Dare to Compete With Amazon: A Few Practical Tips for Small Retailers

by Sean Ross

3 min read

Amazon is the world’s largest retailer and one of the most valuable companies of all time; as of February 2017, the company had a market capitalization over $520 billion CAD. The Canadian version of the website (Amazon.ca) offers well over 100 million products; the original Amazon.com offers more than 450 million and often at the lowest prices. For small business owners, especially in the retail space for finished consumer goods, Amazon may seem like a nightmare competitor. You can take these steps to offset (or at least minimize) Amazon’s advantages.

Offer Special Goods That Aren’t Available Anywhere Else

Amazon is the largest competitor to just about every product seller, with one obvious exception: retailers who offer something completely unique. The most competitive markets – areas such as electronics, home and garden, children’s toys, furniture, and media – tilt heavily in Amazon’s favor. The more niche the market, however, the less likely Amazon is to flood the web with cheap alternatives. One increasingly popular option, especially for companies with lots of SKUs, is private-label branding. Private-label goods perform well as incremental offerings; they accent your big-ticket items in a unique way. They might have features that other big-brand competitors either can’t offer or are not offering.

Emphasize Customer Service and Personal Interactions

If you can’t sell something completely unique, you may be left competing directly with Amazon. That can be a challenge, since it’s very difficult to beat out Amazon on price. Amazon aggressively re-invests its scale advantages to drive prices lower and make its website faster. The Amazon website is so connected and its inventory is so vast that it’s basically a search engine for merchandise. While the search engine-style shopping is extremely convenient, it isn’t always a pleasant or warm experience. A wonderful experience can make your shoppers feel special. If you rely on brick-and-mortar sales, think about ways to build a lasting, positive psychological impression, such as beautiful window displays or sleek in-store end caps. You may find that your consumers care less about price (and may be more prone to make impulse purchases) when they trust or like your company. It’s still a very good idea to target the lowest possible price. Even if you can’t squeeze your margins as much as Amazon can, you should aim to minimize the difference. Get the price close enough that your superior customer experience can convert shoppers to your store.

Do NOT Ignore Online

Even though Amazon is the undisputed king of modern online retail (at least in terms of sales and scope), that doesn’t mean your company can afford to ignore the e-commerce scene. If one of your potential customers is bent on shopping online, do not rob them of the option of choosing you instead of Amazon. Aim to improve your users’ online experience. Customers like it when they can navigate intuitively and purchase easily. Many niche e-commerce sites understand that a better experience often beats out a slightly lower price on Amazon; the key is to combine beauty and functionality. Work with web developers to improve the page load speed for your site. You might think about keeping an eye on search engine optimization and online marketing. These are not easy fields to master, but odds are that you’ll need more than a novice understanding to identify and attract customers.

Don’t Skimp on Purchase Order or Accounting Software, Either

Retailers should rely on secure, competent purchase order software to manage their transactions. The idea is to streamline reports, procurement, vendor orders, compliance, and all of the other tiny details that go into purchase and inventory management. You want a software that can help you create, approve and track your purchase orders much faster than the old-school paper method. You also need to make sure your information is secure and, if possible, improves workflow and approvals. Ideally, the purchase order software works seamlessly with your accounting software. This way you can maintain transparent relationships with customers and suppliers, and you don’t have to waste a lot of money on tax management or internal bookkeeping procedures. Amazon is not an easy bully to deal with, but it isn’t omnipotent. Your main goal should be to shore up those areas where Amazon usually destroys smaller retailers (cost and online shopping) enough so that your unique advantages (unique products and customer services) can build a loyal customer base.

References & Resources

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