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The Amazon Effect Challenges A Long-Standing Web Metric for Success

I’ve been thinking about the Amazon Effect lesson from my customer discovery research of e-commerce from last week. There are a lot of tenets to the Amazon Effect including the rise of expectations of delivery, access to goods, etc. but the one I thought about most was.

The Amazon Effect has affected some of the longest-standing fundamentals of web. That is, time on site used to be a valuable metric. Amazon has proven that a winning strategy can be the opposite — get in, find what you want, check out and get out. Fast. Come back again.

The idea sticks out because it flies in the face of expectations and a metric that website owners typically watch for – “the higher the time on page, the better”. Amazon, however, is about getting folks in and out. This is the experience Amazon wants to build as it then drives consumers to come back.
As I let this idea marinate, one thing becomes clear – Amazon knows its “wow moment”. They’re not just focused on shortening the path to check out. They’re focused on shortening the path to the “aha!” and “wow” moment. That’s the experience. That’s about getting customers getting exactly what they want, when they want, how they want, and where they want (at home, largely).
Southwest Airlines is another company who challenged a long-standing industry paradigm. In this case, it was the airline industry’s paradigm of filling a plane. Southwest can tout its success with 45 straight years of profitability. Most airlines believed profitability and revenue necessitated every seat on a plane be sold and filled. It’s one of the reasons they oversell flights.
Southwest, on the other hand, realized their bottleneck and path to revenue was the plane. As long as a plane sits on the tarmac, the more underutilized the plane is. Thus, it’s not making money.
Southwest built their business on turn-around time – how fast they could turn a flight around, even if it meant the plane was not full. They flourished with the “10-minute turnaround” as other airlines were turning planes at 60 minutes – the time from entering a gate, loading passengers and cargo, and leaving the gate.
For Southwest, the wow moment is arriving at the destination realizing their fees were far less than rivals (in addition to above-and-beyond customer service).
Longstanding business practices don’t always make sense. Consumer habits and expectations continually change. Stay focused on the customer, and realize there are more ways to achieve success, especially, when ushering the market into a new era.
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Initial Customer Discovery in E-Commerce

I’ve been on a customer discovery journey over the last couple weeks. I haven’t dug deep on Mom Test-esque questions. Instead, I’m setting a baseline on the e-commerce space for myself.
Below are highlights from my discussions so far –
  • Initial round of 7 folks from the e-commerce space representing directors and managers of marketing with a couple in sales. Companies were each in the $1B+ category largely in consumer, but also having B2B opportunities.
  • Primary levers for growing e-commerce businesses:
    • Customer acquisition
    • Fulfillment
    • These two levers have the greatest effect on net revenue
  • To achieve higher sales, too, companies are evaluating:
    • Shortest path to revenue — “click-to-checkout”
    • Building an “optimal” customer experience
  • Customer experience for companies range from custom, and temporary, showrooms to shortening the path to revenue with engaging design elements (e.g. imagery, product information consistency)
  • The Amazon Effect has affected some of the longest-standing fundamentals of web. That is, time on site used to be a valuable metric. Amazon has proven that a winning strategy can be the opposite — get in, find what you want, check out and get out. Fast. Come back again
  • Combating the big players in customer acquisition can be difficult as they spend millions upon millions in advertising, especially, on Google and Facebook. Smaller players have to focus on niches and aiming for the repeat buy
  • There are big opportunities, still
    • Most folks still believe less than 30% of the market value (10%, more likely) is still uncovered in e-commerce (“Everyone’s gathering data, but how do you use it?”)
    • There is a lot of data being collected; however, most companies still don’t know how best to utilize the data to deliver good value
    • Dynamic pricing is highly sought after with most folks seeing this as a prime opportunity for customer acquisition and revenue growth (new and recurring)
    • Exceptional customer support and returns processes are vital to keeping customers. When you consider the difficulty of acquiring customers, keeping customers should be an ongoing strategy top-of-mind

I’m still digging into the space as it’s largely unfamiliar outside of my personal shopping. Any take-aways standing out for you that surprises you? Anything contrary to what you thought?

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