Digital Strategies the Amazon Prime Way
In a recent blog I commented on why it’s so important retailers take note of, and learn from, the recent Facebook / Cambridge Analytica scandal. Customer loyalty is a transaction. Customers are accepting of handing over personal data in return for services they deem personally valuable.
Amazon Prime - The 'Keyzer Soze' of customer loyalty schemes
In researching the blog, I considered highlighting customer loyalty success stories. I looked at numerous retailers and their offerings. One retailer I didn’t look at was Amazon. Why? Because they don’t have a customer loyalty scheme. And yet they do. And it’s arguably amongst the most successful in the world; Amazon Prime. My mind was drawn to Keyser Soze, one of the greatest fictional villains represented in film, and his chilling quote that ‘the greatest trick the devil ever pulled was to convince the world he didn’t exist’. Clearly I'm not comparing Amazon to a satanic like presence (legal team take note), but I can't help but be impressed by Amazon's incredible march to world domination.
Amazon tend not to share specific statistics on it’s prime membership purchasing. Indeed the press room content relative to Prime cites generic statements such as ‘More new paid members joined Prime worldwide than any previous year’ and ‘Prime members around the world used Prime digital benefits this year more than ever before’.
I’m a paid up member of the latter group. I pay my yearly subscription in order to benefit from unlimited one day delivery. Really? No. Well, yes. I’m a statistical purchasing profile. I receive personalised content, and I place significant value in the final mile - the transit of goods from a distribution centre to its final destination. I know exactly where my orders are in the fulfilment process. I also benefit from the multitude of supplementary benefits my membership delivers. And because of the value I place in the final mile, I tend to buy more from Amazon than I do any other retailer.
8+ million Amazon Prime subscribers
It was reported in April 2017 in the UK there are approximately 8 million Amazon Prime subscribers in the country as of March 2017—a 33% UK household penetration rate. Based on analysis by Cowen and Company this is comparable to statistics of US membership from 2015. In the states, between June 2016 and June 2017, Prime membership grew 43%, from 63 million to 90 million. Equally, as documented by Statista.com, on average Prime members sprint $1,300 per year, with non-Prime members spending $700. Again - I’m a Prime stereotype!
It’s foreseeable that the purchasing behaviours of members will evolve, as the companies propositions do. The introduction of Amazon Prime Wardrobe and the acquisition of Whole Foods are great examples. Amazon announced in February that it will start shipping Wholefoods products to Prime members in select US cities. It’s becoming a one stop (online) shop.
It occurs to me this is only the start. The tip of the iceberg. Radiocentre last year published research which suggested that by the end of 2018, 40% of UK households would own a smart speaker, up from 9% in June 2017. Frictionless propositions are becoming increasingly important, given strategic focus on deliver customer experiences capable of driving acquisition, conversion and customer retention. Once browser less buying hits the likes of Echo and Cortana, the possibilities are massive.
What does this tell us? Ignore digital strategy at your peril. The high street is not a safe place - we only need to look at Maplin and Toys ‘R’ Us as timely reminders that digital strategy and customer loyalty are inherently linked. One will not exist in the absence of the other.
The importance of digital strategy, in which the organisational strategy is aligned with the customers needs cannot be overstated. The 4th Industrial Revolution is here and retailers, whether traditional or ecommerce disruptors will need to be prepared to respond - as their customers do.
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