How the Threat of Amazon Made CVS Pull the Cigarettes off the Shelves

Amazon revealed recently that new feature in their mobile app will allow a consumer to point his or her camera at a product, like an empty mouthwash bottle or a can of furniture polish, and that photo alone would place an order on their website. The new Flow feature in Amazon’s mobile app is a classic example of how markets are “commoditizing” and is why improving the Customer Experience is so essential for businesses.

Just think about the Amazon logo. It has an arrow between the A and Z. There is a reason. They want to be the supplier of everything a consumer needs, right down to shaving foam and tissues. Making a decision on price and selection alone is not going to be drivers for the future of retail. Instead, consumers will go to the place where the customer has the best experience.

We all know everyone sells the same goods or services. Whether it’s Target, Publix, CVS or Walgreens, or any other of the multitude of retailers that specialize in selling consumer packaged goods there is usually with a negligible price difference. But when you need this mouthwash or furniture polish, you usually go to the store that you like the best.

When I say that you “like the best”, I am referring to the store with which you have had the best overall experience, you may pay a few cents more in one or another but that’s not the deciding factor for many people.

My third book, The DNA of Customer Experience, talks a lot about the importance of emotions in the future of business. For the book, we worked with the London Business School to ask 50,000 participants over 4.5 Million questions, 1 million of which are about how they feel, to determine what emotions drive and destroy value for a customer experience. Not surprisingly, the ones that drove customer loyalty and retention, customer satisfaction and their likelihood of recommending their experience to their friends and family, were emotions like feeling valued, cared for, happy and pleased.

These emotions are what make you pull into one retailer parking lot over another, even if it means passing two or three of these retailers that have the same products on the shelves to get there.

But Amazon doesn’t require you to find your keys, put on your snowsuit or wading boots (given the weather in the USA and UK recently) and make your way through to a parking lot. You can get what you need with a point and click of your camera and the Amazon mobile app. They are in effect, circumventing the retail experience that all these competing retailers have worked so hard to perfect and position with their customers. Technology is speeding the onset of commoditization.

But you may be thinking right now, “If I order on Amazon.com, I have to wait extra time to get my product.” That’s a fair point and one key advantage retailers have right now. But Amazon knows this, too, and they are working diligently to change that wait time.

You may recall the story not so long ago about how Amazon was looking into Drone delivery technology. This prompted a flurry of interest and speculation which I wrote about as well; click here to read the post.

Over the past 18 years, Amazon has showed an unrelenting drive to achieve this goal. Their mission statement in total says:

“Our vision is to be the earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.” (Source: retailindustry.about.com.)

One key phrase here that bears repeating is “discover anything they might want to buy online.” Previous to this app and their decision to improve the delivery time, one might not consider buying mouthwash, shaving foam or furniture polish online. But with their increasingly rapid and convenient delivery channels, that is changing. As I said, there is a reason that their logo has an arrow from A to Z: they want to provide everything.

CVS recognizes that Amazon is a threat to their established brick and mortar business model. In a recent article on wired.com following their big announcement that they would no longer sell the tobacco products in the 7, 600 stores nationwide in the states, author Marcus Wohlsen asserts that the move was in response to the Amazon threat, to create a positive emotional association between their stores and good health. This same move that models good corporate citizenship aligns with the image they are cultivating in their branding that says their stores are where you go to get well.

CVS has a good reason to this…about 7,600 of them. If they can create a relationship with their customers then maybe they can keep them coming through their doors. Target, Publix, Walgreens and all the others should consider a similar positioning strategies moving forward. They must mind their customer experience.

In today’s commoditized market place where technology is quickly introducing new threats to the retail experience, building customer loyalty by appealing to their emotions is critical. People will buy where it is the cheapest and most convenient when all other things are equal. The job of retail stores is too make sure that the playing field is never equal. They must consider the experience they provide valuable enough that consumer will pay more, travel further, or be inconvenienced (even if it is just a little). Then and only then will they pay more. Or in this case, keep coming through the door.