The Amazon Effect and the Importance of Primary-Card Status
By Mike Knoop, President of Financial Institution Loyalty, Augeo
Many industries are feeling the impact of the Amazon-effect, especially in the financial services, as Amazon continues to aggressively evolve into different segments of the consumer buying ecosystem. The online powerhouse had invaded every market, from the introduction of Amazon Prime several years ago, to introduction of the Amazon Prime cobranded credit card, to bringing Alexa to life (which, confidentially, I love as I haven’t had to remember to go out and buy dog food or paper products for the house in months. No more honey-do lists for this guy!).
But Amazon’s biggest move was the recent announcement that it would acquire Whole Foods for $13.7B in case, according to Forbes.com. The acquisition surprised many, in part, because so many retail companies, including credit unions are trying to make the shift from brick-and-mortar to digital. Amazon has the breadth and depth to turn retail—all retail—upside down, and it will be based in data, a concept that much of retail has been late to adapt. Amazon, on the other hand, was born on data.
The firm’s move marks the beginning of the end of retail as we’ve known it. Or maybe the beginning of the retail industry, as it should be. It’s a huge strategic data play – how to best own more of the consumer experience and data, including spending behavior, entertainment, increased
efficiency of product delivery, consolidation of payment channels, and the cherry of top: Adding rewards and incentives to drive behavior.
Rather than small or regional financial institutions fight the Amazon-effect they should embrace the fact that their members/customers are increasingly moving their consumerism to Amazon. One simple move would be to offer double or triple rewards points for using the credit union credit card for buying at Amazon. This actually would compete with the Amazon Prime card, which offers 3% cashback for purchasing at Amazon. Just a quick thought on Amazon’s market positioning and providing competitive balance.
Sarah Snell Cooke, principal at Cooke Consulting Solutions, contributed to this post.