A recent survey revealed that the e-commerce giant is struggling to generate loyalty among the newest generation of shoppers. Conor McGrath, Head of UK Clients at parcelLab, looks at what’s putting them off Amazon and how other retailers can gain from it.
E-commerce in all its forms continues to grow, taking an increasingly larger proportion of total retail sales. In the UK in July 2019, online retailing accounted for 19.9%, an overall growth of 12.7% when compared with the same month a year earlier, according to the Office of National Statistics. Globally, the proportion rose to 10.2% during 2017 overall, the latest figure currently available, and is expected to reach 17.5% in 2021, according to figures from eMarketer and Statista. Despite this, online retailers rest on their laurels at their peril.
More success for the sector means new entrants and so more competition. What’s more, as different demographics come online, new challenges emerge. The spending power of next group of shoppers, Generation Z, is steadily growing, with the older members hitting their 20s. Although Amazon commands the greatest loyalty of all online retailers, according to a recent survey by customer.com, it is struggling with its younger audience. A new Wunderman Thompson Commerce study of over 15,000 consumers found younger shoppers reported less satisfaction with the retail giant than older generations reducing its loyalty rating among Gen Z.
So what’s turning young people off Amazon? The answer could provide a route for other online retailers to exploit. The study reveals that 16 to 24-year-olds are less likely than older shoppers to believe Amazon provides the best experience when it comes to:
- Customer service
- Easy returns
- Ethics
Addressing these areas will help you to not only avoid alienating Gen Z shoppers, but also potentially strengthen your position against Amazon and your other rivals.
Customer service
In terms of online retail, the most emotional part of the customer journey starts once a purchase has been made. Shoppers want to receive their goods as quickly as possible, and be kept up to date on their progress. Most online retailers have refined their browsing and buying experience to the nth degree to make the journey to check out as smooth as possible. This means the real gains in customer service can be made once ‘buy now’ has been clicked.
Most retailers leave post-purchase communication to their courier company. In fact, only 11 of the 100 largest online retailers in the UK contact their customers directly during shipping, according to parcelLab’s UK Ecommerce Shipping Survey 2019. Bringing this in house allows you to provide a more attentive and personal service – that’s also branded and in your tone of voice – when your customers need it most. Any problems can be flagged to customers early and dealt with. You can also make them feel special by sending personalised offers. Overall, it can significantly improve the customer experience, driving 75% of shoppers back to your website*.
Easy returns
There has been plenty written about retail return policies over the past few months following the decision any ASOS to suspend the accounts of those shoppers returning too many items. Abuse of the process should be discouraged, but online retailers first need to ensure they are providing the best possible return service, because, as revealed in the Wunderman survey, it really matters to customers. In fact, outside of Gen Z, over two-thirds of all shoppers check an ecommerce website for its returns policy before making a purchase, according to the UPS Pulse of the Online Shopper study.
‘Easy’ in this area means enclosing a paid-postage label with each order and offering an option for the package to be dropped off at a local collection point – or even providing a collection service – to make returning goods as painless as possible. Also, take control of the returns shipping process in the same way you should during delivery by informing customers promptly when you have received the returned item and when you have paid the refund. Some 22 out of the UK’s largest 100 retailers don’t provide a label or alternative returns options, so by doing so you are not only appealing to Gen Z, but also stealing a march over a number of your rivals.
Ethics
Aside from responsible product sourcing and treating your staff well, you can make the biggest difference from an ethical retailing standpoint by offering sustainable delivery options. Again, this goes beyond Gen Z with 43% of shoppers preferring retailers to offer this, according to recent research by Doddle.
First, you should make sure your operations are as sustainable as possible. Then you should ensure your standard delivery option makes the minimum impact on the environment. Ask your existing courier company what their sustainable policy consists of and how it can be improved. Find out if there are any couriers using electric vehicles and how much this costs. Even if you don’t move all your delivers over to electric, you can at least offer this as an option to customers at an extra charge.
Ethical also means generally treating your customers in a respectful and fair way. So keep delivery and returns costs to a minimum to prevent customers feeling they are being ripped off. Refund payments for returns promptly. And don’t enforce radio silence as soon as you’ve got their money in the bank.
Looking after Gen Z can help future proof your business and addressing the three factors above is a great way to ensure you’re hitting the mark.
By Conor McGrath
Head of UK Clients
* Source: parcelLab ROI metrics across its customer base