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4 Ways SMBs Can Compete With Amazon on Cyber Monday

By Marissa Allen
Oct 12, 2018 5:00 AM PT
small and mid-sized etailers should prepare to leverage amazon for cyber monday sales success

E-commerce companies compete with Amazon for shoppers year-round, but especially around the holidays when Q4 earnings are made. More than 75 percent of U.S. consumers shop on Amazon despite endless e-commerce options.

Amazon commands more than 49.1 percent of all online sales and has more than 300 million active consumer accounts, making it a competitor that can't be ignored.

With e-commerce gaining traction as a shopping option during the holidays, small businesses and brands need to adapt to compete and thrive alongside Amazon.

Whether you intend to fight or align with Amazon, it is crucial to consider it in your digital plans.

Increasingly, Amazon is not just a selling platform but rather an advertising opportunity. Consumers make purchase decisions based on research conducted there, making Amazon ad space highly valuable.

Competing with Amazon is inevitable. As the largest e-commerce retailer in the U.S., Amazon garnered 1.8 billion in average monthly traffic, based on a recent study. Ignoring this giant is not only a poor strategy but hardly is feasible anymore.

E-commerce companies stand to gain from a better understanding Amazon's position relative to their brands. There are ways to leverage Amazon or strategically compete for market share.

Following are four ways e-commerce companies can compete with Amazon this holiday season:

1. Understand Why People Shop on Amazon

Eighty percent of U.S. and UK shoppers recently surveyed reported they check prices and reviews on Amazon first before shopping elsewhere.

This shows the extent of Amazon's reach in e-commerce. Consumers are drawn to the online marketplace for the breadth of products, free and fast shipping, Prime membership perks and convenience.

Amazon Prime memberships come with benefits for members, such as free two-day shipping, access to Prime video streaming, Amazon rewards credit cards, and more. Amazon Prime members pay for their membership, which creates a further onus to buy from the site rather than look elsewhere.

2. Find Your Own 'Prime'

You are what Amazon is not. Identify your unique and compelling offering or experience, and amplify it. Understanding your business' key differentiators from Amazon is crucial to establishing a loyal customer base that will choose you over Amazon.

For instance, if your brand has an active and devoted social media following, make use of this community. Leverage ads and marketing to compel your devotees to shop with you over the holidays. Keep in mind that 64 percent of Cyber Monday Facebook ad conversions came on a mobile device in 2017, meaning that your website should be optimized for mobile shopping too.

Other ways to find your own "Prime" include shipping offerings, pricing, customer service and more. Shipping is one of the first things consumers think of when it comes to Amazon. Is there any way to offer discounted shipping for holiday sales to increase your competitiveness with Amazon?

For companies with high shipping costs that cannot be adjusted due to logistics issues, this raises questions about how and whether this can change. Shipping expectations overall gradually have changed from two weeks to five-to-seven days, to now two days as the ideal for e-commerce.

For companies that can not keep us with this due to third-party logistics (3PL) situations, understanding this trend will open up an awareness of the need to make changes -- or at least communicate value beyond quick shipping to their end consumers.

Assess competitive pricing by searching Amazon for your competitors to ensure you have a full picture of the price comparisons your shoppers will be making -- and adjust accordingly. Strive to make the purchase journey as seamless as possible, offering multiple payment options and welcoming negative feedback to improve.

Leverage a physical store, if possible, to create an omnichannel experience that keeps customers engaged. Provide excellent customer service through loyalty programs and exclusive offerings that make loyal shoppers feel valued.

3. Don't Put All Your Eggs Into One Basket

Amazon should be viewed as a competitor and also as a useful channel. E-commerce businesses should assess the opportunity of selling and advertising on Amazon as a way to meet their customers where they are and gain valuable insights.

Amazon is a fit for a wide spread of companies, and businesses should evaluate their fit regularly. The top five categories of goods sold on Amazon include clothing, shoes and jewelry; home and kitchen; books; electronics; and sports and outdoor.

If an e-commerce company fits into these categories it is a clear fit. Even for those that don't, there's still a chance for success because of the 500-plus million products sold and searched for on the site.

A few key characterics that companies should consider when evaluating their fit within Amazon:

  • You're a consumer packaged goods or e-commerce company;
  • You're looking for growth opportunities outside of traditional channels;
  • Your company has a higher profit margin;
  • You have a good handle on distribution agreements -- or you are the manufacturer or private label brand of your own products.

Taking these characteristics into account should move companies to consider whether competitors are selling on Amazon, how the third-party platform can grow brand awareness, and how different Amazon programs may allow businesses not yet at full maturation to achieve increased visibility.

4. Avoid Pitfalls and Reap Benefits

Companies that consider shifting their approach to include Amazon need to consider a number of potential pitfalls in order to see the full benefit of the change. Cannibalization, competition and lack of brand loyalty are potential pitfalls that could thwart an Amazon strategy.

When it comes to cannibalization, brands should consider that adding Amazon as a portal for access to their products could take away traffic from their own sites. To avoid this pitfall, brands need to consider ways to attract completely new buyers through Amazon.

Keep in mind that more than 53 percent of Amazon shoppers are between the ages 19 and 44, so perhaps tailoring your Amazon portal to reach a younger demographic would be an appropriate shift.

Competition comes into play if Amazon has created a branded product that competes with yours. Consider how to make your product stand out by considering if it is higher quality, or has features or offerings that the generic Amazon version does not. Leverage those differentiators beyond price.

Lastly, brand loyalty is nearly nonexistent when it comes to Amazon shopping. Price and suitability are more likely to outweigh a specific brand for shoppers on the site. Keep in mind that this audience may be more budget-conscious than your typical customer, and make adjustments accordingly.

Amazon as a selling channel can offer instant value for a brand by providing a wider audience for possible sales conversions, in addition to insights that can't be gained otherwise. Amazon provides sellers information about customer satisfaction based on factors such as order defect rates, late shipping rates, and rates of customer dissatisfaction with communication.

In addition, insights can be gained about product category, search and more, which can be useful for your own website. The important thing is not to rule out Amazon as a possible channel for sales, insights or advertising.

Its reach and ubiquity already is unmatched, and Amazon continues to grow. Understanding why consumers shop with Amazon, how to leverage your own "Prime," and not ruling out ways to leverage Amazon as an asset will contribute to success in playing on the competitive field it dominates this holiday shopping season.

Ultimately, holiday shopping days are just points in time that bring the need for this kind of engagement with Amazon to the forefront. E-commerce brands stand to gain when they more broadly consider their business relationships with Amazon.


Marissa Allen is head of retail and e-commerce at Wpromote.


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