Why Are You Feeding Amazon?
Wednesday, February 13, 2019

Why Are You Feeding Amazon?

“24% of Amazon retail sales can be attributed to customers who first tried to shop in stores but found stores out-of-stock”Worried about competing with Amazon? You’re not alone, but that’s no surprise. What may surprise you is that, as a brick-and-mortar retailer, you may be one step ahead of Amazon right now. It’s true. As a retailer, know that people still want to shop in stores. Next, understand the reasons why people go the brick-and-mortar route. Understand a key issue that makes a shopper leave without a purchase. Finally, solve that issue.

Let’s examine why people walk into your store. According to IHL research, the top 5 reasons people shop at brick-and-mortar stores vs online are listed in order:

  • 23% Desire – they need to get it now
  • 20% Sensory – they want to touch, see, feel the item or they need expertise
  • 14% Cost – they don’t want to pay for delivery
  • 12% Community – they want to support local stores
  • 11% Ease – they find the store convenient

As a consumer, you can probably connect with at least one of those motives for a potential purchase. Therefore, it stands to reason that brick-and-mortar stores are not dead. Phew! So, why does Amazon seem to be taking all those sales away from stores? IHL research found that “24% of Amazon retail sales can be attributed to customers who first tried to shop in stores, but found stores out-of-stock”. Almost one-quarter of the Amazon business (retail sales) come from brick-and-mortar stores’ inability to have a product on the shelves! That is astounding. Let’s take those shoppers back.

How Your Out-of-Stock Impact Your Retail Business?

Why Are You Feeding Amazon?It’s important for retailers to understand that out of stock to a consumer is not just the out-of-stock sticker on the empty shelf. From a consumer’s point of view, out-of-stock can mean that the size, colour, model or version of whatever they wanted was not available at the location they visited. It could even be that the store personnel could not find the item in the store, even though it is listed as ‘in stock’ in the system.

Remember too, that Amazon is investing heavily into brick-and-mortar stores for a reason. In the book “Amazon: How the world’s most relentless retailer will continue to revolutionize commerce” by Natalie Berg & Miya Knights, they describe that Amazon sees the future of retail as blended; that is, in-store and online shopping will co-exist.  There will be “very few shoppers that would shop exclusively in-store or only online”. Generally, there is a need for both online and traditional shopping, and now we understand why.

So, the out-of-stock issue can reveal a few problems in your system. How do you fix those problems? The answer is with omni-channel solutions.  The remedy to the out-of-stock issue that pushes all those shoppers to run towards Amazon is omni-channel.

Miya Knights, co-author of “Amazon: Shaping the Future of Retail” says, “Whether it is online or in-store, customers only see the product or service, its brand and the retailer selling it. So, retailers have an advantage over Amazon in understanding the efficiencies of scale that can be gained from managing a multi-channel supply chain to serve omni-channel customers.”

What Does Omni-channel Mean?

Customer should have a seamless shopping experience whether they are online, or in the store.To customers, omni-channel is invisible – the customer should have a seamless shopping experience whether they are online, or in the store. So the customer should be able to buy online, Ship-from-Store, Ship from one Store to Another, Click & Collect, Reserve & Collect, Return in Store.

To retailers, omni-channel means that all of your channels, suppliers, and departments are completely in sync with each other; such that your workflows are efficient and your Store Associates have the information they need to know and serve the customer.

Finally, omni-channel means that the item that the customer came to buy in your store is in stock, or can be delivered to the customer quickly by any method they choose, so that the purchase remains with your store.



Author: Karen Stephenson

Karen Stephenson is an Omni-Channel Consultant at OrderDynamics. She has over 20 years’ experience successfully leading finance, system implementations and organizational change in medical, technology, and financial industries, as well as not-for-profit boards. Karen has a BA in Finance & Economics from Western University, and a Global Executive MBA from Rotman, University of Toronto.

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