Disruption Down Under – What’s Amazon’s real competitive advantage?

Alex Allwood

Alex is the author of the book, Customer Experience is the Brand and CEO of The Holla Agency, a consulting company specialising in customer experience.

Savvy shoppers wait in anticipation, while Australian retailers are gearing up for the onslaught. Amazon’s arrival is imminent.

The digital company offers superior competitive advantage through a signature customer experience coupled with a mission to be Earth’s most customer-centric company.

The expected impact is captured in Credit Suisse’s analysis this week, which predicts Amazon is likely to cause price falls in many retail categories affecting profitability and market share by 5 per cent in the first five years.

The report suggests retailer, Myer, will be among the hardest hit with expected revenue falls of up to 4 per cent, equalling $3.16 billion by 2022. Myer is closely followed by Harvey Norman, JB HiFi and Super Retail Group.

Nielsen research paints a bleak picture, too. According to the research house, 67 per cent of Australian shoppers are expected to purchase electronics, 61 per cent to buy books, 59 per cent clothing and 42 per cent footwear.

Amazon’s signature experiences are built on the back of sophisticated algorithms, innovations in technology and new service offerings such as Alexia and Prime, which know each customer’s preferences and behaviours.

A closer look at the mega-retailer reveals an organisation with its foundations built on a higher purpose beyond maximising profits. From day one, Amazon’s purpose has been their customer. Founder, Jeff Bezos, describes this higher ideal as being ‘customer obsessed’.

Bezos modestly states: “Our focus is on customer obsession rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, the patience to think long-term, and the taking of professional pride in operational excellence.”

A company’s purpose is its belief, defining the business’s role in society - galvanising and uniting the organisation’s culture in pursuit of its intention. Best-in-class organisations use purpose to guide their decision-making; aligning purpose with strategic decisions that influence the business’s values, policy, procedures and organisational behaviour.

Congruent with Amazon’s purpose is the company’s mission: ‘To be Earth’s most customer-centric company - building a place where people can come to find and discover anything they might want to buy online.’

Amazon’s strategy of data-driven, continuous innovation continues to push boundaries and deliver customer experiences that are personalised, seamless and differentiated.

This is innovation that’s informed by the customer and led from the outside-in; cultivating a culture of customer-centricity to deliver customer value and remarkable experiences such as drone delivery and supermarkets with no checkouts.

Amazon’s first principle is to ‘Start with the customer and work backwards... work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.’

Principles like these signpost to the wider business a commitment to delivering their mission by aligning their purpose with business decision-making.

When corporate purpose is the foundation for a business’s strategic decisions and organisational behaviour, it fosters internal stakeholder engagement and contributes to building trust both inside the business and with customers.

Losing trust

However, many organisations now find themselves on the edge of distrust. Edelman’s 2017 Trust Barometer revealed the largest ever drop in people’s trust. Worst was the credibility of business leaders, with CEO’s credibility dropping to 37 per cent.

This distrust is also fuelled by cynicism toward business leaders who talk the talk, but don’t walk the walk. Whilst well meaning, many organisations have statements of purpose that deliver little clarity and don’t inform the decisions and actions of the business.

In times of unprecedented transparency, a misaligned corporate purpose can be viewed with scepticism and perceived as superficial. Now more than ever, brand decisions and behaviours need to be authentic or they risk damaging reputation and performance.

Locally media headlines herald retailers preparing for unprecedented disruption. Recent analysis from Slice Intelligence finds that Amazon now commands 43 per cent of all retail sales in the US. Like the US, consumers here are set to experience online shopping that’s as frictionless as purchasing in store.

In the wake of disruption down under, retailers here will scramble to find new competitive advantage. While Amazon’s customer-first focus and data driven innovation will see Aussie consumers enjoying superior pricing and service innovation that delivers seamless experiences.

Tags: retail, customer engagement, omni-channel retailing

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