Here's how Amazon gets you to buy more stuff - WBRC FOX6 News - Birmingham, AL

Here's how Amazon gets you to buy more stuff

© iStockphoto / Alex Slobodkin © iStockphoto / Alex Slobodkin


By Minda Zetlin


What's the secret of Amazon's success? There are many answers to that question, but one of them is how the retailer uses an arsenal of creative approaches to turn shoppers into buyers, buyers of one item into buyers of multiple items, and one-time buyers into frequently returning customers.

The personal finance site GOBankingRates has carefully analyzed Amazon's approaches and figured out 12 brilliant ways the online retailer gets people to buy more stuff. You can (and should) use this information to avoid getting sucked into buying things you don't really need. But if you run a small business, or even if you're a solopreneur, you can use some of these same tactics to build up your own customer base.

Most of these are well-known marketing hacks that Amazon does better and smarter than most. You can find the full list here. These are some of Amazon's most effective moves:

Using data to upsell.

Amazon's technology is second to none, and it uses the full force of its algorithms to figure out what each of its customers is most likely to buy, and put that item in front of the customer at the right time. You may not be able to match that approach, but you can and should keep track of what every customer buys, and whatever you can learn about each one's likes and dislikes.

You can do it without groundbreaking technology, or any technology, just by paying close attention. For example, there's a cafe where my husband and I have dinner among many of our musician friends every Thursday night. One evening, the owner asked me if she should set aside a special for him. She hadn't served that special before, but it seemed like something he would like, and she knew it would sell out fast. I told her yes, and sure enough he loved it.

Free shipping.

Unless it involves something particularly bulky, or sending it to an overseas location, the days of charging people for shipping are essentially over. You can thank Amazon for that, but also a legion of online sellers who captured the lowest price slot on eBay and other online marketplaces by cutting the prices of items but then making it up with high charges for shipping and "handling." (Definitely don't ever charge people for the effort of handling an item they're paying you for. There's no clearer way to tell customers that you consider them a nuisance.)

But you don't have to just give shipping away; you can use it to trade for something you want. Amazon's approach to free shipping is brilliant: Customers either get free shipping for orders over $25 (for books) or $35 (for everything else), or else they can have free two-day shipping on most items by spending $99 a year to join Amazon Prime. That policy helps turn the purchase of a single item into multiple items, or possibly into a lucrative long-term relationship.

A loyalty program with serious benefits.

Speaking of Amazon Prime, it is among the company's smartest moves ever and a phenomenally successful program. According to GOBankingRates, 80 million people in the United States have Prime memberships. That's a quarter of the nation's population. When you consider that most households have only one (my husband and I share, for instance), you can see that Amazon has had mind-boggling penetration with this program.

One reason Prime is such a hit is that it's almost an offer you can't refuse. Combine the free two-day shipping (or two-hour shipping in some places) with the offer of free video streaming, free books, and discounts on popular items, and if you do any amount of shopping on Amazon at all, it makes no sense not to have Prime.

Then, of course, once you do have it, you're much more motivated to shop on Amazon if only to take advantage of the free two-day shipping. According to GOBankingRates, Prime members spend an average $1,300 a year on Amazon, compared with $700 a year for non-Prime members.

Loyalty programs can bring repeat business and give you a great source of data about what your customers are buying. But to be successful, you have to offer substantial value from the customer's viewpoint. And many customers are feeling overloaded with loyalty cards, punch cards, and key ring tags, so structure your program so customers don't have to carry anything with them if they don't want to.

Time-limited sales that emphasize fun.

This strategy is working so well for Amazon it has three different ways of reeling you in with time-limited sales. One is Prime Day, a 24-hour event where Prime members get access to thousands of items at special prices, another is Lightning Deals, discounts on all kinds of items that last a day or a few hours, and finally, in Seattle, there is the "Treasure Truck," which offers special deals on just one item and travels around the area, announcing its location in advance so customers can find the truck and pick up the item after first buying it from the Amazon shopping app. This approach lets Amazon make quick sales of perishable items, such meat or fish.

Time-limited sales are a marketing staple, but Amazon's offerings stand out because it makes them seem much more fun than a typical one-day-only sale. It treats Prime Day like a celebration for Prime members. It treats Lightning Deals like a treasure hunt--in fact they used to be called "Gold Box" with a logo that looked like a golden treasure chest. And the brightly decorated Treasure Truck is a rolling carnival that (besides bringing special Amazon deals) can come with free ice cream bar handouts, visiting celebrities, or fake mustaches.

Take a lesson from Amazon's success: If you're going to have a one-day sale, find a way to turn it into a party. Extra points if you can throw in a few surprises.

Sell other people's stuff.

One of Amazon's smartest decisions was to create the Amazon Marketplace, allowing anyone with something to sell to do so on its site. That's created huge revenues for Amazon and incidentally allowed the company to steal a lot of business from eBay, its biggest competitor as an online everything store.

You don't have to be a giant company to take advantage of this strategy. If you have a retail store, invite local candy makers to sell a few items by your checkout counter or local artists to hang their work for sale on your walls, or local performers to hold events in your space. If you have a website, look for affiliate marketing programs with products that you can endorse and that make sense for your customers. Either way, you're creating an income stream that costs you nothing or next to nothing in time and effort. And you're giving your customers more choices at the same time.

The original "Here's how Amazon gets you to buy more stuff" article can be seen here.

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