Thursday, June 13, 2019

How to solve the e-retail puzzle and compete with Amazon | Advertising Age

It’s no secret that the advertising landscape is, well, chaotic. Everywhere you go, agencies and brands are making noise about different topics -- artificial intelligence (AI), augmented reality (AR), machine learning and influencer marketing, to name just a few. However, one topic that’s consistently part of conversations is e-commerce.

As the retail marketplace continues to evolve, brands and organizations are rushing to better understand how they can find success, unlock revenue and compete across complex ecosystems. However, unlike the advent of the digital movement, becoming competent in the e-retail/e-commerce category takes much more than having a website with items for sale. It takes a thoughtful and strategically sound approach to compete -- and win -- against the likes of Amazon, Jingdong or eBay.

When The Mighty Are Humbled

From what we’ve seen in the industry, it’s a common issue for brands to become overly enthusiastic about e-retail and forget about some of the key steps along the way, which include ensuring proper infrastructures are in place, understanding what competitors are doing right and wrong, and understanding what will or won’t work for a brand's personality.

Take Walmart, for example (Full disclosure: Walmart is a client of IPG and does work with Reprise), a retail juggernaut that couldn’t be stopped or slowed down. As recently as 10 years ago, the company was growing and increasing the company footprint with brick-and-mortar locations around the globe. However, when the industry pivoted, thanks to the unprecedented adoption and growth of Amazon’s e-retail business model, the once undisputed industry leader found itself in an unfamiliar position of working to catch up instead of leading the pack.

In an effort to quickly catch up to the Amazon machine and bring its e-commerce growth to a minimum of industry standards, Walmart invested more than $3 billion in 2016 for the acquisition of, an e-commerce startup with an established digital infrastructure. Walmart CEO Doug McMillon announced that the acquisition would position the company for fast e-commerce growth, expanded customer reach and the introduction of new capabilities. Walmart was entering a new era.

Fast forward to the present, and Walmart has since grown its position by 40%. However, this is primarily due to the investment and introduction of curbside pick-up and delivery, to which McMillon professed that it’s still more cost-effective to attract new customers using the Walmart brand. So, the company is scaling back marketing investment in, which has seen a significant reduction in site traffic, and is working to create a more cohesive e-commerce plan.

The experience with helped Walmart better understand where it can compete, what strengths to play to and where the company can continue to differentiate itself the way it did when brick-and-mortar stores ruled the landscape. Instead of running a parallel path to Amazon, Walmart is taking the e-commerce leader out of the equation of head-to-head competition and now billing itself as a tech company. The move is meant to shed the tired, old idea of a big-box store and showcase how the retail giant is reinventing and becoming a digital force.

The company said it intends to spend $11 billion worldwide this fiscal year, which will include investment in technologies such as automated pick-up towers that allow consumers to easily retrieve general purchases, restocking/unloading robots, and price-scanning and inventory-stocking units.

What’s interesting about this case, and what we’ve seen in other companies and brands entering the e-retail space, is that it isn’t always about direct competition or emulating an industry leader. Success is more likely to be found in fully understanding what a brand stands for, knowing its strengths and weaknesses and what it’s delivering to customers.

In today’s fast-paced industry, crowded with big and small retailers vying for a piece of the consumer wallet, perhaps it is better not to try to become the next Amazon. Instead, here are a few things that brands should take into consideration when entering the e-commerce space:

• Have a clear understanding of your brand identity and what it stands for.

• Refuse to compromise the integrity of the product or offering in order to be competitive.

• Develop a clear plan of action and a direction that is unique to your brand.

• Know how you can distinguish your product or brand in a growing space.

• Be fluid and open to pivot if necessary.

Brands like Amazon and Walmart have experimented and shared learnings that are helping to lay a foundation for the growing digital ecosystem. However, it will be up to others to provide the unique and diverse offerings and experiences that consumers are expecting. And they’ll need to do it in their own way.


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