Walmart has been struggling with slow online sales as their former brick-and-mortar customers switch over to Amazon in the switch to online. Olivier Schott, CMO and founder of Scalefast (global eCommerce solution) looks at how brands of all sizes make sure that they’re ready to fight the platform and take back their own customers that are now shopping online.
Walmart has been struggling with slow online sales ever since the holidays. Even with recent efforts to bulk up their online strategy and copy the membership aspects that have made Amazon Prime such a consumer favorite, they’re continuing to lose customers to Amazon. If trends continue along their current trajectory – Amazon will officially surpass Walmart as the world’s leading retailer. Walmart’s moves to gain online loyalty with Walmart+ show that competition gets tighter as many brick-and-mortar retailers get more savvy in the eCommerce arena – but competition doesn’t only happen at scale.
Emerging brands can learn from the struggles between two of retail’s biggest players – and the strategies both in-store and online that have brought them success – to make sure that they’re taking the steps to get to the core of what their customers really need.
Love and Hate for Amazon
Amazon has created a precedent in eCommerce that sets consumers’ expectations sky high with perks and experiences that are hard to match – in fact the “Amazon Effect” leads 43 percent of consumers to say they would choose Amazon over a direct to consumer brand simply because of the free shipping options. To take advantage of these perks, brands need to find the right balance between utilizing Amazon as a selling platform while still competing against the marketplace for their customers’ attention, traffic, and loyalty.
There’s a great deal of value for brands in having an Amazon page in addition to their own digital sales platforms. On their native platform, brands have ownership of their core customer base – while still building awareness through Amazon’s massive usership and ease of use. But while it provides perks as a retail marketplace Amazon is still not a primary sales channel for digitally native brands – and in fact high-profile names like Nike and Birkenstock have pulled off the service. There’s a careful balance in this love/hate relationship, and at the end of the day Amazon owns what happens on their platform, their data, and their customers – and brands need to take the control back.
No matter how the marketplace changes, consumers still want what they have always wanted – time and convenience while making a purchase. Niche brands truly know their customers, many of whom have grown used to large, impersonal marketplaces are easily courted by brands that can make them feel special, like their needs are being personally catered to. The power comes from owning consumer data, communications, and relationships. With consistent messaging and experiences between platforms, and personalization. Take Function of Beauty, a subscription haircare program, as an example. The customer journey starts with a quiz to determine their needs – and ends with a box of custom products at their door, month after month, personalized down to the name printed on the bottle. This kind of customer personalization is much more difficult to pull off at scale, an advantage that small brands need to take ownership of.
Walmart’s Transition from In-Store to Online
Walmart is a living lesson in how traditional brick & mortars are adapting and learning to succeed in online growth with customer data and personalization. Walmart is still working to excel online, and we are able to watch live as they figure out what works for their customers, and what doesn’t. For example, Walmart had attempted to capitalize on the strengths of DTC apparel brands, acquiring Bonobos and ModCloth to no avail – Bonobos has faced layoffs since the acquisition, and ModCloth has already been sold. These DTCs, seen as ahead of or on trend by one out of five consumers, may not have the same appeal when owned by a decidedly not trendy retailer like Walmart.
But Walmart has revamped their digital strategy to remedy these failures, leveraging their extensive network of brick & mortar locations for same-day online fulfillment to effectively cater to customer needs and build digital revenue through ‘click & collect’ orders. Now, in mimicking Amazon with the newly announced Walmart+, they will effectively expand the strategy they already utilize within subsidiaries like Sam’s club, expanding grocery delivery programs and offering even more sales channels – like text orders and scan-and-go in store.
Smaller brands can learn from Walmart’s evolving eCommerce strategy to see similar success in the transition from brick & mortar to online. Loyalty programs are just as effective at a smaller scale – and even more cost-effective perks, like access to exclusive content and personalized communication, can prove that a brand know their customers inside and out to build that loyalty even more. But, like Walmart, these brands need to know their lane and what their customers want.
Though there is obviously a difference between retail giants like Amazon & Walmart and smaller emerging DTCs – there is a lot to be learned by watching the large-scale struggles for sales, loyalty, and ultimately success. The journey to success from a brand built online, like Amazon, has been much smoother – but as traditional retailers adapt to the needs of digital customers and allow their in-store customers to become their biggest strength, they can’t be counted out of the game.
By Olivier Schott
CMO and founder