By Ajay Khanna published in CMSWire at https://www.cmswire.com/digital-experience/worried-about-the-amazon-effect-let-data-show-you-the-way/
Amazon recognized the long tail opportunity in the market and used the web to revolutionize how we buy and sell.
Today, Amazon and Chinese rival Alibaba are challenging organizations in every industry. Alibaba recently set a record with single-day sales of $25.3 billion, and Amazon added Whole Foods and got approval to distribute pharmaceutical products in 12 US states.
Businesses Feeling the Heat of the ‘Amazon Effect’
Over the past 10 years, Amazon’s market value has grown more than 2,000 percent. The entire retail industry is feeling the heat, and companies are investing in digital transformation initiatives to help them compete. Walmart, for example, is rapidly investing in digital capabilities and online brands (it acquired Jet.com, for example).
The “Amazon Effect” on retail is apparent when you compare Amazon’s fortunes with the performance of big box stores like Sears or Best Buy. In recent years, Best Buy and Sears have had ups and downs in performance while Amazon experienced continual growth in sales. There’s a sentiment that brick-and-mortar stores will never go away because shoppers like to touch and feel products. But trends suggest that more consumers are trusting online purchases, primarily because of the excellent customer service and generous return policies offered by many online retailers.
Is “click and mortar” the future? Amazon believes so, as demonstrated by its acquisition of Whole Foods and initiatives in which it is testing out new physical stores. Competing with Amazon requires organizations to understand their customers, provide a level of customer experience that is consistent with their brand promise, and be quick to formulate and efficiently implement their own flavor of omnichannel sales and service strategy.
The Amazon Effect is real and palpable, impacting the entire supply chain, including the U.S. Postal Service and other package delivery companies, as well as the transportation industry as a whole.
Amazon is creating a new era in supply chain logistics and technologies, just as Walmart did earlier in the retail supply chain. The significance of supply chain network design, optimal routings, track-and-trace planning and monitoring systems will increase rapidly.
Data will also increase in volume, variety, complexity and velocity. As real-time decisions and commitments become the norm, data will become the underpinning of all digital transformation initiatives that retailers will undertake to tackle the Amazon Effect. Retailers must focus on their core areas of expertise and develop comprehensive data management strategies to support the demands of their business operations.
Supporting the Right Channels for Connected Customer Experience
When shoppers can constantly flit across channels, retailers must keep pace by embracing and excelling in omnichannel service. It’s vital to delivering a seamless and consistent customer experience across every platform — web, mobile and in-store.
To start, they must track and identify every consumer touchpoint, document individuals’ channel preferences and product interests, and blend customer information from all internal, external and third-party sources to create accurate 360-degree consumer profiles. The ability to capture anonymous interactions on the web and later associate them with the known user profiles may give retailers additional insights into the customer journey and customer behavior.
Understanding not only the customers but also their households and the influence of all the individuals in them can help retailers perceive how people make purchase decisions. Such a complete profile provides not just comprehensive demographic data but detailed information about customer preferences based on past interactions and social sentiments. It also includes insights like customer business value and churn propensity, and informs intelligent recommendations for next best actions to create a meaningful customer engagement. The consumer master data must be correlated with omnichannel interactions and transactions and then provisioned to advanced analytics and machine learning platforms. Data scientists can use algorithms to garner relevant customer insights that lead to improved customer engagement and help identify upsell and cross-sell opportunities.
Once the complete consumer information is collected and curated, it must be provisioned to all systems and channels for consistent and connected omnichannel service throughout the customer journey.
Offering the Right Products and Services That Affirm the Brand Promise
Much like customer information, product data comes from a variety of channels, with multidimensional and multiformat characteristics. To truly benefit, companies must not only manage data but make sense of all the “data noise” coming from internal applications, third-party data providers and sources like social networks. Being able to offer the right product to the right customer at the right time requires bringing all product information, including product-related social sentiment and competitive options, together in a meaningful way.
Accurate, timely and reliable product information is essential for a variety of business initiatives, such as marketing, sales and competitive analysis; it leads to better planning for faster product launches and improved supply chain efficiency. Organizations must ensure consistent product information across all channels, as well as order management, billing and delivery systems. Linking a product with correct certifications, safety pedigree and accurate compliance information can also reduce regulatory costs.
With a sensible data management strategy, retailers of any size can cost-effectively deliver accurate, reliable product data to business teams for brand management, competitive intelligence, market basket analysis and segmentation.
Ensuring the Right Availability With Supply Chain Optimization
The supply chain is the backbone of retail systems. Today’s business environment requires very agile supply chains that include real-time collaboration with replenishment updates by SKU, stores and departments. How fast you track and act on data about turns, stockouts, recalls and new products determines your competitive edge. Retailers, especially in the event of a merger or acquisition, need to aggregate their supplier data effectively.
Aggregating all the supplier information in data-driven applications creates a complete and accurate view of the suppliers offering full information about top suppliers, alternate suppliers, required compliance and certifications, as well as contract adherence. Data-as-a-service capabilities further enable retailers to easily share data with suppliers and even monetize consumer data.
Ensuring the Right Access With Optimal Number and Design of Stores
Stores are strategic assets that need continual evaluation and innovation. Getting all store information together, connecting store and online traffic, and incorporating technologies like digital displays, store locator systems, apps and guided selling tools gives retailers a way to create seamless and immersive shopping experiences. Bringing in data about customer traffic, sentiment and recommendations and correlating that information with sales and inventory data to optimize planograms for various seasons can, in turn, deliver enhanced experience, improved efficiency and increased store sales.
To compete effectively, retailers must think about a holistic data strategy that involves managing not just customer information but also data about other entities such as products, suppliers, stores, locations and policies. Effective data management strategies can help retailers unify data from all back-office and front-office systems, and blend it with social and third-party data. Blending all this data and using advanced tools like graph technology helps uncover relationships among consumers, households, products, stores, locations and suppliers.
To take it a step further, in order to survive the Amazon Effect, a comprehensive data strategy should power a closed-loop master data, transactional data and advanced analytics flow, enabling retailers to make informed data-driven decisions and support collaboration across teams while ensuring reliable and consistent data across all functional groups and channels.
Putting data at the center of every action and every decision is the only way to drive forward in today’s retail environment. To avoid being overwhelmed by the Amazon Effect, devise a strategy to match it.
About the Author
Ajay Khanna is Vice President, Marketing at Reltio, the creator of data-driven applications. Prior to joining Reltio he held senior positions at Veeva Systems, Oracle and other software companies including KANA, Progress and Amdocs.