Amazon has been trading in Australia since late 2017 and most analysts are surprised by the lack of impact they have had on the marketplace. Despite launching Prime, amongst other initiatives, sales have fallen below expectations. Their financial results are also unremarkable, with a loss of $5.3 million in 2018 and $9 million in 2017.
However their sales have risen dramatically from just $17 million in 2017 to $292 million in 2018, that’s a 1500% increase. Coupled with a massive range of products on offer, well over 100,000, Amazon is building a strong foundation for future growth. They are in the process of building two more distribution centres in Sydney and Brisbane as they search for the elusive 2 hour delivery window that is commonplace in the US.
They are renowned long term players with an absolute obsession about putting the customer first. This has long been Bezos’s mantra and with the continued rise in AI and their deep pockets, I expect Amazon to do some amazing things here in Australia.
So when they hit their straps, or hopefully before they do, how can retailers compete against them?
One great example of a retailer that has fought back and is now doing better than ever is US company Best Buys. Best Buys is a bricks and mortar consumer electronics company with over 1200 stores that many analysts predicted would go the same way as their competitor Circuit City, who entered bankruptcy and closed all of their stores some years ago.
The fightback started 10 years ago under new CEO Hubert Joly, and their tactic – customer obsession, the same approach as Amazon. Joly spent time in stores working with team members and talking to customers about what was working and what wasn’t. This provided Joly with some quick wins as he was able to fix some of the most pressing issues raised by staff and customers relatively quickly. This showed the team he listened and acted on their feedback, a critical trait for a customer obsessed leader. This also built a large amount of trust amongst the team.
Joly instilled a new purpose “We’re not in the business of selling products or doing transactions, our goal is to enrich lives with the help of technology.” This lead to Best Buys setting up new service offerings such as in home advisors, total tech support packages and a focus on aging seniors with an emphasis on staying in their home independently longer.
Interesting that Best Buys has also partnered with Amazon by selling Amazon products in their stores. The reason for this says Joly is “we’re customer driven and this is what our customers want.”
Joly’s obsession with the customer comes through in every management meeting – “We don’t start with financial results, we start with people. Then we talk about customers and last we talk about financial results. I don’t believe that the purpose of a company is to make money. It’s imperative, it’s a necessity but it’s not the purpose.”
So if you want to compete with Amazon and you are going to have to, you’ll need to up the focus on customer obsession. What can you do to make it easy for them to visit, buy and come back? How well are your team focussing on the customer? Maybe it’s time to spend some time at the frontline to find out.
Roger Simpson – CEO, The Retail Solution and Author of “The Ultimate Retail Sales Experience” With over 35 years’ industry experience, Roger Simpson is recognized as Australia’s #1 Authority on customer ROI in the retail industry and as a global expert on staff coaching, customer service, and selling skills.