Register for the ultimate virtual loyalty and retention event - Loyalty Connect Register now
This year marks the twentieth anniversary of Amazon’s inception, and what a journey it’s been. From selling books to selling almost any item you can think of, Bezos and his team have transformed the ecommerce landscape, and changed the game for everyone in the space that is competing with Amazon.
This can be intimidating. Forbes tells us that Amazon now accounts for 37.8% of ecommerce sales. In replenishable categories such as beauty, it’s significantly influencing buyer behavior, with 37% of consumers starting their product search on Amazon vs 23% on Walmart, 9% on retailer sites, and 8% on search engines.
We won’t pretend that competing with Amazon isn’t a challenge for Shopify stores, however, we believe that you have a weapon in your arsenal that Amazon does not – your brand story and the loyalty of your customers.
Undoubtedly, Amazon secures an enormous volume of repeat purchases. However, these metrics are likely to be driven by convenience and hygiene factors such as speed of delivery, and the fact that they will leave your parcel by the door instead of leaving you a missed delivery slip. The high returning customer rates are not a result of emotional connections with customers, stand-out customer experiences, or brand loyalty.
With that in mind, let’s explore how to compete with Amazon using your brand equity and the loyalty of your customers to differentiate your brand.
We’re going to look at how to compete with Amazon, discussing tactics including:
Let’s dig in!
A key sign that you’re successfully competing with Amazon, is that your returning customer rate is healthy. This demonstrates that customers choose to return and repeat purchase from you, rather than finding your products (or alternative options) on Amazon.
The best way to keep that returning customer rate strong is to give customers additional reasons to buy from you multiple times. A loyalty program is an effective vehicle for achieving this. With each purchase, customers earn additional points which then afford them benefits and rewards such as money off their next purchase and free shipping to name a few. These rewards make a purchase directly from your store just as appealing as a purchase from Amazon.
Moreover, your loyalty program can be set up in a way that enables customers to earn points in between purchases. Allowing members to collect points for activities such as social likes and follows, reviews and referrals ensures that they build up their points balance faster, and have a reward to return and use sooner. It also helps you to keep your brand front of mind whether customers are buying now or not.
By aligning your loyalty program benefits with the same benefits that typically drive customers to shop at Amazon, you increase the chances of them choosing you rather than choosing convenience.
Amazon has access to a huge amount of customer data, and they use it extremely effectively within algorithms of all kinds. However, the data they have is typically quite transactional. When you’re exploring how to compete with Amazon, it’s worth thinking about how you can capture more zero-party data around personal preferences and characteristics. With a loyalty program, this information is typically shared with you by choice and then available for you to deploy within your member interactions.
More and more we are seeing stores competing with Amazon by using their loyalty programs to incentivize data collection via online quizzes. For example, a beauty brand might run a quiz to help customers understand whether they have dry, oily, or combination skin. The quiz adds value for the customer as they begin to better understand their needs, but it also provides the brand with information they can then use to segment customers, tailor communications, and increase personalization.
Zero-party data gathered via online quizzes, surveys, and profiles can be built into email and SMS marketing strategies to deliver highly personalized, highly targeted messages. Not only does this level of personalization increase conversion, but it also demonstrates that as a business, you use data responsibly and for the benefit of the customer – something that is regularly called into question for larger brands. This trust is the basis for longer-term loyalty and will keep customers returning to you in the future.
As we alluded to above, the key chapter in your ‘How to compete with Amazon’ playbook, is your brand story. For the majority of Shopify stores, there is a personal reason as to why a brand was born, or why a particular product range was developed. Your ability to tell these stories is your trump card.
You can use your loyalty program to tell your brand story and emotionally connect with customers in several ways.
Firstly, ensure that you’re taking every opportunity to communicate what makes your brand special. Include context on why your brand exists within loyalty program welcome emails, remind people of your brand values in your post-purchase emails, and feature elements of your About Us page within your loyalty page too. Don’t miss any opportunity to remind customers why you exist, why your store is special, and why they should prioritize shopping with you over Amazon.
Secondly, create a rewards program that aligns with your brand. Offer customers the opportunity to earn points for actions that resonate with them, such as recycling packaging or reselling used clothing. You can also allow them to redeem their loyalty points in exchange for rewards that align with the causes they care about. For example, a pet brand might allow customers to redeem points in exchange for donating a doggy dinner to a pet shelter. A beauty brand may connect with customers around sustainability by allowing customers to redeem points in the form of trees planted. By showing customers that you care about the same things that they do and that shopping with you can impact the causes they value you significantly increase the chances of them returning to shop with you again.
Thirdly, if you are a founder-led brand then find ways to connect with your customers and tell them your personal story. Offer customers in your higher loyalty tiers the chance to attend exclusive webinars – or even in-person events – where they can meet the founder, hear the story of the brand, and feel connected.
When we shop with Amazon, it’s typically a one-and-done process. We explore products, add something to our baskets, pay, and wait for it to arrive. There is no gamification and no additional level of engagement.
A tiered loyalty program creates a very different customer experience that is key to competing with Amazon. Tiers allow customers to move up loyalty program levels as they engage and spend more, unlocking more valuable and enjoyable perks and experiences.
For example, the lowest loyalty program tier might offer exclusive double points days and a birthday reward, while the middle tier offers more VIP perks such as early access to new collections or sales and free shipping. Your top tier might then offer the real clincher – experiential rewards such as the opportunity to join a product focus group for example.
This tiered approach gives customers more reasons to come back and shop with you every time, as with every interaction they get closer to unlocking the top-tier rewards that hold far more intrinsic value than a lower price or faster shipping.
As mentioned above, many consumers head to Amazon for product discovery which is only natural given the volume of products they can find in one place. But what if we told you that a loyalty program could be working hard to introduce your customers to more of your products, from directly within your store?
Free product rewards have become an increasingly popular part of loyalty programs for Shopify stores. By free product rewards, we mean allowing members to redeem their loyalty points in exchange for sample or tester sizes of particular products. This can be aligned with new product launches to increase exposure to new items, or it can be a clever way to clear excess inventory where you have too many of a particular product.
Allowing customers to redeem products as rewards helps you to expand your product exposure, reaching more shoppers with items that they may not have considered previously. Once they’ve tried the product out at no cost to themselves, they are then more likely to return and buy that product at full size, potentially repeat purchasing their original item at the same time to unlock more points and rewards.
You can also use your loyalty program to promote bonus points on particular products or collections. Again this can be used as a tactic to increase exposure for a new product range, or to push products that aren’t flying off the shelves the way you anticipated. Running time-based promotions where customers can earn additional loyalty points if they purchase particular items will encourage them to buy those items from you rather than from Amazon.
Competing with Amazon can feel daunting given they have a larger customer support team and a more automated process but their customer experience can lack the personal touch. This is an area where a loyalty program can help Shopify stores gain a significant advantage.
If you’re wondering how to compete with Amazon using your tech stack, we highly recommend integrating your loyalty program with your helpdesk tool – for example, Gorgias or Zendesk. This ensures that your customer support representatives can access loyalty information in real-time as they work on tickets and correspond with customers.
Your reps can then prioritize support tickets according to the loyalty status of customers, use loyalty points and tiers to sweeten potentially problematic situations and provide a far more personalized experience. This ensures that even in a negative scenario, your customers receive a stand-out experience they will remember, that makes them feel valued and heard – something that larger businesses are less able to do. It’s this experience that will bring them back to shop from you again.
Amazon is a fact of ecommerce life and one that isn’t going anywhere. It’s also not the only large retailer that you will have to compete with over time. We must not forget existing enterprises such as Etsy and eBay, or underestimate the rapid growth of new retailers like Shein and Temu.
However, your Shopify store has everything it needs to stand out and differentiate from these larger stores, and a loyalty program can help you deploy those assets more efficiently and effectively.
Focus on areas where you can win over returning customers with great experiences and the personal touch and you will see success in the most competitive markets.
Want to talk about how to compete with Amazon with a loyalty expert? Just book a time that works for you. We’d love to talk you through examples of the Shopify stores that are not just surviving – but thriving – in the age of Amazon.
