In the last decade or so, the inability or unwillingness to adapt has caused many businesses to succumb to a newer, more innovative company, or one that has re-thought how to do business in the digital age.
For example, people who can remember browsing the aisles of Borders likely understand the irony of one of Amazon’s first moves into the brick-and-mortar realm: book stores. Strategically, it would be somewhat comparable if Netflix decided to open a video rental store after the last Blockbuster shut down.
However, digital transformation ultimately is about making an experience that is old and often clunky more convenient, engaging and smart: getting a cab with a location and mobile payments-enabled app (Lyft); ordering a coffee from your phone, paying for it, and picking it up with no further transactions needed (Starbucks); getting clothes that fit your body type and style (Stitch Fix); or having an everyday or unique item delivered to your doorstep in two days (Amazon). It’s about using technology (usually cloud-based) to ensure that all of those interactions take place without a hitch.
Those experiences are expected today, but there was a time when even today’s most well-known disruptors had to earn the trust of shoppers — not unlike Amazon for people who had never bought online before, or from sellers whose name they had never heard.
One of the ways Amazon earned that trust was through product ratings and reviews, eventually helping to make them a staple of e-commerce. Today, Amazon has married this now-expected digital experience in an unexpected way offline in the form of Amazon 4-star, a store that houses a curated collection of products sold on Amazon, which have been rated four stars or above.
It’s a stellar example of SoLoMo — social, local, mobile — which brands have been trying to get right for years.
New Take on an Older Marketing Trend
The acronym “SoLoMo” seems dated in 2018. Interest in the term peaked in 2014 but then declined as the idea of omnichannel took off.
The reasoning underlying the once-popular concept remains valid: Social is inherently mobile (i.e., apps represent the most use) and mobile is inherently local (i.e., showrooming, local search, local review apps).
While many brands have tried to implement SoLoMo strategies such as in-store beacons, geofencing and social media check-ins, very few have been successful at implementing a full SoLoMo approach to retail.
Of the successful brands, Starbucks tops the list. It has fine-tuned its SoLoMo strategy for the better half of the last decade.
Starbucks offers several ways to engage socially (contests, a loyalty program, user-generated content); to get a localized experience (nearest store locator based on GPS location, buy online, pick up in store, local promotions); and to transact entirely through mobile (orders, payments, gift cards).
While Starbucks sells more than coffee, merchants have struggled to adapt this approach seamlessly. The challenge is to make thousands of SKUs available for pickup at shoppers’ nearest locations, interact with customers on mobile devices, and engage socially in a variety of ways.
In large part, Amazon is responsible for hiking mobile and social expectations — particularly for making product ratings and reviews a quintessential feature on e-commerce websites today. As shoppers browse for products and services, they seek social proof to minimize their perceived risk of doing business with an organization online.
Over time, both consumers and companies have learned that even negative reviews are better than no reviews, as shoppers have refined their purchasing palate to discern how relevant a review is to them, and just how genuine the reviewers seem to be.
For example, a shopper who is petite in stature might complain that an apparel item was too long. While this is a helpful review for someone of a similar build, it might not be for someone else. Savvy shoppers know this, and retailers have found ways to help them filter out the reviews that might be irrelevant to them.
What Amazon 4-star does is bring this social proof into a local store. Previously, consumers would use their mobile phones to check reviews, or take a gamble on a product knowing they could return the item in-person.
Local Presence, Personalization
While social proof moves the needle for companies, one of Amazon’s weaknesses is the lack of local storefronts. Sometimes, for example, two-day shipping is not fast enough — when last-minute supplies are needed the day of a party, for example, or when people just want to browse in a store with the ability to pick up an item, feel it, or try it on.
Amazon 4-star fills this gap by bringing the “best” of Amazon, as rated by shoppers’ peers, to a local store that is filled not only with those highly rated products, but also with top sellers and trending items geared to that particular location.
Product selection by location preferences is just one way Amazon is bringing its personalized digital experience, known to improve the customer experience, to its stores as well.
It’s important to note that when content and products are delivered to consumers in a personalized manner, retailers experience uplifts in conversion, along with higher basket sizes and click-through rates. There’s a corresponding decrease in number of clicks to purchase.
In other words, there is no unwanted info getting in the way of the customer’s purchase, so when CX is improved, so is conversion.
Although the only 4-star location is currently New York City, the personalization examples by city are nearly endless.
For example, popular items in Chicago in the winter might have no place in a store in San Diego during the same months. The disparity can be because of drastically different weather that requires different clothing and household items, or due to a trending local event.
The most popular items in San Diego during the summer could relate to Comic-Con — such as superhero costumes. The most popular items in Chicago during the summer could be items for Lollapalooza — like festival apparel. Those are two of the most popular events in their respective cities.
What makes Amazon’s use of personalization unique is that the shoppers are determining the in-store merchandise by their reviews, versus a merchandiser solely choosing what to display; it’s truly user-generated content in real life.
Since shoppers get a discount when they are Prime members — there are 100 million of them — Amazon can track their offline purchases in 4-star.
Once Amazon enables a geolocation feature within its mobile app — and pairs it with in-store sensors to track users as they pick up items, set them down, and ultimately buy or don’t — they have a way to personalize each interaction with that person based on more knowns about them.
While these features don’t seem to be in play with the first 4-star store, it’s only a matter of time before the brick-and-mortar experience becomes more connected.
Amazon, known for its one-click checkout, is a prime example of removing friction from the buying experience and thus improving CX. In-store queues, for example, can make people think, “Why didn’t I just get this online?”
As is already the case at Amazon Go, however, it’s likely that consumers eventually will be able to just walk out of the store. It’s likely that 4-star will allow a person’s Prime account to serve as payment when they leave through a turnstile.
Today, however, non-Prime members still can visit the shop and check out, albeit paying higher prices than Prime members.
Collectively, when retailers consider how consumers shop — channel to channel — they can begin to realize, like Amazon, that every touchpoint needs to work seamlessly to provide an experience that will stand out in a sea of fragmented experiences they are having with other brands.
Whereas one retailer may not allow consumers to change their shipping address after an order has been placed online (since the order is now with “another department”), Amazon 4-star likely will cater to a shopper’s every need — like shipping an item from the store to the person’s home or office if they do not want to schlep it through the streets of New York City.
Amazon certainly changed the retail game in many ways, and its growing collection of local storefronts will continue to bring the digital experience offline and the offline experience online.
Amazon is not thinking in channels, because shoppers don’t either. It therefore is pushing customer expectations even further.
Those expectations may soar beyond what many marketers and merchandisers can grasp if they are not wholly committed to improving their customer experience through digital and in-store experiences that are personalized to what the organization knows about a customer, and how they will react next.