This ecommerce strategy article is an excerpt from our new book, The Ultimate Ecommerce Email & SMS Playbook. We’re diving into our ecommerce strategy chapter focused on the 7 Reasons Why Ecommerce Customers Leave Your Brand.
Reason 5. Meet the Tech Middlemen
For the previous four reasons, we dove into Amazon’s immense value, selection, scale, and flywheel. Whether you’re able to compete or not with all those hurdles, we can certainly agree with one thing: customers love the Amazon experience. So, it’s no surprise that customers prefer to shop at brands that can best replicate the Amazon experience. Which companies are best-positioned to replicate that digitally-native experience? Silicon Valley startups, apps, and social media.
If you want to level the playing field when it comes to customer experience, pair with an app or technology that can match and even outperform Amazon’s app and experience.
If you’ve paired yourself with great technology, you’re not alone. DoorDash, a restaurant ordering app, and Instacart, a grocery shopping and delivery app, are growing by 25% year over year.
Why are these brands growing so fast? Their reasoning can be summarized like this: “We’re going to make buying your favorite groceries or buying your favorite restaurant meals super-easy with a user-friendly app, huge selection of restaurants, order tracking, and fast delivery!” Sounds great! Essentially, they’re replicating the Amazon experience for their industry.
Another example that may be more relevant for e-commerce brands is ShopRunner. ShopRunner, a membership service for shoppers that was recently acquired by FedEx, promised free two-day delivery and free returns for thousands of e-commerce brands. If your brand partnered with ShopRunner and the customer signed up for ShopRunner, presto! Two-day delivery and free returns on your order were guaranteed.
Here’s the problem. You’ve enabled an app to become a middleman between you and your customer. These apps fuel their growth by owning customer data, which helps them maintain customer loyalty, predict churn, and create better acquisition strategies. Apps positioning themselves between you and your customer is key to their growth strategy, and here’s the end result: your customers become loyal TO THE APP, not you.
Think beyond the immediate sale you may gain from the app you onboarded. Go further back to Amazon’s flywheel also. DoorDash has the users, and they have the selection of restaurants.
At any point, DoorDash could change their app to give preferential treatment to advertisers or higher-paying restaurant chains. DoorDash could demand a premium from you or place you towards the bottom of their search engine. A small restaurant has nowhere to turn: a ton of customers come from DoorDash, and businesses can’t turn their back on that revenue stream. You’re in a major quandary now.
In these scenarios, you need to pick your poison. Enabling a technology that you don’t own to help you meet customers where they expect to be met and replicate the Amazon experience will lead to two trade-offs: trade away customer data or trade away profit margin.
In some cases, you may be trading away both. Customers will end up being loyal to the app’s experience and convenience instead of loyal to your brand.
And if a competitor has the same app, you have no competitive advantage. That’s reason number five why customers will leave you this year; loyalty to the app experience and not to you.
We’ve dived into the app and tech side of things. Now let’s talk about the social media angle, namely Meta. We all know Meta by their other brands: Facebook, Instagram, and WhatsApp. These brands are no stranger to e-commerce; social commerce is growing fast, projected to rise double digits through 2023.
Although the vast majority haven’t used social media to purchase products, COVID-19 expedited a transformation in buying habits. With Instagram Shop, Facebook Shop, and WhatsApp acting as a key customer service option, it will only be a matter of time before Meta becomes a key player in e-commerce.
Of course, selling on Meta means sacrificing a slice from your profit pie. If paid social wasn’t already driving down your margins, selling on Facebook will certainly not help you become more profitable.
Worse, Meta has little incentive to share more data points with you if it means you’ll spend less on ads or take customers away from their ecosystem.
Want proof? This woman’s handle on Instagram was @Metaverse. According to The New York Times, when Facebook changed its name to Meta, her account was instantly disabled for “pretending to be someone else.” Here’s an excerpt from The New York Times article:
In October, Thea-Mai Baumann, an Australian artist and technologist, found herself sitting on prime internet real estate.
In 2012, she had started an Instagram account with the handle @metaverse, a name she used in her creative work. On the account, she documented her life in Brisbane, where she studied fine art, and her travels to Shanghai, where she built an augmented reality company called Metaverse Makeovers.
She had fewer than 1,000 followers when Facebook, the parent company of Instagram, announced on Oct. 28 that it was changing its name. Henceforth, Facebook would be known as Meta, a reflection of its focus on the metaverse, a virtual world it sees as the future of the internet.
In the days before, as word leaked out, Ms. Baumann began receiving messages from strangers offering to buy her Instagram handle. “You are now a millionaire,” one person wrote on her account. Another warned: “fb isn’t gonna buy it, they’re gonna take it.”
On Nov. 2, exactly that happened. Early that morning, when she tried to log in to Instagram, she found that the account had been disabled. A message on the screen read: “Your account has been blocked for pretending to be someone else.”
What’s the moral here? You and millions of brands are just renting data from Meta, leasing space to create posts and stories that get likes, comments, and shares. With one algorithm change or shift in strategy, your presence on Meta can be changed or deleted for good. And Meta has done this before; remember when Instagram deleted fake followers or when Facebook deprioritized organic business page posts over friend posts? History is not on your side.
The point is this: Meta is in a fantastic position to capture some of your sales and take a piece of your revenue pie away from you. As mentioned above, customers will become more loyal to the app, to the platform, to the social medium, instead of you.
Placing apps, technologies, or brands in between you and the customer is a guaranteed way to lose customer loyalty. That loyalty may erode quickly or slowly, but it will erode. That’s reason number five for why brands are losing customers.
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