Portrait of Dr Kai Hudetz, Managing Director of IFH Cologne
May 23, 2019
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5
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Written by: 
Dr Kai Hudetz

Between stationary shop and Amazon: Never lose sight of customer access

Dr Kai Hudetz has been researching various aspects of retail for years. Since 2009, the expert has been managing director of the Institute for Retail Research (IFH) in Cologne. In the MM guest article, he assesses current developments in e-commerce and analyses the supremacy of Amazon.

Guest article by Dr Kai Hudetz. I have been researching retail issues and advising retailers and manufacturers for 22 years. In 1999, I founded the then ECC Handel, now ECC Cologne, at the IFH, which focuses entirely on retail in the digital age. Since 2009, I have been the managing director of the entire organisation and am still passionate about successful retail.

Hardly any current development is as dynamic and complex as e-commerce. Naturally, it is difficult to distinguish sustainable developments from short-term trends, buzzwords from success factors.

Portrait of Dr Kai Hudetz (Managing Director of the IFH Cologne)
Managing Director of the IFH Cologne, Dr Kai Hudetz

From my point of view, three developments are of central relevance, not only in Germany:

1) The smartphone is THE central point of contact with the consumer, 24/7. We use it in bed, on the sofa, in the suburban train, in the restaurant, in the shop. Those who do not adequately occupy the smartphone of their customer groups will lose customer access in the long run. Our studies also clearly show that the smartphone is increasingly developing from an information medium to a transaction medium with enormous business relevance. AboutYou's success is based on a consistent mobile-only approach.

2) The network effect promotes concentration processes on the internet. Large platforms such as eBay, but above all Amazon, are increasingly regulating customer access. In Germany, Amazon accounts for almost half of B2C online sales, with the Marketplace in particular growing at a far disproportionate rate. Large brand manufacturers are also increasingly using the Amazon platform to sell directly to end customers. For intermediaries, Amazon can certainly represent a strong sales channel in the short term, but in the medium term intermediaries must ask themselves what added value they offer within the value network so that they are not eliminated in the long term. For the stationary trade, Amazon with its enormous range and depth of assortment as well as its customer-centric service poses a great challenge. In many cases, new concepts and great efforts are required to hold one's own against this competition. Amazon is already deeply anchored in the customer journey of many consumers and is therefore the benchmark for stationary retail, independent of whether the latter wants to accept that or not.

Chart showing how Amazon dominates online trade in the years 2010 to 2017. Amazon.de incl. Marketplace turnover rises to 26.4 billion euros. Otto.de turnover rises to 3.5 billion euros. eBay Powerseller turnover rises to 3.4 billion euros and zalando.de turnover to 1.5 billion euros. Figures in sales at end consumer prices in billion euros.
Amazon dominates online retail

3) Voice control is finding its way into our everyday lives at a rapid pace, from smart homes to voice commerce. Once again, it was Amazon that entered the market early with Alexa. Almost half of all car manufacturers already work with Alexa, and the smart home market is rapidly developing new solutions. At the same time the rule applies, whoever operates the platform regulates customer access. It is not surprising that Amazon gives preference to its own house brand when orders are placed via Alexa. Google is trying to counter this with considerable efforts and the Google Home. Since voice control brings enormous convenience advantages with a corresponding degree of maturity - which is not yet sufficiently present in the area of voice commerce - the further triumphal march seems clearly predictable, with enormous challenges for trade and industry not to lose access to the end customer via this channel as well. 

llustration showing the different use cases of voice control. It shows how it is mostly used for information research, whereas it is not yet used extensively for shopping.
Shopping by voice control is still a fairly small niche. Overall, however, its use is increasing rapidly.

The dramatic changes we are seeing in the retail landscape through digitalisation become evident in many other industries as well. Much has already been written about the disruptive potential of Uber for the transport industry and Airbnb for the hotel industry. Here and there, mediation platforms have radically changed the customer journey and thus customer access. Markets everywhere are in upheaval, and business models need to be (further) developed to offer their customers real added value through digitalisation - whether in retail or the banking world.

Especially in retail, it is important to recognise the USPs for one's own business model and to emphasise them. Customer satisfaction, for example, is also achieved with punctual, reliable delivery times and availability of goods in line with a strategically compiled product portfolio. Customer centricity, speed, and agility are the key success factors here.

Editor's note: Guest articles and interview responses do not necessarily reflect the opinion of Merchant Magazine. They are the basis for a mutual exchange around the diverse world of Amazon commerce and e-commerce.

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