The success of giant e-commerce businesses are forcing other retail websites to pick up the pace.
Retailers, such as Macy's, Saks, Ralph Lauren and Tiffany & Co., have huge resources to build up their online presence, but no other online retailer can compare with Amazon in terms of innovation in recent years, according to Aram Rubinson, an analyst at Nomura Equity Research.
"Amazon is just revolutionizing retail. I don’t think any other adjective or any other verb would suffice. They are changing the way every retailer on the planet is thinking about retailing, and if they aren’t, they should be thinking about it differently because of Amazon,” Rubinson says.
It's important to keep in mind that the online consumer is wealthier than average. According to a report by Forrester Research, online buyers with household incomes of $75,000 or more represent the largest group of the online consumer population. In fact, they make up more than 40 percent of all online buyers—almost twice the number of those with household incomes of $50,000 to $75,000. These consumers have considerable spending power, making it important for businesses to invest in the e-commerce space.
Rubinson offered a few tips for how retailers can build an e-commerce business fit for today's demanding consumer:
1. Offer free shipping, or at least pay for returns. Having to pay large shipping fees on a domestic order is a huge turn-off for a customer. Retailers like Amazon have created the expectation that postage is free. Studies have shown that many consumers would rather pay extra for the product than have to shell out for shipping.
2. Create loyalty programs to reward the best customers. Big retailers are basing these off of airlines' programs, where the more you buy, the more perks you get. A loyalty program gives the consumer a big incentive to shop at the online store. The online format also allows customers to track their "points" or rewards and be involved with the retailer on a personal level.
3. Demonstrate how an item looks or works using video merchandising. Zappos.com (which is owned by Amazon) gives shoppers a video demonstration of most of the shoes, garments and accessories it sells so they can better evaluate them. Rather than trying to read the dimensions in the fine print, a customer looking for a tote bag can just watch a video of a model carrying it on her shoulder to gauge whether it is the right size. If a business can't do videos of products, photo demonstrations will do.
4. Search online to see what the competition is. A study from Forrester Research shows that more than 30 percent of customers search online for the best deals. There's little chance they will shell out for an item on one website if it's cheaper somewhere else. Being educated gives e-tailers more power.
If customers can order easily with free shipping, there is no reason for them to order on Amazon over any other retailer, Rubinson said. He also points out that specialty retailers have the advantage of offering better products than anyone else.
With a few steps to make the consumer happy, any business' website can compete with Amazon.
Read more OPEN Forum tips for online sales.