 11% increase in overall product sales. Earlier sources said recommendations boosted sales by 35%. 

Despite the difference, it could still be worthwhile to implement a system that suggests other things to buy. You don’t necessarily have to go with something extremely high-tech, either. 

Perhaps you have an e-commerce site that sells bath products. If someone adds a bottle of shower gel to their cart, they might also see a prompt to purchase the complementing body lotion — and get it at a discount compared to buying the two products separately. 

Let Amazon’s Success Work for You

It’s not feasible to expect your business to get to a point where its resources become comparable to Amazon’s. However, you can still follow tips like these that get to the heart of why the e-commerce brand enjoys such phenomenal outcomes. Following those strategies could help you appeal to more customers and increase the likelihood that they choose to do business with you instead of other merchants. 

Lexie is a digital nomad and graphic designer. If she’s not traveling to various parts of the country, you can find her at the local flea markets or hiking with her goldendoodle. Check out her design blog, Design Roast, and connect with her on Twitter @lexieludesigner.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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