Within the column View from the North on the Media Marketing portal, CEO at McCann Copenhagen shares his view on the changes about to happen when Amazon's Alexa enters the European market.
Source: Bureaubiz, Denmark
As Amazon and its voice-based assistant Alexa are fast approaching European markets, it is becoming the biggest gate-keeper for how well grocery and household brands perform. McCann Copenhagen CEO Tobias Smidth-Fibiger gives you 7 tips on how to get past Alexa.
During this year we can expect to see Amazon in the Nordic market and who knows when the Chinese counterpart Alibaba.com, booming on the e-commerce scene, will enter the stage?
Danish e-commerce businesses fear Amazon will take over all e-commerce due to their superior financial strength and global distribution system. And with valid reason: CNBC estimates that 44 percent of all internet trade in the United States in 2017 was via Amazon. The same year Amazon did 5 billion shipments.
Amazon Prime – the world's largest loyalty club
Part of the secret of Amazon's great success is Amazon Prime - a subscription service that gives subscribers a number of benefits such as free shipping and faster delivery.
More than 52% of all US households have already enrolled in Amazon Prime and the number is steadily increasing.
With Amazon Prime, Amazon has created a loyalty and growth engine resulting in that you as a consumer in principle don’t need to go elsewhere than Amazon to buy consumer goods.
Amazon knows you, has your address, payment information and purchasing behavior, and can continuously recommend items that suit your needs or match your last purchase.
But one thing is that e-commerce companies like Nemlig.com, Coop.dk, Coolshop.dk and Elgiganten.dk are meeting a challenging time - household brands are just as well.
Household and grocery brands have, historically, had some strength in terms of e-commerce, considering that consumers purchased peace of mind by choosing a known brand rather than an alternative private label brand.
But with Amazon Prime, that excitement will end when e-commerce really gets its very big breakthrough in Denmark.
”Alexa! – we`re out of kitchen rolls”
The spoilsport is called Alexa and is Amazon's answer to Apple's Siri - an intelligent and voice-based assistant that, through a small freestanding device on the kitchen table, understands what you say to it.
Alexa is thus Amazon's humanized extended arm at home and, despite its charming voice and helpful attitude, it is Amazon's Trojan horse, which can make grocery brands lives miserable.
The fact is that Alexa, among many practical features like sound and light control in your home, also can act as your personal shopping assistant. It writes items on the shopping list at your command and makes sure that the goods are bought and delivered to you without you lifting a finger.
This obviously sounds fantastic - and it is! But this is also where the problems start if you are a household or grocery brand. Because what is it really that you ask Alexa for?
Do you ask Alexa for Heinz or Ketchup or Ariel or laundry detergent?
According to the British retailer Popai, 76% of all purchase decisions are taken in front of the shelf in the supermarket, which with many opportunities for stimuli in the form of packaging, label design, promotions, shelf wobblers etc. gives the brand a real opportunity to communicate and create recognition at the point of sale.
But with Alexa, you make the decision on purchase at home without any kind of stimuli.
If you ask Alexa for a category product, such as laundry detergent and not a specific brand, it will give you some options based on Amazon's earnings margin and thus Amazon's private label products will always be the highest priority.
There is no room for numbers 2 and 3
If the future is as described above, we can no longer just run business as usual. With Alexa at the helm it will no longer be a question of choosing one supermarket rather than the other or about shelf placement, flag promotion, pallet wrap and a sharp price.
It will be all brands against all brands - managed and controlled by Alexa, and there is room for only one brand on the top-of-mind list. So your brand must be top of mind - not in top 3 but top 1.
Who wins?
So what do we do when the 'moment of truth' is moved to a greater extent from the physical store and online?
It's hard to predict what the new controlling market players like Amazon and Alibaba will mean in the long run for the classic household and grocery brands and how we as consumers will act in our buying process.
Regardless, as brand-marketers we must relate to a new mindset in our way of going to the market and communicating, and I believe that the winners of the first battle will be the brands who work very focused on some of the key points below.
7 good tips
- Think like a retailer
The stronger and the more direct the relationship with the consumer, the easier brands can get around Alexa.
It can be a successful permission strategy that allows you to communicate and sell your product directly or through small events like pop-up retail or concept stores that provide opportunities for creating relevant services and positive experiences for the consumer.
With e-commerce having taking place for almost 20 years, we saw similar responses like when Nike started building their own stores to create a direct relationship with their consumers rather than being dependent exclusively on retailers.
Of course, not all brands can be as offensive and the idea of kitchen roll brands should do something like this is obviously absurd. But the idea that brands start to think like retailers and thus come closer to their customers is not.
- Strengthen the emotional ties
The power of the brand can only be measured from the receiver's point of view. If the brand does not have a strong emotional contact with the target group, it will never be top of mind with Alexa's future users.
The insight-based storytelling and branding has therefore never been more relevant, but with the physical store out of the equation, it is even more important to have a real role in the consumer's life and create the necessary preference before the moment of purchase.
- Drop many product variants
Fewer stock keeping units (SKUs) with even catchier brand names that are easy to remember and that match the way we order products via Alexa can be a way to avoid confusion at the moment of purchase.
If you are looking online for the Neutral laundry detergent brand today, you will have the choice of 8-10 variants and sizes. This will be a potential disaster for a consumer to cope with without visual stimuli.
- Be clear in call-to-action
Amazon Prime remembers your previous purchases and therefore it is important to come first on the list so your brand is automatically suggested by Alexa at the next purchase.
Therefore, we can expect to see call-to-action, which is even more tactical and clear in the instruction of consumers in what to order: "Alexa, order Neutral liquid detergent for colored fabrics" instead of "Alexa, order detergent."
- Reward your customers
Everything indicates that Amazon's algorithm will prioritize brands with the best user- ratings. Therefore, the number of stars your brand or product has at Amazon is crucial to how often Alexa will propose it at the moment of purchase.
We can expect to see an increased focus on creating extra good experiences with the brand including good customer service and calls to rate a brand on Amazon if you have had a good experience.
- Think of Alexa as a marketing and content platform
The media strategy efforts will also continue to embrace Voice as a new pay-to-play element, and Voice Search Optimization must be an integral part of the overall search strategy as it will determine what brand Alexa will provide.
And like Google Search, Voice Search will be governed by the auction principle based on Alexa's own algorithm.
- Create relevant content
But Voice Search can also be used for anything else but just ordering a product. General Mills, in collaboration with Amazon, has developed a content platform for Betty Crocker, called 'Ask Betty', which contains tips for baking and cooking.
New thoughts, new opportunities, new challenges... Amazon knocks on the door and the only way is to make the most of it.