FACEBOOK EXEC: How Australian retailers can compete in a market with Amazon

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Kate Box is head of retail at Facebook ANZ

The retail sector is a scorching hot topic right now. Some say it’s unfounded hysteria. Some are late pushing the panic button. And some have been planning for years. The one constant is that it all centres on Amazon entering Australia.

We’ve all read about the $3 billion Amazon is expected to turn over by 2020, the increased pressure on margins and the increased expectations consumers will have with regards to service and online shopping. A recent report from UBS confirms growth rates and expectations of online shopping have increased in the markets Amazon have recently entered.

Incumbent retailers with a strong store network, in-demand or exclusive products, and great store experiences have several benefits that Amazon doesn’t. I often hear retailers who believe if they continue to do what they do well, they will survive and thrive in an Amazon era. I agree, to an extent.

Focusing on incumbent retailer strength (where Amazon lags in ANZ) is a great strategy if implemented at a level of excellence that’s at least nine out of 10. It’s a given that service, supply chain and prices are key. But retailers also need to do the things Amazon does well at a level of at least six out of 10 to compete.

So, what are three things Amazon and other digital disrupters do well? They build the right structure to focus relentlessly on growth.

  • When Amazon want to attract their next one million customers, they don’t brief their marketing team. Like many disrupters, growth is the responsibility of product, engineering, consumer analytics, design, merchandise/buying and marketing.
  • Growth is a product and it has defined, quantitative objectives and KPIs. The remit given to growth by the organisation is much broader than that given to marketing. It runs more along the lines of: “Your team is to move this number, go do what it is you need to do to figure it out”.
  • If anything can influence growth the team has absolute permission to change it. Nothing is off the table.

Walmart’s acquisition of Jet.com and that team’s integration into the existing business is a good example of a retailer focusing on a broader view of growth — and how merchandise, IT, marketing and consumer analytics can all work together to build a consumer lead strategy with measurable goals. It’s important to ask: who is your Jet team?

Your growth team?

Data as a competitive weapon

Amazon doesn’t just gather data. It uses data by leveraging customer history and using artificial intelligence (an algorithm) to close the deal on products people have already shown an interest in, or to show a person a product that will be of interest to them. It’s a personalised catalogue at scale never seen before. Price points are changed thousands of times a day as Amazon uses huge numbers of campaigns to optimise and match the right person to the right product.

The bottom line is that targeting a single product message to a mass audience is like taking a knife to a gun fight. Consumers now expect personalised and relevant products to be shown to them, and are growing increasingly annoyed (or ignoring) irrelevant communications.

Many Australian retailers are collecting valuable data about what their customers buy, when and how. Only a handful are using this data to grow the business and measure in store sales impact.

The opportunity with data also lies in working with partners like Facebook to not only match retailer databases and connect with customers, but to leverage our artificial intelligence capability to match product and people based on thousands of intent signals collected on Facebook ID’s over 10 years. Showing the right person the right product at the right time and being able to measure the impact online and in-store is Personalised Catalogue 2.0 and it’s finally here.

Think mobile — the first language of customer connection

Amazon and other digital disrupters have come early to the mobile sphere. With Aussies spending almost four hours a day on their mobile phones (an hour of it on Facebook platforms) these businesses think in mobile first.

Every consumer touch point, from large-scale brand messages through to a store product feed, has a mobile touch point that delights the customer with a great experience. With incumbent retailers focused on how they turn up in TV, Outdoor, Email, Catalogue or Press, it can be a challenge to give mobile the focus it deserves – but now is the time to get the balance right and aligned to where consumers are spending their time. The disrupters have mobile front and centre, and know that on mobile they can connect with customers through creative that delights and leverages powerful data to drive relevant and measurable performance. It’s a powerful combination.

With a focus on growth, smart use of data to drive customer value and connecting with customers on mobile first, Amazon and other disrupters are generating strong results. I’m excited by the potential as we partner with more and more Aussie retailers to unpick how they can structure for growth, plan for mobile and use their data and ours to drive and measure results. Alongside great store experiences where people can find wanted and exclusive products, it’s a powerful combination.

Kate Box is Facebook’s head of retail in Australia and New Zealand.

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