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The retailer's dilemma - compete or co-exist with Amazon

Versha Kamwal
October 7, 2020
8
mins read

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Amazon is undisputedly the game changer of retail. Its supremacy not only creates infinite opportunities for retailers but also sparks envy. Well, who wouldn't want their business to touch the epitome of success just like Amazon? With over 300 million active customer accounts, it creates new avenues of growth for retailers of all sizes. As a retailer, you can either join or compete with all your might.

How is Amazon winning on selection, price, and convenience?

  • It offers its consumers millions of options at low prices and delivers merchandise with free or less shipping within a few days
  • It has gained the trust of consumers around the globe by guaranteeing secure payment options, easy returns, and genuine user-generated reviews

What makes Amazon a pioneer?

There are several reasons why Amazon's net sales are in tens of billions. It excels at delivering countless conveniences and perks that other online retailers don't, like:

Prime shipping benefits

Amazon Prime subscription offers free same-day, one-day or two-day delivery to eligible addresses. This specific perk is the absolute favourite of its members. Studies state that 88% of customers prefer free over fast shipping, which makes it a win-win situation.

Prime shipping benefits
Perks of availing Amazon Prime

Easy returns

A return policy should give confidence and reassurance to its customers. Amazon's easy return and refund processes alleviate any risk at the point of purchase.

Affordability

Amazon is 11% less expensive when compared with significant ecommerce players. It uses algorithms to dynamically re-price items based on competitors' prices (including third-party marketplace sellers), demand elasticities, remaining stock levels, item profitability, and other factors. Additionally, its massive size of operations drives prices down.

Research resources

If you are purchasing from Amazon or not, you can still count on their resources. Customer reviews, Q&A, product specifications and similar product recommendations are dependable resources that enhance the customer experience.

Amazon Customer reviews
Amazon supports customer reviews in image and video formats as a part of its reliable research resource.

92% of consumers trust product recommendations from real people.

The retail dilemma: Compete or co-exist

Amazon's size and market dominance has manifested a situation where it's difficult for retailers to choose an alternative, especially equally desirable. However, most companies today sell products on Amazon as well as on their websites. But the dilemma remains the same.

For instance, a premium laptop company sells on Amazon and its website. Here customers can have two options (you could guess what they chose after the example):

  • Get free and fast delivery (one or two-day) with Amazon Prime
  • Pay a certain amount for fast delivery (one or two-day) from the company's website

Amazon is the business magnate of ecommerce. You can either compete by gaining a competitive edge over it or integrate Amazon in your multichannel strategy.

How to gain a competitive edge?

Amazon is a great player, but every player has its weaknesses. You can make the most out of such opportunities and use them to your advantage.

Leverage your brand

You can find anything and everything on Amazon. Be it three-toed socks, smart TVs, Shakespeare's sonnets, radiation suits and whatnot. However, it purposely made it difficult for customers to distinguish one brand from another. Eventually, most products have been commoditised under the Amazon brand. Moreover, customers always prefer to purchase from niche shops that are experts in a particular industry—for example, beard oils, vegan cosmetics, and CBD for pets.

Now, this is an opportunity to build a distinctive brand:

  • Highlight your brand's expertise through unique product descriptions and content
Nixon Ascender watch
Nixon, a premium watch and accessories brand, emulsifies a great blend of distinct writing flair in product descriptions to build an impactful brand identity.
  • Offer VIP experiences for your most passionate followers
Myntra's VIP experience for followers
Myntra Insider provides its frequent shoppers with fashion advice, VIP access, and extra savings
  • Through consistent delivery of high-quality products, curate customer reviews in image and video formats

Introduce customer loyalty program and subscriptions

You can nurture existing customers while also attracting new customers. Loyalty programs ensure continuous growth for businesses as it acts as an incentive plan for the customers. Whereas, a subscription is an excellent way to reduce uncertainties in sales projections and ensure steady cash flow. Such programs can lead to retention rates of over 90%. Other than Prime, Amazon doesn't have a unique program. You can use this gap to your benefit if you move with speed and agility. To make your program exciting for your customers:

  • Include great perks, personalisation, and minimal friction in the loyalty program. If you need professional expertise, Voucherify and Talon.One have bespoke promotional management.
  • Offer redeemable points for every purchase
Sephora's beauty insider
In Sephora's beauty insider rewards program, customers can earn points to redeem deluxe samples.

Starbucks' rewards program is one-of-a-kind. Customers get a free drink in their birthday month, free in-store refills, and the convenience of skipping the lines.

Starbucks's Rewards program
Starbuck's rewards program with its gold level benefits.

84% of consumers say that they stick with a brand which offers a loyalty program.

Diversify your offerings with in-store services

Although Amazon has recently ventured into the brick-and-mortar space in a few parts of the world, it still needs to compete with omnichannel retailers. You can broaden the array of your services by:

  • Providing the convenience of in-store pickup and returns
  • Offering other in-store perks like product demos, customisation, and in-store events

Take Apple Retail as an example; it allows customers to touch and play with their new products in-store while giving them the option to buy online.

Apple retail
Apple retail store incorporates in-store services to provide an exceptional customer experience.

Don't compete on price alone

Achieving economies of scale similar to Amazon can be a tormenting task. Adopt a smart strategy and focus on adding value in online shopping. Other than competitive pricing, you can offer:

  • Special product upgrades, personalisation, and training programs
Reebok Rewards program
Reebok's rewards program displays unique features when it comes to pleasing their customers.
  • Exclusive products or collector's items (limited stock) which are only available to your members
Huckberry Exclusive offers for the members
Huckberry's exclusive offerings to its members.

Provide free shipping

Amazon Prime has set new standards of shipping and delivery, be it in terms of speed or rates. You need to keep up your game and provide your online shoppers with tracking details, no commitment returns and, most importantly, free shipping. For a good example, Casper changed the way people purchase mattresses by offering free delivery and "painless returns." The mattresses came in a box and delivered to the customer's door. To grab and retain the attention of your customer you need to ensure:

  • Free shipping that can be provided on every item or above a shopping cart minimum
  • An efficient system for ordering, inventory management, and fulfilment
  • An integrated tracking software to make shipping reliable
Offer free shipping
Free shipping is the most crucial aspect of fulfilment for customers.

Collect customer data

Amazon collects data of every single customer, their search queries, wishlists, reviews, order history, and other datasets. After collection, this data is analysed to ascertain the needs, desires, preferences, and behavioural patterns of the customers. It is used to offer personalised product recommendations, customised offers, and even optimised webpage layouts to address every need of the customer. You can also use customer data to make informed decisions, and serve your customers in the best way possible by:

  • Providing product recommendations based on customer order history, wishlists, and search history

Farfetch Recommendations based on customers behaviour
Farfetch, leverages its robust recommendation engine for designer luxury Fashion for men and women.
  • Optimising product pricing based on search inquiries as well as competitive data. You can enlist Algolia to build and optimise delightful search and discovery experiences for your customers.

Spearmint LOVE achieved 991% year-over-year growth by creating more targeted Facebook Ads using their customer data.

Why should you consider Amazon in your multichannel strategy?

Customers tend to follow an omnichannel approach to their path to purchase. For example, if a customer wants to buy a smartphone, product research and price comparison is conducted online. The next step may include checking the product in-store and comparing prices. Finally, the purchase is made after considering all the available options.

The key is to analyse what you can achieve within and outside of Amazon. It is imperative to take advantage of Amazon to tap into the largest customer base in the world. It allows you to boost your product visibility and build brand awareness.

Usually, customers don't make expensive purchases on Amazon. You can use such platforms for introducing customers to your brand through lower-priced items. And then, sell higher-priced items on your website. However, it would be tricky to test your products without hampering your brand image.

No marketing strategy is fruitful until implemented properly. Amazon's research resources can help you with unbiased feedback. But to foster the relationship between you and your brand, you have to treat it as a valuable insight with actionable measures.

How can Eshopbox help you sell on Amazon?

Increase your sell-through and get prime badge for all your products

Eshopbox is well-integrated with Amazon. All the inventory that you store at Eshopbox Fulfilment Centres (FC) can be made prime enabled. Unlike FBA (fulfilment by Amazon), wherein you ought to commit your inventory exclusively to Amazon, with Eshopbox, you have the flexibility of using the same inventory pool across multiple sales channels while maintaining the prime badge on Amazon.

Sell-through rate measures the amount of inventory that is sold within a given period. By centralising your inventory at Eshopbox FC and relaying it to Amazon and other sales channels simultaneously, you achieve increased sell-through rate.

Increase sell through & get prime badge
Eshopbox's centralised inventory available for multiple sales channels

SLA- driven and Amazon compliant order fulfilment

Amazon has stringent fulfilment guidelines and order packaging requirements which have to be met consistently. Eshopbox is Amazon compliant and meets all their service requirements; this ensures that orders are processed within the required turn around time (TAT), while complying to their strict Service Level Agreement (SLAs).

Eshopbox system is Amazon compliant & SLA driven
Optimsed picking and packing process according to specified TAT

Automated reconciliation of your Amazon payments

You can record your Amazon commercial agreement in Eshopbox platform. This helps you digitise the complex fees structure of Amazon. Once recorded, Eshopbox system gives you the access to accurate and detailed information of every item invoiced to Amazon customer with its real-time payment status— due date, paid amount, whether a refund is issued, refund amount, refund date and so on.

This streamlines everything from filing expenses to matching it with the agreed fees structure. It enables you to analyse your overall costs, identify overcharges, and control excess expenditures.

Additionally, you can make unlimited fees revisions to record and track changes when you are running promotions like flash sales, deal of the day and more.

Automated reconciliation of your Amazon payments
Automated reconciliation of payouts

Conclusion

If your competition is Amazon or any other online retailer in your market, you can position yourself better through semantic capabilities. Applying core business strategies that made Amazon successful in your operations can give you the right direction. But you need to move forward by effectively keeping up with modern consumers, increasing loyalty by being customer-centric and most importantly, planning, measuring, and adapting to the changes in the market.

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