Amazon is the largest online retailer in the world, with 244 million active customers in 2014, producing $74.4 billion in revenue. But the impact of Amazon is not the growth figures, or number of customers, or indeed the market penetration. It is the way it has dominated a fundamental shift in the way we shop.
An April 2013 survey by Dimensional Research of 1,046 active shoppers revealed that an overwhelming 90% of respondents who recalled reading online reviews claimed that positive online reviews influenced buying decisions, while 86% said that buying decisions were influenced by negative online reviews.
The survey demonstrated convincingly that customer service impacts revenue, with participants ranking customer service as the number-one factor impacting vendor trust.
The effect of the Internet on our choices of products, method of purchase, and brand loyalty has been the explosion of two new behaviours: both facets of shopping that were once a small, personal and often ill-informed part of our psyche.
Customers have become procurers.
And consumers have become prosumers.
Let’s take these in turn.
We procure our products using fast and easy-to-use online tools that can be with us at all times. These tools are agile, and they can respond to serendipitous chance or last-minute requests. They also acknowledge our important strategic and regular requirements.
It is a step change – a giant leap forward – and for the first time reconfigures every aspect of our "old" notion of shopping. How much things cost, why, and whether they could be cheaper are questions we can ask and, more importantly, answer. It is the 'consumerization' of Information Technology.
Ultimately this consumer shift requires one over-arching company change: all businesses must now behave like tech brands.
The geeks are in the boardroom
Instagram’s CEO, Kevin Systrom, was a self-taught programmer. Facebook’s CEO, Mark Zuckerberg, began writing software before entering high school, and still keeps a hand in coding today. Microsoft’s Bill Gates, Amazon’s Jeff Bezos, Google’s Larry Page … the list goes on.
The techies who were once in the basements of organizations are now moving up to the executive suite and providing solutions about how the procurers are now shopping, by gathering our data and creating Internet-enabled tools to assist us.
An intriguing game is being played. Shoppers are procuring through access to more data and an enhanced always-on experience, and service suppliers and retailers are examining each and every personal commercial motive with a view to bringing bespoke tech solutions to the process.
At the first suggestion that we cannot find what we want, we jump ship to another vendor. But in a nanosecond we can be offered two or three alternatives or persuaded into a different product or service before we move on. We have to learn about acquiring tools and developing skill sets to optimize our product purchasing patterns.
Target, the US retailer, offers an interesting tool to its customers. 'Cartwheel' is Target’s smartphone app that lets you scan items as you put them in your basket to comparison shop for savings.
And Amazon.com has Amazon Prime, a multi-layered program that combines volume discounts with free shipping, media downloads, music streaming and video streaming a la Netflix.
But procurers are more than enhanced online shoppers. 'Where' they receive their information is as important as 'how' they receive it.
From the mid-1950s, marketing was essentially an in-home experience, pumped directly into the home by TV, radio, and the newspaper delivery boy.
Today marketing has moved out of home. It is carried out on our many devices and travels with us wherever we go; out of home is the new battlefield for our hearts and minds, and this is having an unexpected effect.
Bricks and mortar retailers, whose prophesied demise was once a boon to gumptious, go-getting online retailers, are now free to compete on their own territory–out of home–but with the advantage of Internet-enabled technology.
But the future looks even more interesting.
As procurers in cyberspace, mobilized to act by the accommodation of Internet-enabled tools, driven to precision by data flows in and out of our devices, and inspired by a new level of convenience and self-service, we will see our new behaviours as operating in a new retail reality.
The term 'prosumer' was first coined by the late futurologist Alvin Toffler in his 1980 book, The Third Wave. Toffler’s 'proactive consumers' – prosumers – were regular consumers who were predicted to help, personally improve, or design the goods and services of the marketplace, transforming it and their roles as consumers.
The impact on businesses is fundamental.
The integrated way in which people now interact with companies means that today’s consumer is as much a part of the organization as the employees within it.
Smart organizations will respond and adapt their products and services instantly to the behaviour and demands of the integrated prosumer. What facilitates this is the profusion of consumer-centric technologies, interlinked and driven by the Internet.
Often called the 'Internet Of Things', this machine-to-machine connectivity is not only allowing stores to talk to warehouses and warehouses to talk to smartphones, it allows products to talk to each other. In fact, any object can be embedded with software that enables those objects to collect and exchange data.
When I order something from Amazon on my smartphone I am simply plucking what I want directly from the warehouse and giving instructions as to where I would like it delivered.
Airline apps that let you create your own boarding pass and allow you to choose your seat are doing the same thing. You are issuing the boarding pass to yourself. Therefore you are instantly working for the airline and being a customer at the same time.
To turn a consumer into a prosumer brings enormous advantages; companies can now live in the pockets of their customers and be ready to serve up personalized sales at the touch of a screen.
We have entered an age where we are acquiring and procuring, bringing together multiple data streams, uniting virtual and actual worlds, and making winning purchase decisions with the dexterity of expert retailers.
In creating procurers and prosumers, the internet has upturned a centuries-old transactional sales process and created an upgraded professional shopper.
Few retailers are talking to shoppers in this way, but then few retailers who were focused on self-service a hundred years ago thought about convenience. Procurers and prosumers are more than a progression of shopping habits; they are a material change in the psyche of modern buyers and in the development of consumer-friendly IT.
They are superbly enabled shoppers, a new breed, if you like, and as each new internet-enabled technology arrives, they grow more able and more confident.
This article is an edited extract from Upgraded: How the internet has modernised the human race, by entrepreneur-turned-author Andy Law.