The Amazon Effect: Reshaping Retail Realities

The Amazon Effect: Reshaping Retail Realities

The Gist

  • Industry transformation. The Amazon effect has revolutionized retail and ecommerce, elevating customer expectations for speed, convenience and personalized experiences.
  • Pressure on competitors. Amazon’s dominance and high standards in ecommerce have intensified pressure on other retailers to adapt and innovate in customer service and logistics.
  • Shaping customer service. The Amazon effect influences customer service norms, pushing brands to offer quick, personalized support and integrate customer data across channels.

The “Amazon effect” has become a defining phenomenon in retail and ecommerce, reshaping customer expectations and industry dynamics. Stemming from Amazon’s unparalleled success, it refers to the impact that Amazon, which debuted in 1994, has had on online consumer shopping habits and expectations, as well as the pressure it has put on other retailers. This article will look at the Amazon effect and its impact on logistics, consumer expectations, online retailers and more.


What Is the Amazon Effect?

At its core, the Amazon effect is marked by a demand for speed, convenience and a personalized shopping experience. Consumer expectations have risen in response to the Amazon effect for over a decade, and the pandemic exponentially increased the impact it had. Consumers now expect swift deliveries, easy returns, and a vast array of product choices at their fingertips, all of which Amazon has mastered. With features such as one-click ordering, free two-day shipping for Prime members, and instant customer service callbacks, Amazon has set a high bar for ease of use. Customers have gotten used to free shipping to the point where they are frustrated when they shop elsewhere and must pay for shipping.

John Nash, CMO at Redpoint Global, a customer data management and engagement strategy provider, told CMSWire that the Amazon effect has had a profound impact not only on how consumers interact with brands, but also on marketers intent on providing consumers with a personalized, omnichannel customer experience (CX) that meets their expectations. 

Amazon aims to be the most convenient, user-friendly, and affordable shopping experience. For example, Amazon Prime members get free two-day shipping on millions of items, meaning they can order something today and receive it at their doorstep in just two days, without paying extra shipping fees. This creates an expectation of fast, free delivery.

amazon prime

Amazon uses its size and scale to negotiate great deals from suppliers and passes those savings on to consumers. The site also gives customers access to reviews from other buyers to help them make informed purchase decisions. It uses its customer browsing and purchase history to provide personalized, relevant recommendations for other products customers may appreciate.

Nash said that thanks largely in part to Amazon, consumers now expect a brand to know their personal preferences across channels. “In retail, for example, knowing color, size, and style preferences are now the tip of the iceberg,” said Nash. “What’s the preferred delivery method, and where should the package be left? Does the customer use an online shopping cart as a way station of sorts? Has the customer opted-in for SMS notifications?” Customers now expect brands to know these details without having to repeat them.

Personalization has come to be an expected feature that ecommerce brands provide to customers today. A 2020 Harris Poll survey sponsored by Redpoint revealed that 63% of consumers said that personalization is now considered a standard service, and 42% defined personalization as a brand knowing they are the same customer across all touchpoints (in-store, email, online, mobile, social media, call center, etc.).

Amazon has shaped what consumers expect from the online shopping experience — unparalleled selection and convenience, fast free shipping, easy price comparisons, a personalized, user-friendly interface, and fast, friendly customer service. It’s changed how people shop and has put pressure on all retailers to keep up with these high standards. 

The Amazon effect isn’t always a positive thing. Jeff Rose, founder and CFP at Good Financial Cents, a wealth-building strategies blog, told CMSWire that people used to hunt around for specific brands, but now, they often just head straight to Amazon for whatever they need. “This move has made it super hard for smaller online shops to keep up, not to mention how it’s hit regular stores because everyone’s buying online more. During the pandemic, Amazon’s profits tripled, and their sales jumped by 37%. They dominated e-commerce ad spending with a staggering 76% share. This isn’t just success; it’s domination at a level that raises questions about market fairness and competition.”

Related Article: Amazon’s Latest AI Gives Customer Reviews a Highlight Reel

How Has the Amazon Effect Impacted Customer Expectations?

The pervasive influence of the Amazon effect has substantially transformed customer expectations, especially after getting used to shopping on Amazon during the pandemic due to social distancing, lockdowns and businesses closing. Amazon’s success has redefined how consumers perceive and demand services from businesses. Notably, the emphasis on rapid and reliable deliveries, exemplified by services such as Amazon Prime, has elevated expectations for swift order fulfillment across the board. 

The personalized shopping experiences facilitated by Amazon’s AI-driven recommendation engine have set a precedent for customers expecting tailored suggestions in product offerings and content delivery. Mike Anderson, founder and CTO at Tealium, a customer data platform provider, told CMSWire that customers won’t settle for generic experiences, especially when engaging in multi-session purchases. 

“For example, having an understanding if a customer is searching for certain items on your website repeatedly but not clicking on any search results — someone needs to investigate,” said Anderson. “If a customer is repeatedly trying expired coupon codes at the checkout, give them a coupon.” Anderson suggested that if brands see a conversion funnel drop off at the shipping selection screen and there’s a debate internally at the company about having faster delivery times, they should share that information with the team so they can use data to influence the decision.

Simultaneously, the user-friendly interface of the Amazon platform has become a benchmark for a seamless online shopping experience, influencing the desire for intuitive interfaces from other businesses. The commitment to transparency, evident in detailed product information, customer reviews, and transparent pricing, has heightened expectations for accessible and honest communication. 

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