Retail prophet: Provide added value to compete against Amazon
SAN JUAN – Retail stores in Puerto Rico can compete and beat online sales giant Amazon if they can offer a service experience beyond the product itself, said industry futurist Doug Stephens, aka the “retail prophet.”
“If the difference between your business winning or losing customers against Amazon is the payment of the sales tax, I think you have a serious problem. I think your problems are deeper than that. Because if a consumer is willing to do business with Amazon, just because they can get the same product for a slightly lower price, it is indicative that you do not provide, in any way, a service experience beyond the product itself,” Stephens said in a phone interview with CyberNews.
The 53-year-old Canadian is a retail market consultant, speaker and writer. He is also the founder of www.retailprophet.com.
From his experience of more than 20 years in the retail market, the main speaker of the annual forum of the Retail Trade Association (ACDET by its Spanish initials) understands that added value has a lot of weight at the time of purchase.
“In the end, what our studies tell us is that price is important for consumers, but that is only a value modifier. If all other factors are equal, certainly the price will be the reason for which the customer will make the decision. But if the retailer, in addition to the product at a competitive price, offers a wonderful shopping experience, if it offers service after the purchase and if it offers a reward or incentive program, in which the consumer may feel a part, it is possible the retailer wins that customer from Amazon. But if the only thing the retailer does is offer the same product at a slightly higher price, with no added value for the customer, it will certainly lose against Amazon,” he added.
Companies wishing to be successful in the future must look to e-commerce, Stephens assured, but above all, seek effectiveness in the shipping side. He understands that the problems companies like Amazon face in shipping merchandise abroad are temporary.
“My belief is there is not going to be a place on Earth where there will be no facility to get a product, whether Amazon.com, Alibaba.com or Walmart.com. I believe that online commerce will be pervasive, ubiquitous.
“My advice to the retailers of Puerto Rico is that they start working now to serve their market through online commerce. And I know that has to be a collaborative effort between the business sector and the government, so they build the infrastructure that can serve customers. If they don’t, they’ll be beat as soon as a foreign company finds out how to effectively send to that market,” he said.
The expert also believes that the way in which sales locations currently work has to evolve.
“More and more products come to us without even stepping into a store. In that reality, however, we are going to need physical spaces to go to learn about new products, to inspire ourselves to buy and to occasionally speak with experts to help us better understand how the products work.
“But I don’t think we’ll need the stores in the way we know them today, which is a product distribution system. The store of the future will be a place to have experiences with the products and with people,” he said.
Another way they can compete against Amazon is what Stephens called its weaknesses.
“I buy a lot of things for Amazon, which are products that you do not need to touch or feel before you buy them. I go to Amazon when I know exactly what I am going to buy and what I want. Amazon is a very effective tool for that type of product. Where Amazon is not at all effective is in terms of discovering new products. Products that I don’t know exist and that I don’t know if I need them.
“Neither are they effective in products that require instructions or help. Nor are they effective in products that I need to try first before buying them. There are many ways in which retailers can fight Amazon. Certainly there are situations in which consumers simply don’t care and will continue buying at Amazon. There’s no escaping that,” he said.
“It’s important that retailers ask themselves: What can I offer a consumer above and beyond the product itself that will provide enough added value so the customer prefers to come to me, instead of going to Amazon? That is an important question everyone should ask themselves.
The truth is many retailers don’t provide exciting experiences. Many retail businesses are not attractive. They’re not fun at all to go to. If we can focus on those things, it is very possible that we can fight against Amazon,” Stephens said.
He will be one of the special guests of the Retail Association’s annual forum March 7 at the Sheraton Puerto Rico Convention Center Hotel & Casino in San Juan.