The Difference between Amazon and Sears Is Cognitive

In a recent article (How Amazon Ate Sears’ Lunch) Elizabeth Olson writes an obituary for a company that has been an icon of retail for almost a century. In the past decade or so, Amazon has gradually eroded Sears’ market share to the point where the old superstore had to take the drastic measure of closing over 100 of its outlets.

How is it possible? Sears launched a web site to the public trying to replicate Amazon’s success, but to no avail. Unfortunately, the article I mentioned earlier doesn’t really explain why Sears has lost so much business. I venture to point out one factor that contributed substantially to the failure of the online enterprise, and in fact of the many other retailers who find themselves in a similar position.

The biggest visible difference between the two is in the quality of the cognitive structures presented to their visiting customers. These structures have a tremendous role in helping the customers find information, learn about new products and visualise a purchasing experience before they actually execute it. It is what makes a web site “sticky”.

If you go to Sears’ website you will find a simple interface – that is good – and a sense that not much is happening there – that is bad. The navigation is linear, you have to click through a tree-like structure to get your item or use the search function. The problem with this web site is not only that is not very helpful, but is not working well either which points to a serious problem of the overall design of the information architecture. I searched for TV and it took me to SanDisk SD card, which is shown under the heading Appliances->Sewing & Garmet Care -> Memory Card & Sticks. At the bottom of the screen under “People Who Viewed This Item Also Viewed” there is a list of refrigerators, air conditioning units and washing machines. Yeah, right! It just shows that Sears doesn’t take the importance of the information architecture seriously, and they are paying for that.

But this is not the main problem. The killer here is the lack of evolved cognitive structures that are needed to help customers make sense of the web site. Sears has a design form that is typical to the first generation of ecommerce solutions: use the tree-like structures. In a time when people don’t have time to “learn” the web site, the host must invest in developing sophisticated cognitive structures.

Amazon has a plethora of cognitive helping tools to assist the shoppers: on the left you have a permanent toolbar that shows you exactly where you are at any point in time, with up-to-date number of categories available. Then there is the real-time inventory, shipping information, a long list of filtering criteria, Today’s Deals, Gifts, Listmania, your recently viewed items, browsing history, shipping options, customer reviews, certifications, conditions and the list goes on. When you look at the item individually, the page is filled with helpful and practical information including Frequently Bought Together, What Other Items Do Customers Buy after Viewing This Item, Add to Wish List, More Buying Choices, Technical Details, Product Description, External Web Sites, Customer Reviews, etc.

Amazon is a living beast with a very well organised mind. One of the best executed strategies of Amazon was to get its customers to contribute with content which transformed Amazon into one of the best product information websites. Statistically the reviews are accurate because they are so many and because of the self-regulating system Jeff Bezos put in place from the beginning.

Meanwhile, Sears and others implemented the web site as an afterthought, ignoring the value of the information architecture. The irony is that in essence this is not something new in terms of a selling system. Cognitive structures were used successfully in the past to improve shopping experience, but in a different form. A hundred years ago the successful retailers were those who understood how to assist the customer once they stepped inside their shop: placing carefully useful items visibly near the door, other items near the counter, organising the aisles, hiring helpful shop assistance who would answer any question the visiting shoppers might have, use shelves in an innovative arrangements, place extra helping information for new products, arrange for special stands, etc.

This is exactly what Amazon does in the virtual space. Somehow, the traditional retailers have lost their way and they could not get themselves to apply their experience online. This may be due to the fact that IT departments don’t work well with the sales and marketing. Or maybe there is no one to translate the message from one to another.

In Australia, Harvey Norman struggles to come to term with the new world. Gerry Harvey, the retail chain’s CEO, is trying desperately to setup web sites overseas to win back its customers who are deserting him in droves. But he does not get it. He thinks you just need a web site with buttons to click, the equivalent of a robot made out of pots and springs, wheels and cogs. It is mystifying how he has forgotten how hard he worked to make his business work from its humble beginning.

Information is king and the use of cognitive structures is essential in getting into the mind and soul of the customer. In this sense, the IT is critical to the success of the business, but I should point out that it is the application in a human context that makes it work in the end.

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