How Brands & Retailers Give Away Their Competitive Advantages to Amazon (and Don’t Even Realize It)

Michelle Bacharach
Guest Contributor

Shopper personalization is important, but when taken to an extreme, it cuts off most retailers at the knees as it removes their unique brand points of view, which is something Amazon can never replicate.

Why, in a world where I can buy virtually anything on Amazon – where I get free two-day shipping, get most things cheaper than anywhere else, and conveniently can buy my cat food alongside a pair of blackout curtains – would I ever shop anywhere else?

Like most consumers, I buy things individually, but rarely ever use them in isolation. My couch does not sit in an empty room; it has a rug in front of it, throw pillows and blanket on it, and a table, lamp and some tchotchkes beside it. I don’t carry a drill bit around in my pocket as a lucky charm; I plug it into my electric drill and use it with some screws to mount a piece of art. I don’t wear just a shirt or just a pair of shorts (this only works apparently if you’re a Disney character); I wear a shirt and shorts and a jacket and some socks and shoes and carry a bag.

In other words, customers don’t just buy products, they use them, and they use them for a specific purpose. A purpose which they can either be successful at (I mount my art on the wall) or not (I get arrested for not wearing something to cover my butt). When shopping for a product, no one explicitly asks themselves, “How do I use this product so that I am successful in my goal?” but everyone has to answer this question in order to move forward in the world.

Each retailer or brand has an opportunity to offer unique expertise to help a shopper be successful with what they’re buying. Fashion and home décor brands and retailers can offer style guidance. Home Depot helps me get the right drill bits and screws to match my drill and the purpose of my project. Michaels is an expert at crafting. Foot Locker can help me be the best athlete I can be.

This expertise is part of each of these retailers’ brands. [Note I wrote retailers. Both retailers that sell only one brand and multi-brand retailers have a brand point of view. Saks and Neiman Marcus have very different style “points of view” even if they sell many of the same products.] This expertise is also one of the only remaining things they have to uniquely differentiate them from Amazon. If I want a pair of Stan Smith shoes, I can get them on Amazon. But if I want to be a cooler, more streetwear savvy version of myself, I’m going to buy them from or an adidas store because they’re the absolute only authority on the “Three Stripes Life.” Amazon will never get to own that “Three Stripes Life” feeling because that’s part of the brand identity of adidas.

But retailers trying to compete with Amazon have literally been giving away this unique expertise and brand point of view, which is their main source of competitive advantage. Personalization has been a growing trend in retail. It means that the e-commerce website I see is different than the one you see. Based on my demographic and psychographic profile, algorithms are deciding what products to show to me as “You May Also Like” suggestions. This personalization is super helpful for narrowing down which of 1,000 leather jackets I might be interested in. But, those recommendations will typically show me “You Might Also Like” these five leather jackets and maybe a corduroy one.

Two problems arise: 1) I can’t wear seven jackets with no shirt and no pants (I’ll reiterate: I’m not Donald Duck), and 2) it’s showing me things it thinks I’ll like. It’s not only failing to show me how to be successful with the jacket, but it’s also limiting the products I see to things I’m already likely to buy. I buy a lot of boring black things. It’s not because I don’t like colorful patterns or wouldn’t be inspired by a bright floral dress. It’s that I don’t know how to be successful with many things outside my comfort zone. Personalization holds up a mirror and reflects me back at me. So, I continue to buy the same boring black things reflected back at me by personalization. It’s a race to the bottom in which I’ll continue to buy the same boring things, and buy the same number of things, at the same price points I usually do. I’ll never be a better, cooler version of myself (sucks for me), and I’ll never be a bigger or more frequent spender than I have been before (sucks for the retailer).

To get me out of my style and price point comfort zone, I need a little inspiration and then a little aspiration. Coach me to be a cooler version of myself. Put something new and different in front of me to get me to that OMG-I-LOVE-THIS-NEON LEATHER JACKET moment. Then, hold my hand as doubt sets in and I think, “I couldn’t possibly pull this off, and I won’t wear it enough to justify the fact it’s twice as much as I wanted to spend.” Show me three ways to wear it. Give me that unique style expertise that is why I’m looking for a leather jacket on your site or at your store rather than Amazon in the first place. Then, if I buy that jacket and wear it and feel great in it (read: “success” in the fashion scenario), I’ll have more affinity for your brand. I’ll remember you’ve got my back. I’ll buy more often. I’ll buy more expensive things. I’ll buy things I wouldn’t have. In fact, FINDMINE has found that retailers who consistently provide guidance on how to use a product successfully make between 4-9 percent higher total revenue than when they do not.

An e-commerce site or a physical store that does not provide this guidance but only superficially “personalizes” its offerings to me will quickly become commoditized. Now there’s no expertise, no unique point of view coming through. I don’t know half the cool things the catalog has to offer that I would be delighted with if only I had a little coaching. And now that the brand point of view and guidance are gone, and I’m just seeing me reflected back at me, guess where I can get that same experience, with two-day free shipping, cheaper, and more convenient? Amazon.

The bottom line is that personalization is important, but taken to an extreme cuts off most retailers at the knees as it removes their unique brand points of view, which is one thing Amazon will never be able to replicate.

About the writer: Michelle Bacharach is CEO & Co-Founder of FINDMINE, which leverages the power of artificial intelligence to help stores curate stylish outfit recommendations. Follow Michelle on LinkedIn and Twitter

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