It is no longer a secret—Amazon is moving into the home furnishings business. Quickly. Last year Amazon did over $3 Billion in furniture sales—and that’s with furniture not being the core focus! To strengthen their grip on the furnishings niche, there have been recent confirmed reports that Amazon is launching two new private label furniture brands: The Rivet– mid-century modern living room– and Stone & Beam– higher end upholstery, to further display the commitment Amazon is dedicating to the industry.
I would argue that Amazon selling furniture is more than just trying to sell product in another space. Recently I had lunch with a friend who works in the private equity field, specializing in technology companies. He made a very interesting comment when talking about trends he sees with his portfolio companies
He started by talking about how technology has/is removing many layers of competition. We talked about current businesses that will eventually be defeated by companies that do not exist today. Customers are agnostic about where they buy from; all the customer wants is a quality product, reasonably priced, with outstanding service. The key comment he made was that businesses really need to own their customer. This is not a cheapest price, most advertisement issue; it’s about owning their customer and providing the best possible service to keep them coming back to you.”
Going full circle back to Amazon: They know they own their customer. With their Prime subscribers, outstanding customer service and logistics always improving (faster, cheaper and able to ship larger items easily) Amazon owns their customer. It does not matter if their customer is looking for toothpaste, furniture, or groceries—Amazon knows that a customer will give them the chance at making the purchase through them.
Owning your customer is more than just putting out ads with special prices for the week; it is more than a pretty, transactional website. Those are elements (tools) to get the customer interested in your store. How you get them to buy from you one time and have such a great experience that they continue coming back to you repeatedly is the winning advantage. A couple things that come to mind are:
– Customer service that is friendly, resolves customer issues quickly and offers the customer a reason to come back for their inconveniences (discount or other personalized offer)
– Logistics that over delivers on customer expectations—think quick, cost effective delivery and setup (not curbside)
– Product offers that customers have expressed they are interested in—either through their online product search or products they saw in your store.
All of the above concepts—plus more that are still being developed—are part of the Omni channel experience. This is how the best retailers—Amazon, IKEA, Wal-Mart—own their customer base.
There is no doubt that Amazon will be in a brick and mortar business beyond their Whole Foods acquisition at some point in the future. They struck a deal at Kohl’s as a place for consumers to drop off returned online purchases and to sell Amazon voice activated devices that allow customers to order products from the comfort of their own home. Alexa, send me a Serta recliner. With struggles at Sears, JC Penneys or maybe even Macy’s how long will it take before Amazon makes their next big storefront acquisition. Your only means of survival over time is to own your customer. Do what the customer wants or needs better than anyone else and you win.