As Amazon looks to take the plunge into banking, retailers need to think about partnering with banks and tech firms to continue to innovate. Monisha De La Rocha, a partner in Bain's Retail practice, shares three things retailers can do to build shared data platforms and increase their marketing personalization.
Read the Bain Brief: Banking's Amazon Moment
Read the transcript below.
MONISHA DE LA ROCHA: Amazon's move into banking services highlights the way that retailers need to think about partnering with banks and technology firms to continue to innovate and thrive. And this is not just something that's occurring in the US. It's a global phenomenon.
Now, Amazon has some advantages. They have significant reach. In fact, in the US, most consumers actually start their shopping journey on Amazon vs. a search engine like Google.
Amazon also has put together an enormous data platform. They can leverage this data to offer up relevant products to their consumers. As they capture data from e-commerce transactions, they can use that data to offer relevant products at the right time and, in turn, use the data collected from the usage of those products to continue to deepen and broaden the data set that they have.
Now, retailers entering into financial services is something that has played out in Asia. Retail giants like Alibaba in China, or Rakuten in Japan, offer pretty significant banking services today. In the US, retailers have looked for ways for many years to offer some type of financial services products to their consumers.
For a long time, retailers have had ATMs in their locations, and some retailers offer branded credit cards. Those credit cards tend to be focused on rewards or other branded benefits, and are not as focused on building a shared CRM system of data in order to really drive personalized offers.
In developing markets, retailers like Coppel in Mexico offer wide credit products to their consumers, serving the large unbanked population. So if they were to look to make a move into banking services, they could have an advantage to draw from.
But as Amazon looks to build its e-commerce operations in these markets, they also could have an advantage going forward to build on financial services products at later times. So what should retailers do?
You know, retailers have to, I think, invest in a lot of angles to accelerate what they're able to accomplish. First, they need to speed decision making so that innovations that they develop can bear fruit in weeks, not months. They need to invest in their data science capabilities and use that data to continuously improve and refine the personalization of what they offer consumers.
And, finally, retailers need to make innovative partnerships—much like the Google/Walmart partnership that was recently announced—in order to really partner with technology firms and with banks so that they can build shared data platforms and, together, increase the personalization of their marketing.