eCommerce

How to Combat the Amazon Effect

It is projected that Amazon will do $468 billion dollars in E-Commerce sales in 2021. In the United States this past year Amazon’s sales made up 31.4% of all E-Commerce revenue. So the question here is how can brick-and-mortar stores or independent E-Commerce sellers compete? The answer; they must address the “Amazon Effect” straight on. 

The “Amazon Effect” refers to the disruption of retail and rising consumer expectations as a result of over 200 million people shopping on Amazon’s platform. Some growing expectations of consumers include extremely fast shipping, one-click to buy, 24/7 customer service, and easy returns. While the “Amazon effect” has greatly impacted brick and mortar locations it is also taking a toll on other E-Commerce businesses. 

While Amazon’s rising success can be daunting to independent sellers, all hope is not lost. Here are four ways to compete with some of the world’s largest online retailers. 

Focus on Convenience 

Online shopping has become increasingly popular even before the pandemic. One of the major factors incentivizing online shopping is how convenient it is. If you can shop from the comfort of your home, pay nothing for shipping, and receive your item in a couple of days what would be the motivation to shop in person?

It is important for independent E-Commerce businesses to take into consideration how important convenience is and use it to their advantage. Amazon prime users receive free two-day shipping and will expect similar deals on other sites. Amazon also offers hassle-free returns which is often a deciding factor for buyers to place their orders. With easy return policies, there is less risk in making the purchase. 

In order to compete with Amazon, Shopify, or any other E-Commerce giant sellers have to mimic similar practices. Finding a way to lower shipping costs and shorten delivery times is a great place to start. One way to achieve this is by using a third-party logistics provider that offers on-demand warehousing. Storing stock in distribution fulfillment centers will bring the product closer to consumers, shortening delivery times and lowering prices. 

Offering hassle-free return policies can put independent sellers on the same playing field as the larger E-Commerce sites. It is not uncommon for buyers to back out of a purchase because they cannot easily return it. Online sales, especially of clothing, can be difficult for users to buy sight-unseen. Having the ability to easily return a product that doesn’t fit or meet expectations will help them to trust the brand and place more orders in the future. 

Create a Customer Relationship 

One thing to leverage as an independent seller is making a human connection. While Amazon can offer 24/7 customer support, they will never develop the customer relationships that smaller sellers can. People like to support other people, not huge conglomerates. 

Personal connection is key, but we have to keep in mind the convenience element. The best way to achieve both is by responding personally to messages, DMs, and reviews as quickly as possible. If this requires hiring a customer service team, then so be it. Consumer’s ability to bypass recorded messages or automated responses on your site could be the reason they chose to purchase through a smaller vendor in the first place, so it is worth the investment. 

Building positive customer relationships leads to customer loyalty and higher retention rates. Loyal customers will start conversations about your brand; spreading awareness and earning you free marketing. Creating loyalty programs, email discount codes, and other incentives will encourage customers to make a lasting relationship. 

Leverage Social Media and SEO 

With over 4 billion people on social media and North America and East Asia having the highest social penetration rate at about 70% eachleveraging social media is crucial. However, without experience, social media can be a daunting part of your business plan. If you come across as too sales-y you can scare away potential customers. But, when done correctly, social media can be a great tool to connect with your audience and market your business. 

The first thing you want to do with your social media platforms is to get people talking about your products. Promotions and giveaways are good tactics to strike up conversations and get your audience involved with the brand. Next, post content that is relevant, and always make sure your products are shoppable. Having a conversion tied to your content is crucial for creating a lasting relationship with users. Once your platforms are established you can then consider working with influencers or bloggers to further your reach. 

Search engine optimization (SEO) will guarantee more traffic to your site. 71-92% of traffic clicks come from the first page of Google search results. It is extremely difficult to increase sales and ROI if users cannot find your website. Utilize Google Adwords to work towards becoming one of the top search results for your industry. 

Consider a Partnership 

While Amazon may seem like the enemy, the platform can be of a lot of value to independent sellers. The idea that Amazon is a monopoly stealing sales from retailers is outdated. Amazon actually sold 55% of paid units through third-party vendors in 2020. It is a great way for smaller businesses to gain exposure to a larger market. 

Amazon can serve as an additional channel in which to sell your products. Another benefit is that selling through Amazon doubles as marketing. Just by having your brand’s name on the site, you are gaining access to Amazon’s 2.44 billion viewers. Also, if customers recognize your brand from Amazon later on they may be more likely to visit your site and buy directly from you. Consumers know that buying directly from the seller can often bring benefits like discount codes or other deals. Having your products on such a well-known site will raise brand awareness and can make your company seem more reliable. However, keep in mind that Amazon has very strict seller guidelines and there are often large selling fees. Be sure to weigh your options before deciding what is in the best interest of your business. 

How Locad Can Help?

LOCAD is a great resource when fighting the "Amazon Effect" for a multitude of reasons. To start, unlike Amazon, LOCAD will always have your business needs in mind above all else. Working with a large E-Commerce seller like Amazon or Lazada can bring some benefits, but they will always have their needs prioritized above the smaller sellers. 

LOCAD offers hyperlocal fulfillment so you can get your products into the hands of the consumer as quickly as possible. Instead of housing inventory in one large warehouse, we distribute to smaller fulfillment centers in order to shorten the last mile. As you scale up, we will work alongside you to broaden your distribution warehouse network and inventory management. We pride ourselves on helping entrepreneurs navigate the E-Commerce space and stock, store, and ship their products as effectively as possible. 

As a major shipper, LOCAD has developed relationships with many contracted couriers and can offer your business the best rates possible, leading to significant savings. With the help of LOCAD's network, you can cut back lead time and shipping costs dramatically. Putting you back in the game with the top E-Commerce sites around the world. 

Contact us today to learn how to get started on your own custom dashboard to receive full visibility into our smart supply chain network, in real-time.


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