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[Case Study] Amazon
Omnichannel Strategy
May 13, 2021 | Stephan Serrano
How would you rate your current omnichannel strategy?
In this case study, we explore Amazon's multifaceted omnichannel strategy,
and highlight lessons any eCommerce store can apply.
If you'd like to skip the primer on what omnichannel strategy is and go
straight to the Amazon examples, click here.
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What is Omnichannel Strategy?
Amazon's Omnichannel Strategy: Examples & More
1. Amazon Prime and Data Unification
2. Amazon Echo and Channel Expansion
3. Leveraging channel dominance to build an ecosystem of products
4. Focus on the customer experience
5. Improving Brick and Mortar Experience with Online Data
Next Steps...
What is Omnichannel Strategy?
Unfortunately, the vocabulary around omnichannel is murky.
For clarity, this article uses the following definitions.

2.  Channel: Any medium where a brand can interact with a
customer. Simply put, a channel facilitates a customer touchpoint.
It can include physical touchpoints, such as a pop-up store, or
digital touchpoints such as a mobile application, website, chat, or
social platform.
 Multichannel Retailing/Strategy: Using multiple channels to
sell merchandise through. The goal of multichannel strategy is to
identify which channels to invest in. Channels are approached
independently.
 Omnichannel: Customer phenomenon where all sales and
marketing channels are looked at as one entity.
 Omnichannel Strategy: Optimizing key metrics (such as
sales) by creating seamless shopping experiences across all
channels. Omnichannel strategies take into account all
retailing activities involvedin successfully selling through
channels simultaneously.
Omnichannel strategies assume customers move between channels.
They may research online and buy offline. They might begin a shopping
session on your site, and complete it in-app while waiting in line.
The reality is, you customers will switch channels. An omnichannel strategy
focuses on creating the best experience when they do.
Amazon's Omnichannel Strategy:
Examples & More
Amazon’s stated mission is to be “Earth’s most customer-centric
company”. Part of that is reaching customers where they are. For Amazon,
that means expanding their channels, and creating a unified omnichannel
experience.
They are an ideal case study in how to create an omnichannel
strategy. There are two key principals to Amazon's omnichannel success.
First, Amazon focuses on the customer experience. They use data to create a
personalized, responsive interactions, no matter which channels their
customers are engaging them in.

3. Second, they focus on integrating their channels in the backend. This goes
beyond inventory and central fulfillment. It includes connecting customer
data, and fulfilling customer's wants in whichever channel they prefer.
1. Amazon Prime and Data Unification
The first challenge for any omnichannel strategy is how to connect customer
data across channels and devices. Typically, customer data such as behavior,
previous purchases, demographics, product/category affinities, and more are
siloed in each channel.
Amazon Prime is Amazon's solution to the customer data challenge.
Amazon Prime, simply put, is the single best incentive to create an account,
and log in no matter which channel or device you are on.
Unite Customer Data Across Channels: Barilliance is built to track, store,
and leverage customer data across channels. Request a demo here.
How Amazon Prime Creates a Single
Customer View, the cornerstone of their
omnichannel strategy
Amazon is a master at bundling.
At the center of the Amazon ecosystem (at least on the B2C side) lies

4. Amazon Prime.
On the surface, Amazon Prime is an analogue to membership discount stores
like Costco or Sam's Club. Invest in the membership and you get benefits.
The primary reason to invest in Amazon Prime is the promise of free (and
increasingly fast) shipping.
Prime is pure convenience. It eliminates the biggest reason for cart
abandonment (shipping costs), and creates a lock-in effect. To Prime
members, Amazon is the first, and often only, destination when shopping.
Today, there are 95 million Amazon Prime members. This is despite
the continued price increases, first to $99/year in in 2014 and now up to
$119/year in 2018.
Image Credit
To drive Amazon Prime membership, Amazon has layered additional
benefits. In 2019, the list of benefits extends well beyond shipping.
You can see the full list of Prime Membership benefits here, but below is a
quick sampling.

5.  Free Prime Video Subscription: Unlimited streaming and
access to movies and T.V. series.
 Various Discounts: Spanning premium streaming services such
as HBO or Starz to Whole Foods Supermarket discounts.
 Free Prime Music Subscription: Free access and streaming to
a library of the 2 million most popular songs.
 Prime Wardrobe: Allows you to try on items you buy online
before committing to purchase.
And on and on and on.
Amazon piles benefits onto Prime Membership because data unification is
fundamental to a successful omnichannel strategy. It underpins
Amazon's ability to understand customer preferences, fuels their vaunted
recommendations, and creates a seamless experience across devices.
Simply look at the first screen you are presented on Amazon's mobile app.
The first action is to sign in, authenticate who you are, and continue to enrich
your customer profile on Amazon.

6. How to Apply Data Unification

7. Your store probably already supports some form of account creation. The
challenge is that for most stores, accounts are viewed as an annoyance.
In fact, account creation is cited as the second most reason for cart
abandonment.
Consider how you can create incentives for your customer base to create and
actively use their accounts. You can copy Amazon's playbook directly by
focusing on convenience, shipping, or direct benefits such as Prime Video.
Additionally, you should use technology such as Barilliance to automatically
track and unify customer data across devices. Features like our Triggered
Email Booster ensures you are capturing data even if they don't sign in.
Lastly, you need to use this data in a meaningful way.
The reason our clients convert 73.25% more on returning customers is
because they are able to create personalized recommendations and messages,
tailored to their past behaviors and purchases.
2. Amazon Echo and Channel Expansion

8. Omnichannel assumes customers cross channels fluidly in the same
transaction.
The challenge is establishing (and building upon) a direct relationship with
customers in each channel. Amazon aggressively tackles various channels in
a variety of ways, and the Echo is an excellent case study on how to establish
a dominant presence in a sales channel.
How Amazon's Echo Extends Omnichannel
Strategy into Voice
Voice is solidifying itself as an important channel for commerce. ComScore
predicts that 50% of all Google searches will be conducted by voice by 2020.
And Statista shows that the number of digital voice assistants are expected to
grow to 8.4 billion by 2024.
And, voice is increasingly being used to complete purchases.
In February of 2018, OC&C Strategy reported that roughly $2 billion in sales
were made over voice. However, that number is predicted to balloon to $40
billion in sales by 2020.

9. Before the Echo, Amazon tried to create a more direct relationship with
customers with their Fire Phone. Unfortunately, Android and iOS had already
locked them out of this market, and to this day that effort remains one of the
worst performances in Amazon's history.
It represented a major threat - even to Amazon, to not have direct access to
customers.
Their solution? Create another device customers would use regularly that
bypasses mobile.
Amazon invented the "smart speaker" market in 2015 with the Echo, coupled
with their new personal assistant technology, Alexa. Today, they still possess
an overwhelming lead in market share, capturing more than 2.5x that of
Google Nest and nearly 10x that of Apple's HomePod.
Amazon's smart speakers changed the competitive landscape, giving Amazon
direct access to customers in a way similar to mobile devices.
Today, consumers can easily ask Alexa to purchase any number of products,
from toilet paper to headphones. Additionally, it acts as another channel for a
number of Amazon owned services, including Audible and Amazon Music.
How to Apply Channel Expansion
The key lesson is establishing a direct touchpoint with customers. The good
news is you don't have to create a whole new product category to do so.
What new channels and touchpoints can you create with customers? Is it a
direct, ongoing relationship? Can you continually educate, and motivate new
and past customers?
One fantastic example is Lego. Their Youtube channel has gained 6M+
subscribers, with videos regularly receiving 500,000 - 1M views. Each video
promotes the lego universe, or celebrates a new product coming out. It's one
of the best examples of retention marketing I've seen.
3. Leveraging channel dominance to build an
ecosystem of products

10. Once you establish a channel, what should you do next? Your omnichannel
strategy needs to extend beyond first contact. In Amazon's case, the Echo
was a beachhead. It opened the door for Amazon to not only sell through
voice, but create a whole new category of products to lead in.
The Echo speaker line was really an introduction to Alexa, a new way to
engage with Amazon.
Amazon began expanding Alexa's capabilities in two ways. First, they
allowed other hardware manufactures to use Alexa in their own products via
skills. Second, Amazon invested itself in other form factors.
Today, Amazon sells everything from light bulbs to smart displays to smart
plugs that all use Alexa as it's core differentiating factor.
Once Alexa becomes the default smart system in the house, it becomes much
more likely that customer will add on more products to that system. Further,
each added product adds functionality and benefit, making the whole Alexa
system more valuable to the consumer.
And, best of all for Amazon, having Alexa a centerpiece of the home makes
purchasing from Amazon even easier, multiplying the customer LTV from a
customer purchasing an Alexa based system.

11. 4. Focus on the customer experience
Our final example of Amazon's omnichannel strategy centers on Amazon Go
and their continued focus on the customer experience.
Amazon has had their eyes set on the grocery category for a long time. In
fact, as early as 2006 Amazon began selling groceries online. From an
opportunity perspective, grocery is a massive $653 billion industry and

12. growing rapidly.
However, this doesn't fully get at why Amazon wants to be at the center of
grocery. The truth is, without providing grocery services to their members,
they open the door for competitors to enter and compete with Amazon on
every other category.
Now, after almost a decade, it looks like Amazon is ready to begin rolling out
new store concepts and begin taking a piece of the grocery industry they have
been aiming for.
Amazon Go stores focus on convenience. There is no checkout. As a
consequence, there are no checkout lines. You simply us the Amazon Go app
to enter the store, login with your Amazon login credentials, select the items
you want, and walk out.
The theme of Amazon is the customer. Everything they do in their
omnichannel strategy circles back to improving the customer experience.
Amazon Go stores follow a long line of technological feats used to make
Amazon the most convenient choice, from 1 click checkout to same day
delivery, to now using computer vision to remove checkouts from the store.
5. Improving Brick and Mortar Experience with
Online Data

13. ECommerce makes collecting data easy.
Amazon leverages collected data in a number of ways, including how they
think about traditional brick and mortar stores.
Expanding Into Physical Locations
Amazon is much more than amazon.com.
Currently, they operate 512 physical stores with plans to open many, many
more.
The truth is, the future of retail is multi-channel. Consumers do not shop
exclusively online. Nor do they only shop in-store. They do both. And a
successful omnichannel strategy focused on the customer experience and
convenience needs to have a firm footing in both worlds.
“Amazon is fully aware that they have to be
much biggerin consumables and that
omnichannel is what’s going to work in
consumables.” - Wolfe Research
A successful omnichannel strategy connects offline and online channels.
Below is one example of how Amazon does it.
Leveraging Online Data In-Store:
Introducing Amazon 4-Star

14. My favorite example of how Amazon leverages online data for physical use
is their 4-Star concept.
The store is a physical extension of Amazon.com, using unique displays
based entirely on customer data.
According to Amazon, “We’ve designed our stores around our
customers - what they’re buying and what they’re loving. We’ve
used customer ratings, reviews, and sales data from the hundreds
of millions of products online to curate our store with features like
'Most-Wished-For' and 'Frequently Bought Together'."
While the concept continues to evolve, they currently use three types of
customer data.
 Reviews - The whole store is premised on items sold on
Amazon.com with 4 stars and above rating.
 Sales Data -Sales data is used to identify top selling items, and
helps keep inventory turnover high.
 Customer Data - Lastly, customer data such as Most Wished For
items are identified and displayed.

15. Next Steps...
The next step is to commit to creating the best customer experience for
today's omnichannel shopper.
Next, you need to select the right technology partner. Ideally, they can both
create personalized touch points and connect data across both offline and
online channels.
We've put together an in-depth guide on how to select a personalization
partner here.
If you're interested to see how Barilliance can help your brand, you can
request a demo here.