Amazon: The World's Biggest What?

Amazon.com‘s original mission was to be the “World’s Biggest Bookstore.” Well, if it’s ever going to get beyond that, Jeff Bezos and crew need a sharp slap to the side of the head. Not because they now take a month to ship you something that “usually ships in 2-3 days.” Well, maybe they deserve a whacking for that, too, but there are even better reasons.

In an article titled “Amazon Must Alter Its Brand Strategy,” originally published in iMarketingNews, Al and Laura Reis added to the cacophony of industry watchers predicting the demise of the online retailer, writing:

Is this the beginning of the end for Amazon.com? It certainly looks like it…. If Amazon were a drug store or a department store or a physical retailer of any kind, investors would be screaming for management to resign.

Given my own area of specialization, I couldn’t help noticing all the examples of branding successes and failures mentioned in the article come from companies framing their marketing and branding strategies in an offline environment.

I’d like to suggest yet another angle to Amazon’s situation
— that of the user’s online experience shopping the site. I am by no means a branding specialist. Instead, I look at brand as one of a constellation of factors that affect conversion rates.

The Reises write, “Once a brand is strongly established in the mind, it is very difficult or even impossible to change the perception of the brand.” This marketing truism leads me to the question, when it comes to consumer perception just what constitutes the Amazon brand in the online environment? I ask this question because in the online environment, the perception of brand goes hand in hand with conversion issues, such as usability, effective navigation, satisfaction with the shopping experience, and so forth.

I think it’s important to consider that Amazon has built its phenomenal reputation principally as a shopping engine that is extremely proficient not only at converting browsers into buyers but also at targeting repeat business. The strength of its “core” books, music, and video operation has been built upon the fact that these items have unique identifiers (qualities that lend themselves to effective internal search strategies): titles, authors or artists, directors, publishers. In this arena, Amazon has proven that it can become a profitable business.

Most of the other lines into which Amazon has expanded are characterized by an absence of unique product identifiers. The proverbial bottom line indicates these noncore areas are not profitable. Nonetheless, Amazon offers these products at competitive prices through a sensitized system of conversion — and people are certainly buying this stuff from Amazon. If there is one thing Amazon knows how to do well, it is selling online! And it has the qualified traffic.

So, what could be going wrong?

Research indicates the company is having significant issues involving product categorization and the shopping process (both the selling and buying processes) that affect conversion rates (as well as the perception of brand) online. One of the most critical determinants of online success is a company’s ability to capture and capitalize on the way its visitors approach and carry out the decision to buy a particular product. And not all products are created equal when it comes to how people go about buying them.

Amazon’s primary difficulty in expanding its brand may well be that its software and information architecture were designed to sell books, music, and video — not products lacking unique identifiers. People coming to Amazon expect to interact with the company’s effective shopping engine in a specific way — a way Amazon has excelled at and mined for further benefit (wish lists, personalized announcements when new items with particular identifiers hit its virtual shelves, the page you made, product suggestions, etc.) for a number of years.

But simply having the traffic does not mean Amazon will be as successful selling in other areas. A crude comparison might be this: Imagine trying to sell upscale fashion at Home Depot. All those folks — a captive audience focused on spending money — constitute potential buyers. But are they in the frame of mind, at that point, to consider upscale fashion that competes with Bloomingdale’s?

In application, let’s look at the marketing (but also brand-building) strategies of up-sell and cross-sell. Because the core line of products possesses the benefit of having unique identifiers, in addition to other benefits, it’s much easier to up-sell and cross-sell other products with unique identifiers, such as books, movies, or music. It doesn’t work the same way with kitchenware, electronics, or hardware.

Saying “people who liked the books you are ordering also liked these other books” is likely to be perceived as valuable. It’s not quite the same when you tell people “if you like this tool, you might also like this other tool.” One strategy compares apples with apples, the other apples with oranges — the trick is to compare the motivating needs. This is where Amazon’s shopping-engine design strategy fails to effectively support its branding mission. Naturally, the ability to make useful suggestions is an integral component of building brand.

The Reises argue a company that has outgrown its brand should launch a second brand, concluding that “Amazon still has a chance. It could be the end of the beginning and a new future for the King of Online Books.”

I agree about a new future for Amazon, but I’d tell Jeff Bezos to focus on his shopping engines and pay better attention to his customers. The company doesn’t need a new brand. It just needs to make its technology fulfill the promise of the Amazon brand in arenas other than books, music, or video. Here’s what you can learn from this example: Carefully examine the selling process dictated by your shopping cart software, and make sure it’s sending the message you’re trying to convey.