This article was originally published October 2nd, 2018
Entertainment and retail thinker Stefano Salvischiani is a master asker of important retailing questions. He usually has some great answers too. We recently talked about Amazon’s retail strategy, prompted by the opening of the company’s ‘4-Star’ store in NYC. The store is a cracking idea; selling only the products that Amazon knows New Yorkers like and only those items that score 4+ review ratings. Oh to have that sort of depth of data! The question asked was about Amazon’s core model, is that model to only ever supply the largest possible range in the most convenient possible way? In other words to be extremely low-friction all the time.
It’s a great question. One of the most important considerations is that Amazon has never called itself an Internet business; they believe themselves to be a ‘customer business’. That they are devastatingly low-friction is a part of how they’ve delivered on this but it isn’t dogma. The various movements into physical spaces all make sense because in each case they’ve worked out how to do something significant to improve customer experience. Bookshops that stock the books they know local customers like, the data-driven 4-star store, and convenience stores that are more convenient.
If you consider Amazon in terms of friction vs reward (FvR) this makes total sense strategically. Online, nobody offers lower friction, and we know that when given no better option on the reward-side customers will revert to low friction as default. Amazon clearly know that lowest friction is a default and not a given because wherever they can add reward they do so. Amazon Go’s headline is no till convenience but the product offer is fresh and compelling too, they’re nice stores to be in. The bookshops are a pleasure to browse and to shop, Prime too loads the reward-side with content, exclusives, and events as well as being a paid friction-reduction scheme.
That’s because reversion to lowest friction is a customer default whenever reward is low or missing. But we’re seeing time and again that experiences that offer a more attractive balance of friction vs reward can win against pure low-friction/low-reward offers.
This is the whole basis for Uncrowd’s existence; to index friction vs reward vs competitors to find those combinations that can retain and win customers. It’s tough to win customers from Amazon but understanding your FRi (Friction/Reward Indexes) is both a good start and, possibly more importantly, a powerful tool to keep the customers you already have.