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Positive and Negative Effects of Amazon on Customer Experience
We are in the midst of a Customer Experience (CX) revolution and customers are demanding an enhanced experience. In this episode of The CX Angle, Bob Meyer, Vice President Customer Experience Solutions; Ryan Kubec, Customer Experience Account Executive; and Jeremy Cross, Corporate Communication Manager, discuss the impact of Amazon on customer experience and the perceived positive and negative outcomes.
Read the transcript below or listen to the podcast.
(Jeremy Cross) What we want to talk about today is Amazon. And there’s a lot you could talk about when you talk about Amazon. But specifically, what we’re going to get into today is, has Amazon been a positive and a negative? What sort of impact have they had in the commerce space? And really, what do we see the future looking like? And so we’re going to get into that conversation with Bob Meyer.
But really what I want to think about is, I think it’s commonplace for many people to immediately look to Amazon as the outlet for purchasing anything online. And, Ryan, I’m curious what you and Bob have to say as we look at this, what was the first thing that you remember buying online or what was the site that you remember using online? I can tell you specifically for me, mine goes back to using Newegg. I used to build computers for myself and I used to buy all of my components from Newegg, so for me, Newegg was really the first. And I remember they shipped quickly and they were affordable and they were the go-to for me. Ryan, what do you remember as being the first site that you really remember utilizing for purchasing stuff online?
(Ryan Kubec) Yeah, I’m trying to think. It’s definitely one of three things, and I’m not sure which one came first. So I guess I’ll run through them. As you were just speaking, it made me remember when I was getting ready to leave for school, I ordered a Dell Computer from their website, which I guess, thinking back on it now, also had a really good CPQ engine, because I got to pick what size monitor I wanted. I got to pick how much RAM, I got to pick how much memory, and kind of configure my own computer. So it was either that or I bought a snowboard off eBay. I think eBay might have been my very first purchase. And then I also bought concert tickets in high school on Ticketmaster.com. So it was one of those three. But those are my three earliest experiences with buying online or what became known as e-commerce.
(Jeremy Cross) Now, I know there’s a few years’ difference between our ages, but I remember for Ticketmaster, we used to have to go to the local record store and stand in line outside in order to buy our concert tickets. So we didn’t have Ticketmaster.com when I was in high school and into college, from what I can remember.
Bob, what about you? What do you remember using? What is the first site that you really remember buying stuff from?
(Bob Meyer) What was the first site I remember buying stuff from? I’ve been trying to think through that. I do remember looking at Amazon when it was strictly hyperlinks, no images, and was a pretty crude site. Gosh, it’s so long ago — I go back to the AOL days, guys and bulletin boards and all of that stuff — you know, my first computer I built was a Timex Sinclair. So I am really dating myself. I would have to say I think it was an early version of Amazon, I ordered a book. You know, it was $9, really nervous about putting your credit card in. And then, you know, I’ve been in the space for 20 years, so I watched a lot of catalogers move their traditional catalog purchases online. So I’ve been doing it for a long time, but I think it was Amazon.
(Jeremy Cross) Well, interesting that you remember it being Amazon and we’re talking Amazon today. So, Ryan, I’m going to ask you, do you remember the first time you used Amazon?
(Ryan Kubec) Yeah, mine was in college, for sure, so early 20s. And that was back when I believe Amazon pretty much only sold books online. And I would always price check between Amazon and a site called Half.com, which I believe was powered by eBay for my textbooks because you could buy them used. They were like a quarter of the cost of what they were at the good old Central Michigan University bookstore. And so I’d save about a $1000 per semester on books, just buying them used. So I think that was it. I was buying textbooks for class and on Amazon.
(Jeremy Cross) Well, here’s where we’ve established Amazon, I think it is the go-to for most people unless they’re constantly saying, we’re not going to support Amazon. I think many people are Amazon Prime members. I think we’ve bought into the system. I think we did look to go to it prior to the pandemic and shipping speeds getting kind of turned upside down. I think you would look at it and say, yeah, I’ll take that one-day delivery or I’ll take that in-two days delivery. And I’ve noticed actually with the last few Amazon orders that I’ve had, I am getting back to one-day delivery in two days. So I think Amazon is catching up with things as the pandemic has rolled on.
But what I really am curious about — and this is where I want to tap into your expertise, Bob, and yours, Ryan, from working in the space — what do you see have been the positive and the negative things that Amazon has had on the commerce space in general, based on your experience and your industry knowledge? So let’s start with the positive. Bob, what do you think the Amazon has done in the positive part of the commerce space?
(Bob Meyer) Well, there are a few. One is, I would say, accessibility for the masses. Amazon figured out how to get more and more people to buy online to make them comfortable with buying online and to deliver on the expectations of online. I know years ago, everybody, we wanted to be like Amazon. Amazon, for one reason or another, never had the best or most creative user experience, but they kind of trained everybody on, this is what you should expect. And when you click submit and a couple of days– and nowadays it’s even in a day or same day — you’re going to get your product. And so I think it knocked down a lot of barriers to customers in terms of fear and anxiousness. And I think that, in turn, made it easier for the rest of the industry or industries that are now participating online to gain confidence that, yes, their products can be sold online. And maybe it’s not, as you know, sophisticated or as fancy as some of the higher end brand or apparel sites that think of as a luxury experience. Folks want to come in, put something in their cart, buy it and get it in a few days. And I think Amazon kind of trained everybody to realize that that’s OK.
(Jeremy Cross) What about you, Ryan, what do you think?
(Ryan Kubec) Yeah, so I guess I’ll back that up. I am a Prime member, and I probably am one of the few people that joined because of it. I joined because of Alexa, because when we first bought ours in order to have the streaming music, you had to be a Prime member. And so we did the 30-day trial, and I liked it and was going to cancel and then forgot. I finally said, all right, well, I guess we’re getting stuff a lot quicker now, and now I can’t imagine life without it, like the rest of the country.
But speaking just from the commerce side, what I see as positives in a higher level of what Bob was talking about is, I think they just set the standard for what customer experience in an online buying environment looks like — not just with the ease of ordering, but the fact that you don’t have to talk to a customer service person. I don’t even know, I mean, we could probably find it, but I don’t even know when you would click the contact us and call Amazon and have someone look up your order. It’s so easy to just go to my orders, look at your order history and see it, the current status, tracking numbers, all of that is now just expected from the B2C and B2B worlds.
The other thing that I think is really cool that I don’t know if they were the pioneers of this, but having peer review. So the ratings, and certainly I think we’re in a space now where there are mysterious seeds being found all over the country right now and people are saying that this is a scam. So the way some company can justify that, they sold all these, they shipped them, and now they’re going to go post fake reviews. So I think they are true pioneers in some of that space where people are so reliant on reviews now, but now there’s this added problem of how do you ensure the authenticity of those reviews? So setting the standard for customer experience, being able to see what other customers have said about that product they bought.
And then I think the last thing is being able to personalize that site. So when I log on, it knows the type of products that I’ve searched for in the past, the type of books that I’ve ordered. And so it’s already able to start proposing to me: you read this, you might like this. You’ve purchased this, you might like this. And, again, I don’t know if they were necessarily the first ones to have some of that “recommended” or “shoppers like you have also bought,” but it’s probably the experience most people have had with a lot of those pieces of technology.
(Jeremy Cross) Well, they certainly have the ability to look at their own business and to recognize opportunities for change and growth. And really, if you think of this– and both of you, correct me if I’m wrong — think about the way that Amazon Web Services (AWS) came out of it. I mean, they looked at it. They had the backbone and they had the infrastructure and thought, well, this is something we could be selling. And they started doing it and are leading in the space.
And so they have a history of being able to look at themselves and reinvent and take risks. They take risks that like the Fire Phone that was considered to be a flop. But you’ve got to think what they learned in the process of creating that device. They certainly have shown that they have the ability to think about their business and move things forward.
(Ryan Kubec) Yeah, the other thing that I guess I’ll say is a positive, and maybe this isn’t necessarily specific to the commercial space, but I think this is a positive, depending on what industry you work in. And maybe a negative also is that, in any capitalist society where there’s competition that’s driving how everyone else needs to react and behave. I think on one of our previous episodes, we talked with Sterling about the retail industry and the Amazon effect of someone in a store. They see a product they like, they see the price. If they want to get it in that store, they quickly jump online to see, can I get a cheaper on Amazon? And if they can, they know it’ll be there tomorrow. There are a lot of times they’re walking out of that store, having made that purchase online. So I think they’ve kind of forced the hand of retailers and manufacturers to say, hey, you need to keep pace with us and start offering additional services or additional price matching to your customers, which, as you know, benefits all of us as consumers. But it certainly puts the pressure on the companies and manufacturers.
(Jeremy Cross) Absolutely.
(Bob Meyer) I think Amazon has taken that, you know, when they look at their business, what areas were they not participating in? B2B, they’ve changed that. They’ve got tens of millions, if not hundreds of millions of products now in the B2B space. But grocery, that’s a big area. And traditionally, grocery has had terrible margins. If you ever get — you know, they own Whole Foods and they’ve got the Amazon Go stores — if you ever get a chance to go into a Go store, it’s a fascinating experience. You think they’re using RFID tags or barcodes or something, but they’re actually using images. So they see what you take it off the shelf, they know what’s on that specific space on the shelf. You walk out, they know who you are because you logged in with your Amazon Prime membership, and you get charged for it.
Ryan and I were at a conference last year and actually went to an Amazon Go store to test it out. Turns out they’re opening a full-sized grocery store the next town over from me in a few months. And it’ll be interesting to see that experience and what Amazon figures out as they see what the current processes are, where can we find efficiency and squeeze out cost, having cashiers, all of the things that are traditionally driving margins down, they figure out a way to make it as efficient as possible to increase their margins and then as a result, they can be more competitive on price and force out less efficient competitors.
(Jeremy Cross) So I think you can look at this and you can say, hey, this is the way that they’ve reinvented themselves, but some, I think, could say that’s a negative thing, when you start to get into the way that they are able to manipulate price and use price to their advantage. So on the other side of things, what would you say are the more negative impacts that Amazon has had in the space and things that could be questioned as to whether or not this is a good or bad thing?
(Bob Meyer) Well, I think I gave an example of how they have the ability to squeeze out costs that some of their competitors just don’t do. I know in talking with clients that have interacted with Amazon — one of the most famous ones was Toys”R”US — Amazon ran their online store for a long time. And, you know, they had to figure out how to do it themselves after a while. But I think what people forget is, yes, you are selling products to customers and Amazon fulfills things extremely well. The other thing Amazon is capturing is that data, that customer data. So as Ryan mentioned earlier, they now have this rich data so they know what you’ve bought. They know what genres of music or movies or books you like and can make the appropriate recommendations.
You know, it’s the ideal digital transformation Utopia is the way to market to one. How do you take millions of people and get that right message to that one single individual? And it’s the data. So Amazon captures all of this data and then they use it to their advantage. How can they promote other things? How can they promote Amazon-specific products, Amazon Basics? And I think what a lot of folks who participate in their programs fail to realize early is that they’re missing out on that data. Again, it’s not one hundred percent negative because a lot of firms wouldn’t be able to do the things that they do today without Amazon’s infrastructure and capabilities. But they often lose sight of man. If we had that customer data, what else could we do in terms of brand awareness, extended product mix up, sell/cross-sell personalization to that customer because they don’t have control of that data?
(Ryan Kubec) Yeah, from my thoughts, I guess I was thinking of it more just, from a consumer standpoint, one of my frustrations with Amazon every now and then is I’ll be looking for something trivial and I’m looking for a new set of speakers or I’m looking for our CUZZI or something like that. And, you know, there’s eight billion to choose from on there. And they’re all from companies you’ve never heard of. So I think there’s a product overload sometimes that is found there. You’ve got manufacturers you’re not sure who they are. A lot of the stuff is cheap and it’s got no reviews, so you’re not sure how long this company has actually been around.
So I think there’s a lot of noise on that site as well, where if I want to buy a Samsung TV and I go to Best Buy, I can quickly get to that specific one, see the specs on it, or if I go into the store — again, I think we talked about this with Sterling a little bit — is they’ve got the sales people who really know and can make recommendations, whereas as an end consumer, sometimes you’re just doing that research on your own. So I think that’s one negative.
The other negative, and I guess this one from even our experience working with B2B and B2C customers, is a lot of folks want to sell through Amazon because of the distribution. And I guess this is probably not too dissimilar to manufacturers wanting to have their products in Wal-Mart is when you have that big of a distribution kind of hold, then they’re taking a large percentage off the top. And I was looking up some stats right before our call, the professional sellers had to pay closing fees and also referral fee percentages, and I guess those can range. And this is the stat I found online, anywhere from 6% to 25%. And the average that a company is paying is 13%. I know we worked with customers who said, you know, we’re trying to get out of just selling our products on Amazon because they take 18% right off the top,and so certainly there’s a cost of sales there. But I think there may be a tipping point coming where a lot of these manufacturers are starting to say, hey, we want to build our own relationships with these customers and we want them to buy from our site and we’ll keep that 18%. We’ll put it toward making a better experience. So those are two of the negatives that come to mind when I think about their site.
(Bob Meyer) When it comes to manufacturers, there’s a book, The Billion Dollar B2B E-commerce, by Brian Beck, a long-time industry guy. He had a stat in there that said 43% of customers prefer buying directly from the manufacturer because they consider them the experts. So then that begs the question, OK, where do distributors and resellers fit into all of this versus Amazon? And I think the challenge to a distributor and a reseller is what value-add services are you providing and how do you clearly demonstrate that to the end user or consumer of the product so that they don’t go direct to the manufacturer and don’t go online to look at the lowest cost, cheapest price supplier, if you will? There has to be some value-added service there.
And I think one of the challenges for distributors and resellers is conveying that value-add service. To use Ryan’s example, going to look at a TV years ago, you would go to a TV or appliance store. Why? Because they knew the most about the TVs. They had a great selection. That was kind of your only choice. Then when you started getting more and more choices, you might still go to them because you know what, they would deliver it, they would hook it up. They would do all of those other things. Well, now you can order something online. The package is light enough to ship UPS, and when you get it home, you have to plug in the power cord and the cable cord. That’s it. Set up your Wi-Fi, maybe. And it’s become so much simpler.
So the value-add services that the TV appliance sales person and company were adding are no longer there, so they’re no longer around. So I think it’s how do you continue to maintain your value, add services and introduce new ones that are relevant to the consumer and what they want to see? Things like subscriptions or new product releases, etc., that maybe the manufacturer has, but they may not be intimately familiar enough with the right application that a distributor or somebody else might be. And then the mass merchants obviously don’t know that.
(Jeremy Cross) Well, I think along with what you’re saying, Bob, is that for those who are competing with Amazon are going to have to really think about those things. There’s the other side of this where there are organizations or the individuals that see Amazon as being a threat. For example, there is a website called Bookshop Dog, have you either you heard of this? I have not. So Bookshop Dog is a site that’s recently come up that supports local bookstores when you shop on their site and you can designate. So, for example, I just finished reading a fantastic book I would recommend to both of you called, Think Like a Rocket Scientist, by Ozan Varal. Fantastic book. If I wanted to go purchase that book and I went through Bookshop.org, I could actually purchase that book and then designate my local bookstore here in town as being the bookstore that’s going to basically receive that sale through the site.
And so they’ve gone about basically saying they want to prop up your local bookstores and give you a reason still to buy from your local bookstore, but make it so easy to do through a single online site. And you have these sites that are popping up that are anti-Amazon that have really evolved out of Amazon, providing all of these things at the cheapest price. But there is, I think, we’re returning to a very local mentality and I think people are dropping back and trying to stay local as best as they possibly can. And you have sites coming up that are really reactionary to what Amazon has done and rethinking the way the industry works.
(Bob Meyer) It’s a fantastic idea. I like the concept. And I think, without jumping on the proverbial COVID bandwagon, more and more people are looking to do more things locally with folks they trust. Yes, you’ll still be able to get significant things from Amazon and Wal-Mart, etc., without leaving your home. When you do leave your home, it’s better to go to downtown Main Street than it is to go to the big mall, because you feel more safe and more comfortable. So that’s a great idea. I could see that expanding to other businesses, as well. Shoe stores, for example. If you had a local shoe store that if somebody purchased shoes online, the local shoe store got credit, I think that concept could go a lot further into a lot more lines of business than just books, but books are a good first start.
(Jeremy Cross) I just thought it was interesting. And at this point, bookshop.org, if I remember correctly, even operates as a non-profit, so if you go to their site, it says that they’ve raised $5.7 million for local bookstores at this point through the site. So, you know, it’s one of those interesting things as to, again, what Amazon has.
Amazon has had some very positive impacts to the way that consumers purchase goods and how we interact with online platforms. And at the same time, for all of the success they have created, other competitors are coming up with ways to basically provide alternatives. I read in the last couple of days that Target, for example, is going to completely rethink the way that they are approaching the holiday sales cycle coming up, where they’re going to start offering sales starting in October and running through the holiday season, and basically letting consumers know that the best price on something, you might find the best price on that TV you’re looking for in October; you don’t have to wait until Black Monday, or Cyber Monday, or Black Friday or any of those things.
(Bob Meyer) Well, it’s interesting because I know most folks don’t know this, but Target fulfills 80% of their online orders from a local store. So they’ve figured out a decentralized way of distributing their products, probably keeping their inventory turns up in the process, too, and then cutting down on delivery times and or facilitating quicker buy, online pickup, in-store options for their customers by fulfilling 80% of their online orders via their local stores.
(Jeremy Cross) I know that Target wasn’t the focus of today’s conversation, but I will say that this is something that I’ve learned specifically during COVID. But when it comes down to purchasing online and picking up in the parking lot and curbside pick-up, they have it down by far. I think they have been the best experience that I’ve had when it comes down to something like that, that they’ve just nailed it and they’ve really learned how to do it well.
(Bob Meyer) And another good example, you’ve got to look outside the industry, Chick-fil-A, do an online order for Chick-fil-A and go pick it up. You can go place your order, go right through the drive-thru. They ask you the color of your car, you get to the drive through, you tell them your name and your order is right there and they charge your credit card. And I have teenage boys — so, hey Dad, we want to get Chick-fil-A for lunch. Place the order, they go, they don’t have to take my credit card, they don’t need money. They pull in, give them their name and boom, there’s their order. So it’s actually a pretty great experience online.
(Jeremy Cross) You have to wonder, are these things that have evolved because of the Amazon juggernaut, because Amazon did what they did in their industry? Have other industries learned from that, and then basically adapted and created their own systems because they’ve been inspired by what Amazon was able to do?
(Bob Meyer) I think so. You know, I think it’s a copycat world. So if somebody can find some process that works well within the industry or outside of their industry and adapt it to theirs — and what companies have to keep in mind is try to keep the best things that you do and then supplement it with the best things that other industries are doing to make what you do that much better. And I think we gave good examples of Target and Chick-fil-A, and there are countless others that do the same thing. They look at how it would it be possible to emulate their model. I selfishly I can’t remember the last time I bought razor blades at a store; I do Shave Club. I don’t worry about it once a month, because I know I’m going to have razor blades. Could I buy them somewhere else? Sure. If they raise their price fifty cents, I wouldn’t even notice. And I think that’s the trap that people can fall into. But it’s also the benefit that companies can take advantage of — you get these recurring models or you look outside your industry for ways to make your products and services better. And then over time, it becomes the de facto standard and people are willing to pay a little bit more for convenience.
(Jeremy Cross) Well, we are running long on our time, gentlemen. So here’s what I’m going to do. I’m going to ask, do either of you have any closing thoughts that you can think of with regard to Amazon sort of wrapping up our conversation today?
(Bob Meyer) Yeah, I would say that I think Amazon has a luxury to be able to try certain things and others would be wise to pay attention to what they’re doing, to figure out what works and what doesn’t work. You know, Ryan mentioned listening to music on Alexis. Amazon is making it a more open platform, and I’ve connected my Apple Music to Alexa so I can tell Alexa to play Apple Music. So I think as you look at those things, Amazon in certain areas will open their platforms or solutions up like they did with us and others. They may do it for grocery stores where they could sell that self-service checkout to other chains and probably make more money than they would selling groceries. So just pay attention to what Amazon is doing and think about how it might apply to your space. You don’t necessarily have to have the Amazon solution, but you could mimic what they’re doing in your own tools and technology.
(Ryan Kubec) Yeah, I think it’s so crazy that they are one of the leaders in customer service and customer experience and it’s vastly self-service. So the customers are doing everything themselves, but they provided those tools and they’ve made it user friendly enough that you feel like you’ve gotten great customer service from them because you have access to everything. It’s all up to date; it’s realtime.
The one thought — and this will be interesting to see over the next few years as we’ve been talking about their relationship with manufacturers — is Amazon doesn’t really create; they don’t manufacture this stuff themselves. And so they are starting to get into some of that. As we talked about, they obviously have the Kindle, the smart speakers. They’re manufacturing those Amazon-specific devices and they’re starting to create their own content now that they own the grocery store. I wonder, are they going to start getting into a lot of other places? I think they also have Amazon Essentials, so they have a clothing line. It’ll be interesting to see how far they take that. So maybe keep some of that market share with Amazon-branded products.
(Jeremy Cross) Well, with that, I’m going to go ahead and close this out for today. Thanks to everybody for listening to the CX Angle podcast. We appreciate if you have any comments, questions, anything like that, please go ahead and reach out to us. Our contact information is in the show notes. Thanks to Bob for being on again. It was great to get a chance to talk with you and Ryan, as always.
(Ryan Kubec) Thank you.
(Bob Meyer) Thanks. Take care.
(Jeremy Cross) All right, thanks, everyone
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