Industry
After Amazon: Old and New
Two merchandise award leaders take different paths to reclaiming business: Traditional and a new hybrid approach
By Leo Jakobson
August 10, 2010
Four months after the online retail giant Amazon.com abruptly withdrew from the incentive merchandise market, its customers are returning to traditional incentive fulfillment channels. But having been seduced by Amazon’s massive award catalog that included millions of items, are they ready to go back to traditional offerings?
Paul Gordon, senior director of solution sales of manufacturers rep firm Rymax Marketing Services, argues that the approach that has served the industry for more than half a century—offering carefully selected products that target the specific needs of clients based on factors like the goals and length of the incentive program, the demographics of the audience, and what behaviors the client is trying to foster among participants—has survived so long because it works.
“At first glance, two million products is attractive,” Gordon says. “But unless those products are aligned with demographics, it’s not a powerful way to go to the market—in this market. Amazon is a great retailer, possibly the best. But you don’t hire the best car mechanic to do open-heart surgery.”
Dave Peer, executive vice president of Chicago-based Hinda Incentives, one of the leading fulfillment specialists, thinks there are lessons firms like his can learn from Amazon. And at the Motivation Show in Chicago this October, Hinda will unveil the result of those lessons: a new product that is a hybrid of its traditional catalog of 4,500 aspirational brand-name awards and Amazon’s we’ve-got-everything catalog with literally millions of items.
“What differentiates us is that our core assortment is the foundation of our offering,” Peer says. “We are acting as an agent for the customer, to eliminate clutter and make life easier. It is important to control inventory and to control the supply chain so we can provide stellar customer service to our customers and our customers’ customers. By offering virtually everything, Amazon became a shopping experience, not a redemption experience.”
Hinda’s new product is called More Award Choices, and it will be up and running by the new year, Peer says. “This tool reflects what we’ve learned over the past two years: the idea of having seven figures’ worth of choice is important to some larger clients. We needed to be able to deliver lower-value awards like DVDs and video games. We saw how important that was to a certain component of our clients.”
Still, Peer says he views More Award Choices’ place in the incentive industry like he views gift cards’ place. “They are a great product and perfect for some clients, not for all of them,” he says. It makes the most sense, he adds, for programs with national scope, like large consumer loyalty programs.
The right award experience
One thing leaders of Hinda and Rymax have both long criticized Amazon for was its lack of selectivity.
“Rymax Marketing represents thousands of brands from more than 200 companies, but it focuses on luxury brands,” Gordon points out. “Any good program has aspirational products,” he says. “We pride ourselves on being a marketing company. The brands and [products] we offer are very specific to the redeemers in each program. It is not a simple equation to meet what the client wants.”
He cites Rymax’s decision to add toys to a major casino loyalty program’s awards selection, despite the fact that the participants are largely in their 50s. “In casino programs, 60 percent of participants redeem for others—so we added toys,” he says. They proved very popular.”
Hinda’s More Award Choices will have a substantially larger selection of products from selected online merchant partners. But there will be only one partner in each product category, Peer says. Examples of the partners he was ready to announce this far in advance are ABT Electronics, Bass Pro Shops, 1-800-Flowers.com, and Sears Canada. Other categories Hinda will have ready for the Motivation Show include individual travel, event tickets, movie tickets, books, and CDs.
Another aspect that sets apart companies that focus on incentive fulfillment is customer service. While Amazon’s consumer reputation is sterling, it isn’t focused on the things that incentive planners tend to focus on.
“It is not a rewarding experience to reach [an award] level and be told the award you’ve been looking forward to is not available or there will be a delay in shipping it,”
Gordon says. “We don’t just drop the award off at the doorstep. We bring it in the door, set it up, and clean up the packaging.”
The items in Hinda’s core award offering will continue to be warehoused and shipped from its own facilities, and it has the ability to customize packaging and add personal notes and other communications, Peer says. The company will rely on its merchant partners to drop-ship their products, he adds. That is one of the reasons it is taking so long to choose partners. But that drop-shipping will be overseen by Hinda, so it will know of and be able to handle any potential customer service issues.
On the front end, the customer will see “one seamless catalog,” Peer says, hosted either by Hinda or on the client company’s own incentive program Web site. There will be no duplication with Hinda’s core catalog, and incentive program managers will not need to worry about inappropriate awards—Amazon carries X-rated videos, for example—as Hinda won’t include them in the More Award Choices catalog.
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