Jeweller - September 2020

Best of Business | RETAIL FEATURE
technology, shutting Walmart out for
months.
Like something out of a sci-fi movie, this is
a battle fought between retail Goliaths in
cyberspace and the importance cannot be
overstated for traditional retailers.
Amazon’s mastery of the complex, behindthe-scenes
technologies that power
modern e-commerce is vitally important
to its success.
exterity with bots allows Amazon to not
only see what rivals are doing but also
keep those rivals in the dark when Amazon
undercuts them on price or quietly goes on
to charge more.
Pricing bots are just one example of the
integrated ecosystem of technology and
systems that Amazon and Walmart have in
their omnichannel arsenal.
Smaller retailers simply do not have
the resources to recreate this strategic
infrastructure.
Applying AI effectively
If a retailer does not know the acronym
IFTTT then they are falling behind in digital
retailing. IFTTT stands for “If this then that”
and it is AI applied at the simplest level to
automate choices and actions.
IFTTTs can create algorithms that enable
consumers to make a purchase based
on a predefined set of criteria, like price
point, quantity left in stock, or even the
weather conditions.
Amazon deploys a host of IFTTTs online
and engages customers through its
dashboard buttons.
Of course, Amazon is not the only retailer
deploying IFTTTs in retail and supply-chain
automation. Supermarkets such as the
UK’s Tesco began adopting the technology
as far back as 2013.
Tom Furphy, CEO Consumer Equity
Partners, explained the technology to retail
news site Morning News Beat at the time:,
saying, “Their applets can automatically
order products if they meet a certain price,
they can add burgers to a shopping basket
based on the weather or they can set a
reminder to add certain items to a basket
at a certain time.
“They are also using IFTTT to
allow customers to use Google
Home to add items to their
basket,” he added.
Traditional retailers might scoff
and say that their consumers
don’t need or want IFTTTs, but
consumers expect all retailers
to match the convenience and
services levels provided by
Amazon or a Tesco in today’s
omnichannel world.
IFTTTs create convenience and
place even more pressure on
competitive pricing driven by real-time
criteria, which is controlled by empowered
customers.
E-tailer fulfilment
Amazon’s genius is using its own Amazon
Marketplace to recruit retailers and brands
to sell products through its ecosystem.
As part of Amazon’s ‘turn key’ solution,
the Marketplace products are “Fulfilled by
Amazon” (FBA).
Amazon’s own fulfilment costs for its
membership program Prime run into the
billions. By incorporating its Marketplace
sellers into FBA, Amazon gains logistical
volume, efficiencies and resources to
continue to build state-of-the-art systems.
Amazon is taking FBA to new levels by
picking up products at manufacturing
locations and delivering them directly to the
consumer’s home.
This process cuts out the role of
distributors and most of the traditional
supply chain.
World domination or bust
There are many more components
of Amazon’s ecosystem but the ones
mentioned here already create a huge
strategic advantage that leaves even US
retail behemoth Walmart struggling
to compete.
There are only a handful of retailers
with deep-enough pockets to be able to invest
billions in this kind of infrastructure, again
giving Amazon a huge competitive advantage.
At the same time, there is little profit to
be made in e-commerce today without
efficiencies and massive scale.
OVERCOME
AMAZON
Don’t
compete
on price
Online megaretailers
have
the advantage
of always
offering lower
prices
Apply AI like
an e-tailer
Integrate ‘if
this, then that’
algorithms into
your online
store to help
customers shop
more efficiently
Build
customer
loyalty
Rather than
focusing on
widening
your base,
create deeper
and more
meaningful
customer
relationships
and invest in
great service
Anticipate
change
Think about
how consumer
behaviour and
technology will
evolve over
time and begin
adapting your
business now
Amazon didn’t turn a profit for years and the
cost of replicating the many components of
its ecosystem is virtually insurmountable for
retailers.
In addressing the question of whether
Amazon can become the world’s most
dominant retailer, many are betting on
when, rather than if.
What now?
Forget trying to be Amazon. The first thing
smaller traditional retailers need to do
is shed the historical baggage of selling
products at a price.
The future lies in creating engagement and
relationships with customers. To do that,
retailers must leverage the
one thing Amazon does not have yet, outside
the US: stores with talented
front-line sales staff.
Even within the US, Amazon’s bricksand-mortar
stores are not widespread or
particularly well-known, and have been
criticised for their initial smartphone-only
payment system.
Traditional retailers already have close
relationships with customers and beautiful
local stores with helpful and welcoming
staff; they just need strategies to leverage
those elements for maximum profit.The
mantra of Amazon CEO Jeff Bezos is,
“Tomorrow is day one,” but he is always
focused several years ahead.
Driverless cars and delivery are likely to be a
reality by around 2024, so think about what
this will mean for consumers. Will they still
go to stores?
Chances are most retailers haven’t even
thought about what driverless means to
store design and parking, for example,
but one can bet with certainty that Amazon
is already planning a holistic ecosystem to
leverage it.
It is the job of retailers to think ahead, keep
informed and do what they can to keep up.
CHRIS PETERSEN is founder and CEO
of retail consultancy Integrated Marketing
Solutions (IMS). Visit: imsresultscount.com
48 | September 2020