Why is Amazon so Successful While Traditional Retailers Struggle?

John Krautzel
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Traditional retailers face an uphill climb in the contemporary consumer-based economy. The same methods brick-and-mortar stores used to sell items in the past may not work now, as shopping habits have changed over the years due to e-commerce, customer service issues and the meaning of engagement with the consumer base. Here are seven reasons why retailers face struggles to compete against online behemoths such as Amazon.

1. Definition of Point-of-Sale

Point-of-sale no longer means a transaction in a store. Instead of traditional retailers deciding how, when and where a shopper makes purchasing decisions, the opposite occurs. Shoppers now control everything from finding reviews to how to buy something and where they want to pick up the merchandise. Many brick-and-mortar models have trouble adapting to that new shopping paradigm.

2. Customer Experience

The customer experience is more than just going to a store, finding an item and buying it. Stores need to engage with shoppers online, within the e-commerce store and after the sale. Making the shopping experience personal, seamless and efficient is part of that experience.

3. Managing Relationships

Truly great online retailers know how to manage customer relationships. As an example, Amazon manages a Wish List of items for you to save later that is separate from items you want to buy now in your shopping cart. Traditional retailers have trouble placing customer relationship software in the store that follows you from home to the location where you buy merchandise.

4. Stores as Silos

Traditional retailers should realize that stores are not silos, meaning the locations stand apart from the outside world. Physical locations must meld with online shopping to provide a seamless experience for shoppers. These entities can no longer be separate and be successful.

5. Traffic

Some brick-and-mortar locations saw traffic decline by as much as half, and these stores have not fully recovered from that slowdown. The difference is digital consumption of products, which includes clothing, merchandise, movies and music. Traditional retailers cannot rely on a great looking store as the main draw to get customers to buy something.

6. Making Up the Difference

Physical stores try to make up the difference in lack of traffic by selling things online. Unfortunately, when customers get to the online store, they expect to have a similar experience as they do with Amazon. The online giant has set a high standard that traditional stores have yet to match.

7. Investing in People

Retailers need to invest in people to create a great customer service model in a store. Shoppers say one of the main reasons they continue to frequent physical stores is because of the personalized assistance. If retailers treat employees and associates as expenses rather than investments, Amazon may continue to dominate the retail sector of the economy.

Traditional retailers cannot continue to do the same things they have done in the past and expect the same results. Stores must adapt soon or perish in the fast-changing world of retail.

Photo courtesy of Ol Roppa at Flickr.com


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