When Amazon UK on Thursday (Nov. 5) rolled out a free same-day delivery trial in parts of the U.K., it was exhibiting unbridled Amazonian behavior. In other words, Amazon is trying to leverage shopper emotions to get them hooked on a service that they don't currently seek or want. No one in retail is more Machiavellian about free offers than Amazon — or more successful at it.
Although the offer had the usual laundry list of restrictions, it illustrates how far Amazon's thinking has evolved on this subject.
Fact one: Most shoppers today believe — and quite correctly — that same-day delivery is not something they typically want, need or have any interest in paying for, except in the case of a handful of unusual, last-minute, urgent purchases. They would like same-day to be available if it's needed but do not want to pay for the rare privilege.
Fact two: Amazon knows that Amazon Prime shoppers spend more. It's not that they are globally spending more, but once they become Prime, they start shifting their purchases away from other e-tailers as well as from local physical stores. Amazon prefers when shoppers shift purchases to it, as opposed to making new purchases, because that simultaneously delivers revenue and a boost in market share.
Fact three: By trialing the addition of same-day delivery to Amazon Prime, Amazon's true goal is to sell more Prime subscriptions, which are a gold mine. Worst-case scenario: The money lost on free same-day deliveries will be more than made up for with higher Prime-influenced revenue elsewhere.
Fact four: With all due respect, Amazon sometimes operates like a corporate drug dealer. Its goal is to get you hooked, after which it can charge whatever it wants. Consider Amazon Instant Video, which is one of the perks offered within Amazon Prime. Prime members get the first season or two of key popular TV shows for free. Once those members get hooked on the characters and the plots, they are willing to pay far more than they would otherwise to binge-watch later seasons.
Fact five: Using the same logic from video experience, Amazon wants shoppers to try same-day delivery (for free) and to get used to it. Then, in a year or two, it can start to charge, at which point addicted shoppers will surrender and pay.
I have previously addressed the huge potential within retail same-day delivery as well as the dangers of attaching too many restrictions on it. I've also explored how physical chains can properly thwart Amazon's Machiavellian magic. But Amazon may be truly onto something powerful in its U.K. trial.
Same-day delivery can rewrite who controls retail spending, but only if shoppers embrace it. Amazon can invest all the money it wants in drones — and it can even use a consumer's location while window shopping to literally fly to them on the street — but none of that will matter if it doesn't convince shoppers to use the service and like it.
Don’t underestimate the genius-like manipulation beneath Amazon's free U.K. free same-day delivery trial. It's a master at work.
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