Amazon has built an online retail empire and expectation of customer experience so significant that it has even permeated American cultural norms. Today a visit to Amazon.com to check reviews of products is a shopping prerequisite, while to “order it on Amazon” is synonymous with, ease, efficiency, and front door delivery. Yet, for the company’s competitors Amazon’s success and popularity have inspired a hasty scramble to compete. More and more traditionally brick and mortar retail giants trying to match the prices and service Amazon provides.
We built a data set to understand the consumer beliefs behind Amazon’s success. We found that the company’s emphasis on a positive and wholesome customer experience (CX), helped maintain the narrative, or deeply held belief that Amazon’s actions and policies always place their customers first. The narrative data also helped shed further light on the consumer beliefs of the future of retail, specifically that the ideal consumer focused retail solution is not either online, or brick and mortar but a modernized combination of both.
Behind the Analysis
In every research piece, we use the Protagonist platform to surface, classify, and quantify narratives from millions of pieces of content in social media, reviews, blogs and articles. The combination of computational linguistics, natural language processing (NLP), and Narrative Analytics allow us to understand the deeper beliefs or narratives present in content. We can then calculate the individual impact or size of each narrative relative to the conversation as a whole. The Narrative Analytics process, gives us the ability to assess significantly more data than traditional research methods and deeper, richer insight than social listening, or media monitoring.
The Narrative Landscape
In order to assess the data empirically, we score calculate each narrative’s “impact”, a measure of its volume and social engagement. Amazon Domination, garnered 42% of the narrative impact and was the largest narrative in the landscape. It focused on content that framed Amazon as a retail juggernaut, eating up competition and constantly expanding. It also captured the belief that Amazon would continue to grow globally and in doing so, take on and ultimately dominate different aspects of the retail market and, evident most recently in its pushes into grocery and fashion. Powered by financial success, Amazon Dominationfurther represents the perception that Amazon was now a constantly growing giant on par with the likes of Google and Apple and its success would lead to the “death” of traditional brick and mortar retail.
The Beliefs Behind Amazon’s Success
Despite the sheer size of Amazon Domination, the most interesting insight from the data came from three narratives that together represented just under half of the conversation. The most critical is Customers First, which drove 13% of the narrative impact and captured the belief that Amazon as a company genuinely cared about the experience of its customers. For consumers, journalists, and critics, the deals and benefits associated with buying on Amazon and especially and as an Amazon Prime member, were evidence that the retail giant was focused on customer satisfaction. This perception is critical to Amazon’s ongoing success and driven by a relatively straightforward belief: the customer experience should be easy, efficient, and pleasant.
While Amazon is perceived as a company dedicated to taking care of its customers, be it the best deals, or something simple as free shipping, the company’s reputation as an innovator was the second component in its success. The narrative Future of Retail drives 17% of narrative impact and captures the belief that Amazon, as a company, is an innovator and influencer for the retail industry through, checkout-less grocery, artificial intelligence driven shopping, or drone powered day-of-delivery.
The narrative captures the perception that Amazon is a best-in-class example, but also a compass for retailers pointing toward the future of the industry. Together with Customers First, these narratives capture the critical positive beliefs consumers have about the company that are inherent to its positive public perception.
A Largely Untarnished Image
The small fraction of negative narratives about Amazon is further evidence of the power of its brand in the public eye. Two small narratives capture the little public dissatisfaction with the giant, The Bottom Line at 4% of narrative impact represents the belief that Amazon is just like any other corporate giant, only focused on profit, and devoid of any care for its employees or society. Savings Illusion, which is even smaller at 0.2% of impact, captured content driven by the belief that the “deals” provided by Amazon were misleading and they used negative advertising. Yet, both of these narratives were largely drowned out by positive narratives shown in an analysis of the landscape over time.
Temporal changes in the Amazon landscape were heavily influenced by key company and industry events. For example, as competitors like Walmart and Target tried to match the prices and shipping benefits provided by Amazon last fall, the narrative Amazon Domination surged. Likewise, conversation about Amazon opening a checkout-less grocery outlets drove major spikes in Future of Retail in December and stories about the acquisition of grocer Whole Foods pushed up Amazon Domination in June of 2017. However, with the shifts and movement of narratives that were both favorable and neutral to the company, the impact of the negative narratives was almost completely minimized. Similarly, when we examine the narrative balance of the top sources in the data set, we see the same pattern: the presence of unfavorable narratives is very small and largely overwhelmed by favorable and neutral beliefs about Amazon.
Negative content about Amazon does exist within the top sources, but only captures a relatively small fraction of narrative impact. Among the top ten sources, only stories in TechCrunch, Bloomberg, and CNBCincluded the negative narratives The Bottom Line or Savings Illusion. This is in stark contrast to seven of the same top ten sources that all provided content that included largely positive beliefs about Amazon. Additionally, the top two sources in the data set Examiner.com and The Atlantic only provided content that reflected neutral beliefs.
The Upshot for Competition
It is clear more than ever, Amazon’s dominance in the retail space is widely known and accepted in public conversation and it is reflected strongly in the data. For competitors two options exist: follow Amazon’s example, or double down on their background in brick and mortar. Whatever the strategy, there is a significant hill to climb as competitors have the largest signature in Amazon Domination with Target driving 21%, Walmart 7%, and both eBay, and Best Buy each driving 1% of narrative impact. Presence in the narrative is associating competitor brands with a dominant Amazon set to capture the entire market. However, there is a shining light at the end of the tunnel.
Two neutral narratives are critical to understand for the rest of the retail industry competing with Amazon. First, the narrative Innovation Drives Competition drives 4% of narrative impact and captures the belief that Amazon’s success is forcing traditional retailers to innovate via lower prices or better service for the benefit of the consumer. For companies trying to innovate and replicate the customer service, deals, and benefits provided by Amazon, presence in this narrative is a barometer for success. Yet overall signature for key competition is quite small with Target driving only 1% of impact and Walmart only 2%, while Best Buy and eBay are nonexistent.
The second narrative, Online with Brick and Mortar represents 14% of narrative impact and captures the belief that despite Amazon’s dominance in online retail what consumers really want is the option to have a positive in-store customer experience as well as ability to purchase goods online.
Assessments of Generation Z shopping preferences that favor brick and mortar to online retail heavily influence this narrative. The good news is this narrative is the ideal white space for traditional retail competitors, who unlike Amazon, already have established brick and mortar locations. Still, competitor presence is small with Target responsible for only 7% of impact, Walmart driving 5%, and eBay and Best Buy not showing up at all.
The Narrative Take Away
The public perception of Amazon’s success is driven by the belief that the company not only innovates for the future, but cares about the experience of their customers. We’ve seen in this data set Amazon’s online dominance over traditional retail was thought to put brick and mortar competitors in an early grave. Yet, a deeper analysis shows that the traditional retailers are at risk, but not quite at death’s door.
The narrative-based keys to the future lie in a balance of online and in-store experience that provides innovative service and customer benefits. Amazon’s dominance over the retail market puts them at a unique advantage over their competition, but there is a chink in every set of armor. Competitors who can amplify their presence in narratives about positive customer experience and innovation, while minimizing their association with the belief that Amazon is putting them out of business, have more than ample room to grow.