4 Tips To Use When Competing With Amazon
Since its creation 20 years ago, Amazon has become an online retail leader with 23% market share. They have shown their dominance in a number of ways with free shipping on orders over $35 and low prices that keep the market on its toes. From a retailer’s standpoint, competing against Amazon may seem intimidating, but don’t lose hope yet. You can create a David and Goliath story of your own with these four tips to compete against Amazon.
Keep It Real
Personal relationships with customers are essential for smaller retailers. Look at mom-and-pop shops. Don’t you love it when you go to your favorite mom-and-pop shop and the owners greet you by name? As a customer, it’s a great feeling to be recognized by a business because it shows that you are valued for your loyalty. According to brand-building expert Denise Lee Yohn, this feeling is the reason why many shoppers decide to stick with a brand.
People love seeing the authentic side of companies because they don’t just buy your product, they buy your passion as well. Putting a face on your brand creates a unique look that sets you apart and makes you more approachable to customers. Show your shoppers who your company is through social media by posting images of your company in a candid perspective, like company outings. If it’s working for Hillary Clinton and Taylor Swift, it can work for you, too. Personality can help build trusting connections between you and your shoppers.
Success in Discovery
Amazon is known for its strong recommendation system, meaning if you’re shopping for y, you might end up buying something similar to y as well. However, according to New York Magazine, the flaw in Amazon’s recommendation system is failing to promote new product discovery. In other words, Amazon fails to incentivize impulse purchases. For instance, if a shopper knows they want to buy shoes, Amazon might be able to persuade them to buy matching socks, but it is unlikely that they end up with a phone case as well.
Retailers can capitalize on Amazon’s flaw by promoting product discovery through mobile channels. According to a Nielsen survey, 42% of shoppers cited mobile as the most important platform to find information when shopping. To take advantage of this opportunity, you can use emails as a promotional vehicle to drive discovery on mobile. A report from Marketing Land found that 66% of emails are opened on mobile devices, suggesting the potential emails have to promote product discovery. Hop on the bandwagon and leverage mobile devices to influence higher product discovery.
Fighting on the Inventory Front
Amazon’s inventory houses a variety of products, but they don’t have it all. You can compete with Amazon on the inventory front by differentiating and developing unique products.
According to a survey conducted by Cowen and Co., a majority of Amazon’s sales consist of hard goods, such as electronics, household appliances, and media. This is because manufacturers produce hard goods and distribute them throughout multiple retail channels, with Amazon (obviously) being one of the biggest ones. To counter this, you can try to sell in categories that Amazon isn’t as dominant in, like soft goods which consist of apparel and textiles. Though they are trying to build up this aspect of their business, Amazon’s soft goods sales aren’t as high as their hard goods. So take advantage of this weakness and “soften” your inventory.
You can also try to sell products that aren’t as popular on Amazon, but are still reputable to shoppers. To do this, you can invest in assortment software that views and analyzes your competitors’ inventory in real time. With this insight, you can rethink your inventory while keeping in mind your competitors’ flaws. This is possible to do against Amazon because although their inventory holds a broad variety, they lack focus in unique products.
Level the Pricing Field
Retailers can compete with Amazon through dynamic pricing. “What? Competing with Amazon on pricing? That’s ridiculous!” Actually, it’s not as ridiculous as you would think. Dynamic pricing is a real-time strategy that adjusts product prices according to demand, among other factors. Amazon is known for repricing every 10-15 minutes. To combat this, retailers can use dynamic pricing to constantly compete with Amazon. Real-time price changes and analytics allow retailers to be flexible to market changes. Dynamic pricing software is able to find the optimal price by scanning numerous competitor prices in a short amount of time. Level the playing field by investing money and time into repricing tools that will keep you profitable and competitive against Amazon.
Amazon’s grip on the retail industry may make it seem like an intimidating opponent to compete against. However, this does not mean that it is invincible. With strategies such as building personalized relationships with shoppers, improved product discovery, product development, and dynamic pricing, you can stand your ground against the retail giant.
Contributing Writer: Don Dao
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