Competing with Amazon

If you’re the owner of a small retail or wholesale business you already realize that Amazon has had an impact on your sales. But the general hysterics surrounding the online-shopping site that says it will put you out of business are partially unfounded (Amazon only does 13% of online sales, which are still only 20% of the market). Yes, Amazon is and will continue to have an impact, especially when smart-phone users are can compare prices while shopping in your store, but Fox Books doesn’t always have to put The Shop Around the Corner out of business.  Here are a few tips to help your SMB compete.

1.   Lower prices and create incentive.

Amazon’s prices are low, but they aren’t the lowest out there, so price match, or at least come close to their prices. You could even buy an iPad and tether it in your store with a sign that says “Compare with Amazon Prices Here” to show customers the “deals” they are getting in your store. Yes, we know about margins, wholesale, retail, overhead, and cost of wares. But you can still survive! 300% and in many cases even 50 and 100% margin are things of the past. Match the prices and then create an incentive to come back to your store. Drop a Groupon-like coupon into the bag with your customer’s purchases, create a punch-card or a loyalty program that will keep customers coming back for more than just the price.

For loyalty programs we suggest looking to Michaels Crafts. Michaels certainly isn’t a small business, but it has a budding and incentivizing loyalty program, and though it doesn’t always have the cheapest prices, it has loyal customers. The Michaels’ loyalty program offers additional percentages off for weekly member deals as well as welcome and birthday deals. Michaels also always offers a 40% off one-regular priced item coupon (which is especially smart considering customers always like getting a deal).

2. Use Amazon to your advantage.

Amazon has an incredible tool that is ready for you to use: its recommendations engine. Amazon has spent bundles investing and perfecting its algorithms that create recommendations that predict or suggest what customers may buy next. If you don’t have an Amazon account, get one and start using it for some of the products you sell in your own store. Take Amazon’s recommendations and group them together in your own store to direct your customer’s buying.

3.  If you can’t beat ‘em, join ‘em.

Open an Amazon store. Amazon offers two options for third-party hosts: an Amazon Webstore is a fully hosted e-commerce solution while Amazon Services offers selling on Amazon, where you upload your inventory and Amazon shows it within their system. This opens up your shop to a world-wide audience. There are many shipping options to make your products competitive that still allows you to stay viable in a big-business market.

4.  People like to work with people more than they like to work with computers (engineers aside).

Creating a positive customer experience through kind and knowledgeable staff gives you something Amazon will never be able to touch. Circuit City went out of business, along with many other retailers, when they insisted on trying to maintain high margins, overexpanded, and laid off knowledgeable employees who loved the products and their jobs. They brought in inexperienced employees with little product knowledge and could not create a unique shopping experience for customers. Going to a shop where the staff is able to genuinely help a customer, past making change, is a serious draw. There is a small and independently owned comic book/game store, Adventurers Underground, in Richland, Washington that has such a friendly staff (and a large Irish wolf hound) whose recommendations go far beyond, “would you like fries with that?” Their prices are just slightly above Amazon, but it’s a store we continue to frequent when in the area because of their well-informed staff.

Amazon is not the end of your small retail or wholesale business, though it is a game changer. Using these tips can certainly help make your business a competitive option for customers, especially if you offer them more than just price

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One thought on “Competing with Amazon

  1. After being herded through flights and unable to talk to humans on phones when needing help, I’m all for a company that has customer service with knowledgeable associates. You’ve made some good points here.

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