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Amazon’s Gamble in Positioning Strategy Marketing

Amazon’s Gamble in Positioning Strategy Marketing

Will Walmart & Target Win Big as Amazon Switches Focus to Temu & Shein?

In its positioning strategy marketing, Amazon has typically aligned itself with big box competitors, like Walmart and Target. But big changes are happening at the retail behemoth. The Wall Street Journal reports that Amazon is ignoring classic competitors to zero in on a new competitive threat: Chinese-export discounters Temu and Shein.

This new positioning strategy marketing effort is designed to shut down the growing influence of these two brands. In the past, Amazon has been able to disable competitors through sheer force, but are consumers willing to go along for the ride this time? Or will Amazon damage its own brand in the process?

Amazon Bets Customers Will Stay during Positioning Strategy Marketing Shift

Temu and Shein share a similar US business model: drop ship inexpensive but appealing products from China to US consumers. Their customer segments seek great deals through:

  • Bargain prices
  • Assortment of interesting or novel products
  • Tolerance for low quality
  • Free/inexpensive shipping
  • Tolerance for long ship times

When Amazon shifted its positioning strategy marketing to Bargain Shopper customer segments, it left behind a previous focus on capturing Walmart and Target customers. These customer segments represent everyday shoppers who seek value through:

  • Quality products
  • Reasonable prices
  • Broad selection
  • Fast, free shipping (or immediate availability in-store)
  • Convenient return policies

In one big gamble, Amazon believes it can satisfy and retain all these customer segments. From the WSJ, we learn:

“Amazon executives are concentrating in part on two aspects of their business they believe will continue to give them a competitive advantage: customer trust and fast delivery.”

Amazon is relying on these two brand pillars to hold up its reputation with Value Shoppers. In recent months, I’ve witnessed cracks in both pillars. If Amazon bets that it can take out Temu and Shein without hurting its brand with other customer segments, it’s going to lose badly.

Amazon’s Gamble in Positioning Strategy Marketing

Positioning Strategy Marketing:
Search Result Trends Erode ‘Customer Trust’ Pillar

In an attempt to reach Bargain Shoppers, search results have deteriorated for Value Shoppers. These consumers can’t trust that a top search result will yield a quality item for a reasonable price. Until I finally learned to be more discerning with my search queries about three months ago, here’s a list of disappointing products I purchased over the last year:

  • Girls’ dress shoes that broke after one wearing
  • Wireless lavalier microphone that didn’t function at all
  • Rocking chair that didn’t exist
  • Wooden tooth fairy box that also didn’t exist
  • Zipper pull replacements that immediately snapped in half

Instead of time-tested, name brand products, all I could find in my search results were unknown brands. Should it have taken me so long to learn that my search results were crammed full of unusable Chinese imports? Certainly not, but Amazon had built up my trust in its offerings over many years. It took awhile to become skeptical.

I wasn’t alone. Here are some comments from an informal research study I conducted with a cross-section of people in my network. Many have observed poor product quality becoming more regular with Amazon.

Amazon has become my last resort (for quick shipping purposes only really) instead of my first go-to for a generic product.” – Kelsey

“Not happy with the way things are presented with on Amazon and then when checking out told that item is not available but here is a similar more expensive item.” – Regina

Simple… pick two… good, fast or cheap. Can’t have all three. If it’s good and fast, it won’t be cheap… if it’s cheap and good it won’t be fast. Amazon, Shein and Temu aren’t really great choices, but they fit my description. You want quality items, shop local.” – Paul

I’ve been burned by inferior products from Amazon. Or poor search engine results.” Nathan

More Cracks in ‘Customer Trust’ as Amazon Review Integrity is Called into Question

Concurrent with search trends, third-party sellers are becoming wilier at evading Amazon’s review policies. As a result, reviews are being manipulated, and trust in reviews is deteriorating. Here’s an example screenshot from my conversation with the junk lavalier microphone seller:

Amazon’s Gamble in Positioning Strategy Marketing

In obscure, emoji-filled language, the seller told me:

“Hello, we have submitted the refund application, you only need modify the one-star review to five-star review without any other procedures, the system will automatically refund to your payment account.”

I reported this conversation to Amazon, but nothing happened. The product is still for sale today and has a 4.2-star rating. While I didn’t change my review rating to receive my refund, how many consumers may have altered their rating simply to receive a refund? I don’t blame consumers, but I certainly hold Amazon responsible for the integrity of its reviews.

This experience wasn’t unique. I had a similar exchange with the seller of the ghost rocking chair.

Positioning Strategy Marketing:
Slowing Consumer Perceptions about Amazon ‘Fast Delivery’ Pillar

My research into opinions about Amazon revealed one big surprise: many consumers across the country don’t think Amazon delivery times are that great anymore.

They’ve gone downhill dramatically, both in searches pulling things up and especially in shipping! I know if it’s Amazon delivering vs UPS, FEDEX, or USPS there is about a 50% chance it won’t arrive on time. The drivers don’t care, either. They just throw packages. I’ve had them in the middle of my lawn, my driveway, my garden bed.” – Jennifer S

“I have ordered things from Amazon and told ‘next day delivery’ only for it to quietly change delivery dates for 3-4 days out. I have also ordered items for Christmas that still haven’t shown up yet, and it’s almost April.  Amazon is not what it used to be.” – Angela

“Our Amazon shipping times have increased significantly since after Christmas. Now anything Prime has a 4-6 day window to reach us when it used to take 1-2, or maybe 3 maximum. Other people in Bowling Green have commented the same. However, if you change the address to Scottsville (20 minutes away), shipping changes back to 1-3 days.” – Elizabeth

“Amazon has slowed down from two days shipping for sure.” – Tim

A few people I queried remain satisfied with Amazon shipping. But my main takeaway is that “Fast Delivery” is on shakier ground than any brand pillar has a right to be.

Amazon’s Gamble in Positioning Strategy Marketing

After Amazon’s Positioning Strategy Marketing Shift, Are Value Shoppers Changing Their Behavior?

Especially during the pandemic, shopping with Amazon became habitual for Value Shoppers. Amazon’s new competitive focus on Bargain Shoppers has shaken many consumers out of those habits, and they are re-thinking how and where they shop. For today’s value-focused consumers, Amazon is no longer the no-brainer option for everyday purchases. In my research, there are three main ways consumer behavior is changing:

  1. Switching to online shopping at Walmart or Target
  2. Shopping at big box retail locations, like Lowe’s or DSW Shoe Warehouse
  3. Shopping local with small businesses, like furniture craftsmen or farmer’s market

It’s interesting that when Amazon started prioritizing competition with Temu and Shein over Walmart and Target, many consumers switched to those online retailers.

I have started looking at or Walmart app before checking Amazon. Simply because I’ve been burned by inferior products from Amazon. Or poor search engine results. Or even if I get a good product from Amazon, I can only buy it in bulk quantities that I don’t want or need. In the past two months, I’m at about 50/50 Amazon/Walmart in terms of number of orders, with the Amazon slice decreasing.” – Nathan

“I now use more than” – Bobbi

“I find myself checking Walmart and shopping around a lot, especially if it’s for my woodworking side hustle.” – Tim

Some consumers have started to distrust online shopping for certain product categories, and their experiences with Amazon have driven them out of the house and into retail stores.

I’ve also begin shopping at Home Depot and Lowes again, instead of ordering many home improvement items from Amazon. Precisely the same reasons: Amazon was supplying crappy, inferior products as first search results.” – Nathan

Other consumers have re-dedicated themselves to “shop local,” a movement that was gaining popularity until the pandemic.

I only use Amazon when I can’t get it locally! (An item that is so obscure) I always check my local purveyors before anything.” – Jennifer L

“Hugely against all three. I use Amazon because of convenience and variety but can’t bring myself to ever use Temu or Shein- mainly because of their shocking disregard for labor and the earth. Trying to shop local as much as possible.” – Cal

Value Shopper Perceptions of Temu & Shein Show Disdain for Amazon’s New Positioning Strategy Marketing

Pursuing Bargain Shoppers by emulating Temu and Shein may do more than simply annoy Amazon’s Value Shoppers. These online retailers are more controversial than most. A Congressional report warned Americans that it’s likely “Temu’s supply chains have forced labor” (that’s a less evocative term than slave labor, but it means the same thing). Shein’s ultra-fast-fashion approach is criticized for its environmental impact.

Along with ethical concerns, many Bargain Shoppers share security concerns. One acquaintance of mine expressed worry about Temu. She experienced problems with her bank account after shopping on the app with her debit card, and others were quick to say they only buy from the site through PayPal or other indirect payment methods. Value Shoppers will be less likely to accept this kind of risk.

By aligning its positioning strategy marketing with Temu and Shein, Amazon risks permanently downgrading its brand with Value Shoppers. This customer segment wants to “feel good” about their savvy shopping habits—and they can’t feel good about forced labor, harming the environment or debit card theft.

Considering the importance of Value Shoppers to Amazon’s sales, I don’t believe this gamble with Bargain Shoppers is going to pay off for the company’s profits or long-term success. Amazon seems to believe it can bank on Customer Trust and Fast Delivery, while the customers themselves seem to disagree. And… the customer is always right. Sometimes, clichés are common because they are true.

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