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Is Amazon Vulnerable?

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Could Amazon be experiencing a moment of vulnerability, even if only temporarily? The pandemic crisis is changing their customer and employee experience in ways that put the brand’s performance and image at risk.

Customer Experience

Amazon has dominated e-commerce with a simple formula: nearly frictionless purchasing and, for most orders, delivery in 48 hours or less. Combined with a huge selection of products and reasonably competitive pricing, Amazon gave their customers no reason to shop elsewhere. For years, I’ve rarely shopped around for most purchases - it’s been too easy to use the 1-Click button and know that the item would be on my doorstep in a day or two at most.

Amazon’s loyalty has been based on minimization of customer effort. It doesn’t get easier than one simple click or tap to complete a transaction. And, they deliver as promised, every single time. For years, if you bought a product for Tuesday delivery, it arrived on Tuesday. Exceptions were highly unusual. Amazon even makes returns almost effortless, even if doing so reduces profits. This combination of convenience and precision has built tremendous trust in the brand.

But, this loyalty is transactional. Amazon doesn’t “wow” or delight their customers with surprises or above-and-beyond efforts. Human contact is minimal. That’s a credit to the systems the firm has built. It’s rare to have a customer situation in which contacting a human is necessary.

The only Amazon people I ever come in contact with are an endless parade of algorithmically dispatched delivery drivers. I know what my regular UPS driver looks like. I even know our mail carrier is a new parent. But, although I probably have seen the same Amazon driver more than once, I can’t prove it.

That’s not all bad. I’d rather have free, 100% predictable delivery from a stranger than, say, the often erratic postal service.

Until the pandemic, Amazon’s smooth customer experience kept most of us loyal. But even as Amazon prospers with a surge in demand for product delivery, their performance is changing for the worse. Prime products that would have arrived in no more than two days (and often less) now have deliveries weeks in the future.

For the first time in years, I’ve begun shopping on other e-commerce sites to see if I could obtain a product more quickly. Others have told me they, too, are doing this.

Transactional loyalty. In speeches and workshops, I almost always make the point that if your customers are loyal because you have the best product or the lowest price, they aren’t really loyal. A competitor with a better product or a cheaper price will get their business. Amazon’s loyalty has been based in large part on convenience, and we’re seeing that impacted by the current crisis.

Employee Experience

Amazon has enjoyed a good reputation as an employer. They tend to pay well, and were one of the first big firms to announce additional “crisis pay” for their hourly workers. They also expect a high level of performance and dedication to customer service. One account says during busy times 60-hour weeks were mandatory and conditions were “brutal.”

According to data from job site Indeed, Amazon employees are generally satisfied with their employer. But, this, too, may be more transactional than emotional. In an earlier article here, I compared the survey data for Amazon to the far better numbers of H-E-B, the big Texas grocery chain. In the early days of panic buying, H-E-B headquarters staff volunteered to work in their warehouses to keep shelves stocked for customers.

Amazon, meanwhile, is seeing sporadic protests and sick-outs. It’s hard to tell how much traction this movement is getting, but it isn’t doing much good for Amazon’s image as a firm that puts its employees first. They don’t. At Amazon, the customer comes first - that’s the driving force that has made them enormously successful.

The Opportunity

Amazon’s decline in delivery performance and bad press about working conditions provide a small window of opportunity for e-commerce and even traditional retailers to do better. While many other firms are dealing with the same logistics problems Amazon is experiencing, some may still be able to outperform their larger competitor.

This would be a perfect time to promote next-day delivery, same-day pickup, or similar offers for products impacted by Amazon’s current shipping policies.

For example, in the first weeks of the pandemic, overwhelming demand made it nearly impossible to schedule a pickup or delivery at Amazon’s Whole Foods stores. H-E-B’s slots were full too, but they partnered with delivery service Favor to offer same-day shopping for seniors and at-risk customers. The “Senior Support Line” was staffed with volunteers.

Humanizing your operation and establishing a bond with the customer will be particularly effective. H-E-B puts its people in the center of their promotions, using the slogan, “Texans helping Texans.”

Emotional Loyalty. I’m a firm believer that in this time of consumer stress, those companies that go out of their way to help customers will build the foundation for loyalty based on emotion, not price or convenience. Customers will remember the personal touch, the “above and beyond” effort, or even an unexpected but helpful surprise of some kind.

I think this window of opportunity won’t be open for long. The current crisis will keep Amazon off-balance while the economy re-opens in different places and infection hot spots emerge. Could their warehouses experience a shutdown like those in the meat-packing industry? Perhaps, but I think Amazon is smarter and will avoid such drastic measures.

Amazon is brilliant at logistics and has ample cash. They will sort their situation out sooner than many expect. I’m already seeing what look like shorter lead times on many products. Any business hoping to gain ground on the e-commerce giant should move quickly before the advantage evaporates.

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