How Amazon Prime is Shifting Consumer Expectations
The free two-day shipping for Amazon Prime members has reshaped consumer expectations since its 2005 launch.
Amazon’s customer reviews and personalized recommendations have also contributed to the higher expectations now placed on retail companies.
This article reviews the effects of Amazon’s success, often referred to as “The Amazon Effect.” We also provide tips on how retailers can keep up with the high expectations of today’s consumers.
Use the information to understand how small businesses can thrive in the fast-paced consumer economy of 2019.
How Amazon’s 2-Day Shipping Changed the Retail Industry
Over time, Amazon’s free 2-day shipping has created a culture of instant gratification for online shoppers.
In 2004, Amazon struggled to compete with big-box stores and its frequent outages attracted media attention. Despite its problems, Amazon’s free shipping on orders of $25 or more was working well.
The following year, Amazon enhanced its shipping benefits with a service called “Prime Membership.” For $79 a year, Amazon Prime members received unlimited two-day free shipping.
Often referred to as “The Amazon effect,” the program’s impact on retail businesses would prove a challenge. Amazon’s free two-day shipping eventually became so successful that it changed customer expectations across the entire retail industry.
In 2019, all consumers expect packages to arrive quickly, even when ordering from small businesses.
According to new research, nearly half of shoppers (48%) receive orders within 2-3 days. Forty-five percent (45%) of customers say they won’t buy from companies that deliver packages late.
Providing free two-day shipping requires large-scale operations and advanced technologies. Unfortunately, these requirements are beyond the capabilities of most companies.
To make matters worse, Amazon recently announced it will cut shipping times in half to provide unlimited free one-day shipping to Prime members.
How Small Businesses Can Adapt to Consumers’ High Expectations
Small retail businesses can continue to thrive by streamlining product offerings, communicating with customers, and using outside expertise such as third-party logistics providers.
Fortunately, many small businesses continue to thrive, despite the Amazon Effect. Selling products online is essential to these retailers’ survival, and there are several steps businesses can take to level the playing field.
If you are a small business owner seeking to increase your shipping capabilities, you should:
- Streamline your product offerings to improve your shipping speed.
Reduce the number of products you sell online, and offer a small selection of items that are ready to ship quickly. Your ecommerce sales may only consist of five products, but you’ll build a good reputation with customers and sell more online products as a result.
- Take advantage of third-party logistics providers and keep in mind that Amazon can sell and ship products for you if you’re willing to pay a commission on sales.
- Communicate clearly with customers about when items will ship and arrive at their doorstep.
While it’s tempting to try to compete with Amazon’s fast-moving shipments, it’s essential that you’re honest about when products will arrive. Customers appreciate transparency, and you’ll avoid bad reviews and disappointed customers by setting clear expectations in advance.
As an added measure, companies may consider adding perks similar to the kind that attract Amazon Prime members:
- Customer review system
- Outstanding customer service
- Personalized recommendations for new products
Social media provides an opportunity for businesses to publish online customer reviews and setup customer service options that satisfy consumers.
Finding ways to ship products quickly, providing access to online reviews and customer service, and personalizing customer shopping experiences can help small businesses thrive online.
Above all, clear and truthful communication about when products will arrive is central to the satisfaction of today’s ecommerce customers.
Amazon Prime Expectations Mean Small Businesses Must Adjust
Amazon’s Prime shipping has changed the way customers interact with retail stores, and small businesses must adjust to succeed in the new consumer economy.
Riley Panko leads Clutch’s logistics research as one of the team’s Senior Market Analysts.