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Amazon’s war on small businesses isn’t set to die down anytime soon.
In fact, judging by the data we found on Amazon’s power, their predicted eCommerce takeover is likely to put the fear in small online retailers all over the world—no what stage of business they’re in.
Not only are they actively selling over 12 million products (plus a huge selection of books, wine, services and media), but their standalone website is also expected to hold 50% of all retail eCommerce global market value share by 2021:
But the game is not over yet.
Although Amazon are gearing up for their biggest year ever, it’s not impossible for small businesses to compete for their customers - we'll even tell you how to beat Amazon below. But first, here’s why.
3 Reasons Why Competing with Amazon Isn’t a Total Waste of Time
1. Not All Amazon Consumers are Loyal
Granted, Amazon’s Prime loyalty scheme is doing a great job at convincing previous purchasers to head back to their site in the future.
...But it doesn’t work for everyone.
53% of consumers ‘never’ or ‘sometimes’ compare prices on other websites before purchasing on Amazon. Amazon might be their first port of call, but they’ll look elsewhere first.
Source: Amazon Consumer Survey
Add to that the 28% of consumers who don't shop on Amazon, and suddenly you're looking at a potential 82% of online consumers who could be your customers.
2. Customers Will Pick Another Retailer If They Offer Free Returns
Did you know that Amazon only offer free returns on their products if the reason for the return is Amazon’s fault? They say:
“If you return an item using a prepaid method (dropoff or pickup) from the Online Returns Center, and the reason for return is not a result of an Amazon error, the cost of return shipping will be deducted from your refund unless your item qualifies for a free return.”
Although that’s bad news for Amazon customers, it’s great news for small businesses—especially considering that over half of consumers will pick another store if they offer free returns:
Combine that with the 34% of people who will only make a purchase if they’re able to return the item for free, and you’re already at a huge advantage by offering free returns on your own products.
3. Amazon’s Product Descriptions Are Fairly Weak
Although 19.8% of Amazon customers made a purchase as a result of a convincing product description, the bar isn’t set very high.
Just take a look at this one describing a pair of luggage tags:
“Our Bride and Groom luggage tags make the perfect gift for the happy couple! SPECIFICS: - 2.5"h x 4.25" with 9" strap buckle - Tag is embossed with "Bride" in black and gold diamond & '"Groom" in gold.”
...Not very convincing, right?
How To Beat Amazon: A Giant-Killing Guide for Small Businesses
Ready to dust off your boxing gloves out and convince potential customers that you’re more worthy of their cash than Amazon?
Although you won’t need to go to that extreme, here’s two steps for how you can beat the Amazon giant - Be Friendier and Be Faster.
1. Deliver A+ Customer Service At All Stages in the Buying Process
Did you know that just 67% of Amazon shoppers are ‘very satisfied’ with their customer service?
Granted, that sounds like a huge chunk of happy customers—but it means a third of their current pool of customers aren’t happy:
Is this why consumers are looking to other stores that offer perks (such as free returns)?
Smaller businesses have the upper hand over Amazon—and the potential to steal 33% of their customers—by offering customer service that blows Amazons’ out of the water.
This is possible if you’re:
- Always going the extra mile to help potential buyers
- Sending handwritten notes to customers
- Being empathetic when dealing with your customers’ problems
- Quickly responding to any problems or queries that come your way
On average, the top 100 retailers in the U.S. take 17 hours to respond to an email.
Since your small business is likely to have fewer enquiries, there’s a strong chance you’re able to solve your customer’s query long before one of Amazon’s customer service team reads their initial email.
That’s always going to put you in a consumer’s good books, and great customer service will get you extra word-of-mouth too. Just ask Zappos.
2. Make Checkout Easier and More Convenient for Your Customers to Purchase
If you’ve ever tried to purchase a product on Amazon, you wouldn’t be alone if you felt frustrated with their checkout process.
If you’re not familiar, they use an account-based checkout system. You can’t make a purchase without signing up.
37% of all online cart abandonments happen because the site they were trying to purchase on wanted them to create an account:
Source: Baymard Institute
Why not eliminate this from your customer’s buying process and capture the customers Amazon are obviously missing out on?
You could also:
- Allow potential customers to check out as a guest
- Confirm that the checkout page works well on mobile devices
- Make sure your site uses HTTPS
- Enable social login (one-click, instead of filling out forms)
Here’s a great example of how Fab’s checkout page makes it easy for customers to purchase by enabling social logins:
Since you’re able to use trusted pre-authorized websites to store your information, why wouldn’t you opt for this checkout process over Amazon’s?
3. Build A Community
If there is one thing that every small business has over the giant online retailer is that small retailers can build a community. Whether it's a weekly live chat via social media, a local event for the holiday season, or a membership-type of online forum, creating a sense of community can eventually lead to more online sales.
In fact, 63 percent of consumers say they prefer to shop with brands that have the same values and beliefs as they do. And 90 percent of shoppers say they will choose an authentic brand over its competitor.
And what better way to demonstrate a brand's values and authenticity than through a community?
There are two ways to do this:
- online retailers can create an online community
- local retailers can get involved with events within their community
Since Amazon's success is largely due to its monstrous size and focus on mass-market, there is a gaping hole in community bonding that many local retailers can (and gladly) fill.
So how do you build a community?
One way that an online retailer can create a sense of community is by creating a forum, or an open space where people can come together and share their experiences. Many brands bring their customer base online through forums, subreddits, and community-based blogs already.
Others opt for in-person events so that their customer base can get to know the brand they are shopping with.
Either way, creating a sense of community helps brands establish trust with their customer base...
...something that a big brand like Amazon simply cannot fake.
4. Personalize The Customer Experience
Personalization is an easy and thoughtful way to improve the customer experience and build brand loyalty. It's also something that Amazon's online store is sorely lacking.
Sure, the shopper will get a list of related items every time they look at a product listing on Amazon, but personalization ends there.
With small retailers, though, there is a tremendous opportunity to customize the entire online shopping experience.
Segmented email lists, loyalty program perks, holiday season discounts are super easy personalization tactics that every online store can utilize.
5. Focus On Niche Products
Amazon's dominance is largely reliant on the convenience it provides to consumers. Bulk toilet paper, basic items found in grocery stores, and household goods are the star players in Amazon's success.
Niche products, however, are not. Unless, of course, they are sold by a third party seller inside the platform.
So if you're a small business that is trying to compete with the convenience factor that Amazon provides, then you simply will not win. But if you can hone in on niche products that can only be found by shopping in your online store, then you can surely beat Amazon.
Final Thoughts: Can Small Businesses Compete with Amazon? (Yes!)
Now you’re in-the-know about the power you’ve got when competing with Amazon for online sales, use it to your advantage.
Focus on boosting customer loyalty and build branding evangelists, but don’t feel intimidated by Amazon’s market share.
Remember: Customers will always pick the brand that goes above and beyond to meet their needs—whether they’re looking for a new pencil or a $5,000 hot tub for their garden.
Although Amazon is the biggest eCommerce brand in the world, they’re not untouchable.
Next week, we'll have more about how to beat Amazon at their own game!
ReferralCandy Guide: How to Compete with Amazon:
Part 2 - How to Beat Amazon: Amazon's vulnerabilities and how Small Businesses Can Beat Amazon (you are here)