Lessons from Amazon Lessons from Amazon

Lessons from Amazon you can apply to your eCommerce business

For most eCommerce retailers, moving just a tiny fraction of the amount of product Amazon sells each year would be a dream come true.

Founded among the first big wave of online shops in the mid-1990s and initially selling only books, Amazon has become a household name. It is first place people all over the world think to shop online, and the site now sells over half a billion products. In July 2018, Amazon became the second company in history worth more than $1 trillion and it collects nearly half of all eCommerce dollars spent. Those are some eye-popping stats.

Lessons from Amazon
Image: venturecapitalist.com

Amazon has always been an inspiring business. It never seems to stop expanding and finding new ways to drive more revenue.

The good news for you as an eCommerce shop owner is that Amazon isn’t just a competitor—it can also be a teacher. By studying what Amazon has done to develop their customers’ experience, strengthen their brand, and drive conversions, you can follow in their footsteps (at least a little).

Free download: The eight different types of Amazon emails and why they’re great

6 important lessons from Amazon

Because Amazon sells basically everything and has the volume to offer low prices and perks like free shipping, they’re almost certainly one of your toughest competitors. That makes it important to learn from them as much as possible. By adopting some of the strategies and techniques they use, you can take advantage of the things Amazon has already figured out without needing to invest (as much) in the research and testing yourself.

Most eCommerce shops see Amazon as one of their toughest competitors, so it’s important to learn from them as much as possible. Click To Tweet

1. Put your customers first

Everything Amazon does is customer-centered. They play the long game by relentlessly focusing on the customer experience. Jeff Bezos calls this the “Virtuous Cycle.”

Lessons from Amazon

“We’re always innovating and experimenting on behalf of customers and the businesses that sell and grow on Amazon to create faster lower-cost delivery choices,” said Kristen Kish, an Amazon spokeswoman.”

Essentially, Amazon’s growth flows from the customer experience. Designing a great experience creates word-of-mouth and positive press, which leads to more traffic, which in turn leads to more word-of-mouth. Owning a high-traffic platform also attracts plenty of quality sellers, which creates a wide selection of products. A big selection of products means Amazon can take advantage of economies of scale, which drives down prices and further bolsters the customer experience. And the cycle repeats.

Instead of designing your store or products based on your preferences or “best practices,” start with your customers. Click To Tweet

Instead of designing your store or products based on your preferences or “best practices,” start with your customers. Ask yourself what they want out of an online shopping experience. Then adapt your shop (design, products, pricing, policies, etc.) to fit their needs. This is ultimately simpler for you and the customer.

2. Use data to inform your decisions

Amazon CEO Jeff Bezos once said, “If you double the number of experiments you do per year you’re going to double your inventiveness.”

Amazon has had a culture of experimentation and innovation since the very beginning. They test absolutely everything, from complex elements like pricing, checkout systems, and fulfillment, to minor things like button colors, page layouts, and copy.

Amazon likes to deploy changes quickly and measure their results. They aren’t afraid of failure. They know if they make a change that reduces their conversion rate, they can always revert it back. A little lost revenue is part of the cost of learning.

The lesson here is clear: avoid making decisions based on your gut or feelings. Don’t make a radical change to follow a competitor or because one customer complained. Look to your data to make smart decisions. If you don’t have the right data to make a decision, ask yourself how you can get it.

Once you make a change to your eCommerce store (or any part of your business, for that matter), spend some time testing it and measuring the results. How does it compare to your previous version?

3. Provide a personalized experience

Each time you visit Amazon, you see unique pages designed just for you. They fill the site with products and content based on your needs and preferences.

How does Amazon know what you like? By logging and examining the products you have purchased and viewed, and comparing your views and purchases to other similar users.

This process not only helps you find products you’re looking for, but it also makes smart recommendations that entice people to make additional purchases.

Amazon may have more data than other online retailers, but there are plenty of tools you can use to offer your customers a personalized experience. With the right personalization tools, you can deliver dynamic pages depending on your visitors’ past behavior. And with careful email marketing segmentation, you can deliver personalized email content to your subscribers at scale.

Personalizing the customer experience is one of the most important things Amazon does to set themselves apart from competitors. Click To Tweet

For instance, a person in the process of buying a set of drinking glasses might be willing to purchase a set of coasters. You can personalize their experience by offering the coasters during checkout or in a post-purchase upsell email.

4. Let customers help each other

User reviews are an integral part of the online shopping experience. According to a 2018 study by BrightLocal, a majority of people trust online reviews just as much as personal recommendations from their family and friends.

Lessons from Amazon

Amazon understands this well. They make reviews a big part of their product pages. They give shoppers the ability to sort reviews by rating. You can even search the reviews using keywords if you’re trying to find a specific piece of information.

Furthermore, Amazon takes the customer-to-customer experience one step further by giving shoppers a place to ask and answer each other’s questions. You can get specific feedback about purchases before you decide to buy.

Lessons from Amazon

Collect reviews for your products by prompting your customers after they purchase. Read more in our full guide: How to ask for product reviews from your eCommerce customers.

5. Develop your customers’ loyalty

Amazon has its own loyalty program, but few people think of it that way. It’s called, ready? Amazon Prime. Surely you’ve heard of it! 🙂

Amazon’s loyalty program is unique because users actually pay to be a part of it. Whereas most loyalty programs are free to join, Amazon’s program is so valuable that people are happy to pay.

What makes the program so valuable? For starters, it comes with free shipping on pretty much anything you need. There’s a Prime-eligible version of nearly every product they offer. 91 percent of consumers say free shipping makes them more likely to become a repeat customer (it’s also a top reason for shopping cart abandonment).

Furthermore, Amazon continues to pack additional value into Prime. Now it comes with free movies, music, books, early access to products, and a whole bunch of other benefits.

Lessons from Amazon

Does it work? You bet. Prime members spend about double what regular users spend. In fact, many users switch from purchasing products in other stores (eCommerce or brick-and-mortar) to Amazon so they get the most value out of their Prime subscription.

Improve your customer retention by creating a loyalty program that rewards your customers for repeat purchases. Click To Tweet

Of course you don’t have to offer all the benefits that Amazon does with Prime. Given that Amazon spent $5 billion on video content alone this year, it’s unlikely that you even could compete with the benefit level that Prime offers. But that’s not the point.

The key takeaway here is that you can improve your customer retention by creating a loyalty program that rewards your customers for repeat purchases. You don’t have to dole out constant discounts, but you should determine what kinds of benefits your customers find valuable. They may want free samples, better shipping terms, or charity involvement. It all goes back to putting your customers first.

6. Invest in innovation

Amazon wasn’t the first eCommerce store, but almost everything it’s done since its conception has been innovative. They don’t follow the industry. They lead it.

Amazon is constantly looking for ways to further monetize their customer base. They want Amazon customers coming directly to them whenever they need to buy something online.

Want a warranty for those products? They’ll sell that. Need credit to make that purchase? They can help. Faster shipping? Automatic subscriptions? Do you want to stick a button on your washing machine that will automatically ship detergent when you press it? That seriously exists.

You don’t have to be a massive company with expensive engineers and seemingly unlimited cash in order to innovate. You just have to think like your customer and build services and an experience that fit their needs.

To innovate in eCommerce, you have to be willing to take risks. You’ll try some things and they won’t work out. That’s part of learning. Click To Tweet

Not everything you do will work. Not everything Amazon has done has been a home run! They’v certainly had plenty of failures. But the important point here is that Amazon has never shied away from innovating and trying new things. They often zigged when the rest over the industry zagged, and that has paid off big time over the long run.

Innovate safely by testing the smallest versions of your ideas. For instance, instead of purchasing a pricey survey tool, you could create a free Google Form and send links manually to your customers. If the response is good and the feedback is valuable, then you can invest in a fancier, automated solution.

Want to see exactly how Amazon manages their email marketing? Download this rundown of the eight types of emails Amazon sends out to its customers.

Leverage Amazon’s experience

You won’t transform your eCommerce store into Amazon in a month or a year. It’s taken Amazon decades to get to where they are now. But if you take these lessons from Amazon seriously, you’ll benefit from their years of experimentation and innovation.

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