It’s hard to imagine now, but in 1994, Amazon was just an online book retailer. Fast-forward 20 or so years, and in the second quarter of 2019, Amazon booked over $63 billion – billion with a “B”! – in retail sales. Amazon killed the likes of Barnes and Noble and has been gobbling up categories left and right ever since. Therefore, as a small business, it’s hard not to see Amazon as a threat, especially for newer businesses.
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Most Small Businesses See Amazon as a Threat
According to Lendio’s American Dream Survey, many small business owners see Amazon as a threat to their profitability and long-term health. Over 2/3rd of small business owners see Amazon, Google, and other large companies, e.g. Walmart, as having a negative impact on their long-term growth.
Our client David was concerned about online retailers stealing market share and customers. He was finding that many potential clients came into his store to look at the merchandise, and then, use their mobile device to purchase it on Amazon. It was infuriating to him. He was acting as a showroom, carrying all the overhead so Amazon could make the profit. He was frustrated and didn’t quite know what to do.
David’s Sling Shot – How Did He Overcome Goliath
Well, if you’re looking for the classical biblical ending, you won’t find it here. But you will see how David was able to grow and start to get his fair share by working with Amazon instead of fighting it.
Give them what Amazon can’t – an experience
It’s the biggest flaw in the e-commerce’s armor. All the best algorithms in the world still can’t make people feel like they’re special or going to look like a million bucks. David could. So, that’s where we focused. We had to yield the ground to low-end inventory and focus on upselling either the high-end unique products or in selling a full look. If you purchased in-store, David would ‘dress’ his clients. This meant they would leave with a full look.
He still lost some of the browsers, but they weren’t likely to purchase anyway. It was OK, as this gave him more time to focus on his engaged customers. He was able to increase their average dollars spent per visit by over 40%, just by upselling. He made them look and feel beautiful. That’s something no e-commerce retailer can do, today. It is also why so many new businesses still rely on brick-and-mortar.
Power of Positive Experiences
So, guess what? When you make a customer feel great, what happens? They tell others. This switch in approach caused his Yelp and Google My Business rating skyrocket. It seems like common sense, right? Well, if you want clients to go out of their way, then you need to give them something special. In David’s case, it was the way he made them feel. Emotions drive reactions more powerfully than anything else. David’s brand, essentially, was his care for others.
Finally, if you can’t beat them, join them
According to Amazon, small- and medium-sized businesses accounted for $2 billion in sales during the last Prime Day. While that may be true, you want to smart about how you show up on Amazon, so it isn’t a race to the bottom on price. David did. He opened his own Amazon store, where he only sold curated outfits, not individual pieces. Amazon is set up to sell bundles as easily, so there was no simple way to directly price compare. While he couldn’t repeat the store experience online, he could differentiate his product offering. With the added fees, he wasn’t going to win on price without hurting his margin. So, he changed the rules of the game and accellerated his small business growth.
So, What If You’re Not David?
You can still win vs. Goliath if you follow a few key steps.
- Focus on what they can’t deliver – an experience: Even if you can replicate what David did, ask yourself this – What can you do to make sure that people leave your store feeling better than they did when coming in
- Build on the power of positive experiences: If people exit your store feeling better than they did entering, they are more likely to provide you with positive reviews. A positive review pays dividends long after the experience ended
- Learn how to join them: Don’t try to compete head-to-head on price. Find a way to offer something that they can’t. Maybe it’s a bundle, like David? Perhaps, it’s a limited-edition promotion? Whatever it is, you’re likely to be more successful if it’s something that can’t easily find elsewhere.