If you’re selling physical products online, you’ll have to face a daunting reality: Most likely, your biggest competitor is Amazon.
Boasting net annual revenue of over $135 billion, 43% of U.S. online retail market share, and 53 percent growth in 2016, Amazon is the undisputed Goliath of eCommerce. But that doesn’t mean you should just bow down to this retail behemoth; there are plenty of ways to compete against even the biggest of eCommerce players. The key is to find ways to differentiate your product and exploit Amazon’s vulnerabilities (yes, they do exist).
Legacy brands like Walmart, Apple, Target, and Sears, runners-up on the list of highest grossing online retailers, have all found ways to compete against Amazon — with various degrees of success. And thousands of lesser known eCommerce brands are disrupting markets, exploiting niches, attracting loyal customers, and making millions annually.
While Amazon has created an amazing business providing consumers with an outstanding shopping experience and low prices, it’s certainly not unbeatable. Here are six ways you can compete with and even beat Amazon:
Leverage your brand
Amazon excels at giving consumers literally millions of options at low prices and delivering merchandise free of charge within days or even hours. Additionally, the brand has built trust with consumers in the U.S. and around the globe by guaranteeing secure payment options, easy returns, and unbiased user-generated reviews. Essentially, Amazon is winning on selection, price, and convenience.
Now let’s look at some of its vulnerabilities. First off, Amazon is “the everything” store. You can find three-toed socks, lawn mowers, flatscreen TVs, the complete works of Shakespeare, and even full-body radiation suits for use during a dirty bomb evacuation. The list seems endless. However, Amazon has deliberately made it difficult for consumers to distinguish one brand from another within its vast online store. Essentially, most products have become commoditized under the Amazon brand. This creates an opportunity for companies to build a distinctive brand and following, and carve out a competitive advantage.
You should also look to showcase your brand’s expertise through product descriptions and content. Although Amazon now supports written, photo and video customer reviews, the platform doesn’t present the authority of expertise that a company with a specific niche would have. Here is another opportunity to outshine Amazon. Through consistent, high-quality content marketing, you can easily outshine Amazon in terms of highlighting your brand’s deep expertise.
Another excellent way to differentiate your brand is to offer VIP experiences for your most passionate followers. This might be a personal tour of your offices, an invitation to meet some of your creators, a private party, or an event where fans can “live the brand” in person. Online, you could offer exclusive and early access content. You might offer a sweepstakes that fans can enter for a chance at winning one of these VIP experiences.
A brand that is doing a great job of using its niche to attract followers and fans is Beardbrand. The online retailer is a one-stop-shop for all things beard related and is using its focus on facial hair to build a strong social media presence and entice beard enthusiasts to become customers. This kind of brand presence is just not possible within the Amazon store.
Prioritize user experience
It’s paramount for any online company to offer shoppers an exceptional user experience. This means ensuring brand consistency and simplicity across platforms and devices to help consumers navigate the increasingly diverse digital shopping landscape.
Interestingly, mobile purchases represented nearly a quarter of online retail sales in 2015. Statistica estimates mobile will account for 50 percent of retail by 2020. Of course, Amazon has a strong mobile presence, so enabling mobile purchases will only get you to par with the retail giant.
Where you might outflank Amazon is by focusing on delivering more thoughtful design and a cleaner, simpler user interface. Amazon’s user experience is outdated, messy, and overwhelming. This is what happens when you’re trying to sell nearly 400 million products under one digital roof.
With far fewer SKUs, your store can offer a user experience that much more delightful for customers to navigate.
Don’t compete on price alone
You’ll likely never achieve the economies of scale that Amazon enjoys. So a smart strategy is to not compete at all on pricing. Rather than race to the bottom on prices, add value by offering unique products that are hard to find anywhere else.
For instance, you could offer exclusive, limited-quantity products or collector’s items that are only available to your members. Or, you could offer special product upgrades, bundles, or customizations that can only be found on your online store. Other tactics include enabling a mix of digital and physical products, pre-orders, or bonuses for high-ticket purchases.
One eCommerce brand that is employing some of these strategies effectively is Huckberry, the online purveyor of outdoor gear and apparel. First, the site requires visitors to sign up as members if they want to browse and purchase products. But it makes membership worthwhile by offering items that are exclusive to its members.
Offer free shipping
After the widespread adoption of Amazon Prime, online shoppers now expect seamless delivery and free shipping. In fact, a recent survey found that convenience was the second most important factor – next to price – for Amazon customers.
To compete in the online marketplace, you must provide shoppers with tracking details, no commitment returns and, yes, free shipping. While free shipping itself won’t give you the advantage you need to control significant market share, it will be hard to compete without offering some kind of “free shipping” option. Depending on your profitability margins and business model, shipping could be free on every item or above a shopping cart minimum.
For a good example, check out Casper. With sales of roughly $200 million in 2016, the startup is changing the way people purchase mattresses by offering free delivery and “painless returns.” Its mattresses come in a box delivered to your front door. Also worth noting is the elegant design of its website and checkout experience.
Needless to say, you need to have your systems for ordering, inventory management, and fulfillment all integrated to make shipping completely reliable.
Target niche markets
Niche markets present opportunities for smaller companies to earn a reputation as the most informed and go-to supplier in a specific field. To build consumer trust, it’s important to truly become an expert in your product area and illustrate your authority through branding.
Huckberry is an example of a company that is benefiting from its expertise in a specific market. Although many of the products sold on the outdoor brand’s online store are available on Amazon and other platforms, Huckberry is generating sales and beating the competition by establishing itself as an expert in camping, hiking and adventure merchandise for the backpacker and the casual outdoors lover.
The lifestyle brand features the industry’s latest products as well as informative and inspirational content to build its reputation as a top brand in outdoor apparel and accessories.
Offer rewards and subscriptions
After gaining your target demographics interest and trust, it’s time to turn those followers into subscribers. According to Business Insider, 48% of eCommerce sales come from repeat customers who are twice as likely to make a purchase than first time buyers. Attracting subscribers is an excellent way to reduce uncertainties in sales projections and secure a steady cash flow.
Another way to strengthen relationships with consumers is to build rewards and loyalty programs in which repeat customers receive special offers, discounts and bonuses. Membership programs are so effective that they can lead to retention rates of over 90 percent.
Other than its Prime membership program, Amazon doesn’t offer any kind of loyalty program that rewards customers for buying more frequently or filling up their carts with more items.
Running an eCommerce operation at scale is complicated enough. If you also need to compete against Amazon, you need to move with speed and agility.
Scalefast makes it easy by offering end-to-end eCommerce services including online store management, packaging, labeling, shipping, subscription management, payment processing, merchant of record services, and more. Contact us today to learn how we can position you better to compete better against Amazon and other online retailers in your market.