The Amazon way: a five-step guide for all retailers

We spoke to a host of online experts, including a former senior employee of the company, for their insights and practical advice on how retailers can learn from Amazon to drive their competitive advantage.

1. Work out your strengths

Retailers need to work out how their proposition differs to Amazon and then play to their individual strengths in order to set themselves apart.

For example, toy retailer The Entertainer sells through Amazon Marketplace, as well as independently.

“It makes sense for us to piggyback on Amazon’s scale where we can, but it’s also vital that we remember the advantages of being a specialist toy retailer and ensure we stay one step ahead in our knowledge of toys, trends and service,” says Rob Wood, head of online and digital.

2. Understand your challenges

Three particularly painful challenges faced by retailers have emerged in our research, based on the DynamicAction Retail Index: Autumn 2017.

They are: customer acquisition and retention; pricing; and delivery. Learn how Amazon is tackling these pain points.

3. Refine your data strategy

Data shouldn’t be analysed in silos. Retailers should instead take a more holistic view of the customer, product and profit.

“It makes sense for us to piggyback on Amazon’s scale, but it’s also vital that we remember the advantages of being a specialist toy retailer”

Rob Wood, The Entertainer

The ex-Amazon employee we spoke to shares how the etail giant analyses data: “At weekly sales meetings, most companies will look at sales and profitability and what was the gap and what drove it.

“At Amazon, it is about looking much more closely, for example, at how the Prime delivery dropped by six percentage points due to Lego going out of stock, and how we have done x, y and z to ensure that does not happen again.”

4. Create the right culture

From extensive interview processes to the ‘It’s always day one’ ethos, Amazon’s culture encourages innovation and freedom for creativity.

According to the ex-Amazon employee, “there was complete trust”.

“If you have the right culture and relationships in the organisation then you can make anything work, even if it is broken,” she says.

Retailers must learn from this example and have the right people and the right model for them to work within.

5. Keep an eye on the future

The most successful retailers will be able to harness the best of both physical and online retail.

This is a lesson Amazon is teaching us through its acquisition of grocer Whole Foods in the US.

“If you have the right culture and relationships in the organisation then you can make anything work”

Former senior Amazon employee

Martin Hayward, member of the KPMG/Ipsos Retail Think Tank and founder of Hayward Strategy and Futures, says: “The real challenge will be to integrate the two sides of the equation seamlessly to maximise their joint power.

“This will require retailers to get a lot better at gathering and understanding customer data.”