In the Amazon era, online customers still crave a personal touch — This is good news for Direct Sellers
This post was first published on March 24th, 2018. Written by LK.
Of all the online retailers, Amazon is arguably one of the most innovative companies in the world today. Jeff Bezos, the company’s CEO, built his company around one key idea — Putting customers first. Over the years, Amazon has been laser focused on creating an innovative and agile online retail environment. The value to the customer is simple; Amazon simplifies the shopping experience by offering the convenience of a broad product selection, low prices and next-day delivery. Amazon’s brand recognition, return policy and the protections of credit card providers give customers peace of mind. With close to $180 billion in annual sales, Amazon has become the benchmark for retailers across the world and not surprisingly competitors are scrambling to respond.
Interestingly, the premise behind Amazon’s business model is not new. Direct Selling companies across the world have long offered a similar value proposition to its customers. Avon, Tupperware, Shaklee and Amway have been offering a more convenient alternative to traditional retail for more than 60 years. Their value propositions include innovative products, personalized service, on-door service and yes, a referral rewards program. Their customers can purchase products from a local representative knowing that the products are backed by a real company. Sound familiar? Well it should as this is the basic business model Amazon has adopted and improved upon.
Jeff Bezos understands that convenience is everything to a customer and technology allows Amazon to optimize the customer experience. His innovative approach to link a vast network of retailers under one umbrella has created a very efficient marketplace. The convenience to the customer is indisputable — It provides a seamless customer experience, while also driving down customer prices. With all its brilliance, the Amazon model is still lacking a key ingredient, a personal connection between customer and seller. Amazon does not educate customers on the various similar product offerings available on its site. Yes, customer reviews are helpful but are still directional at best. There simply is no substitute for a product recommendation from a person that understands your needs and whom you trust. This is the missing piece online.
Reputable Direct Sellers offer a personalized customer experience. Traditionally independent sales representatives host casual parties where they introduce products to friends and acquaintances. The casual setting of a home party allows for product sampling, dialogue and testimonials. The attendees both buy into the representative’s pitch and the value proposition of the products. This relationship between customer, sales representative and company is unique to Direct Selling and a distinct competitive advantage. The host is essentially putting their reputation on the line on behalf of the products and the company that they are promoting. This is influencer marketing at its best and a competitive advantage for Direct Sellers.
Direct Sellers are in a unique position. These companies already have thousands of micro influencers in their sales representatives who offer convenient, honest, and valuable product recommendations on a daily basis. Additionally, the sales representatives are supported by large corporations whose main purpose is to ensure that product orders are fulfilled and shipped directly to the customer. Direct Sellers already possess many of the key ingredients for creating customer convenience, but the industry also lacks a few critical factors in the quest for the proverbial ideal customer experience. Technology is a major limiting factor and so is the public’s acceptance of the industry as a whole.
Amazon’s current competitive advantage lies in its technology and supply chain. The company takes the order and ships the product to the customer within 24 hours. In the case of Direct Sellers, the turnaround time is longer. It is not uncommon for an order to arrive 7 or 10 days after the order was placed. In order to compete with the likes of Amazon, Direct Selling companies must invest in technologies and infrastructure that speed up order processing, fulfillment and shipping. Additionally, free shipping is now the norm and must be part of any company seeking to endear itself with its customers.
The Direct Selling industry has credibility issues. This stems from the business model that relies on paying commissions based on sales. Sales representatives are compensated for their personal product sales and also based on the product sales of their sales teams. In general, the larger the team, the more commissions a representative earns. This fact is the Achilles heel of the Direct Selling industry. Companies compensate their representatives for hosting parties, tending to customer needs and building sales teams over time. Opportunistic sales representatives, trying to game the system, focus only on building teams often neglecting customer needs; a practice that is guaranteed to wreak havoc on customer satisfaction. In order to gain acceptance of the general public, it is incumbent on Direct Sellers to ensure that the business practices of their representatives are 100% in sync with the values of the company. Only by reigning in the practices of a few bad actors can the industry gain broader public acceptance.
The ideal customer experience boils down to one word — Convenience. Today’s customers are abandoning traditional time-honed practices such as going to the grocery store, the mall and even to specialty retailers in favor of online retailers. Technology is causing customers to place higher demands on service providers in terms of product quality, price point, and delivery options. Additionally, younger generations are placing a greater premium on their time and going to the mall is no longer an option. They increasingly rely on online options to meet their needs and utilize their social network to vet the quality of service provided. Amazon and other online retailers have made great strides on their quest for the optimal customer experience but there are still more that can be done. Customer convenience is more than low prices and swift shipping; it includes on-point product testimonials and recommendations. It also includes a referral program that rewards customers for their opinions and their referrals. Direct Sellers are uniquely equipped to answer the call by mobilizing their micro influencers and offering unique products that exceed the needs of an increasingly demanding customer. In order to achieve this, Direct Sellers must match the technology and infrastructure of online retailers such as Amazon. Additionally, Direct Sellers must curb bad business practices inside their walls. Only by offering convenient, affordable, rewarding and swift solutions can optimal customer satisfaction be achieved.
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