- Are there any chances that your eCommerce store can compete with Amazon?
- How important is your brand for Amazon customers?
- Fulfillment by Amazon: What? Why? When?
Amazon is indeed an intimidating behemoth of a business. The knowledge that, by launching your own eCommerce business, competition with the conglomerate is unavoidable has dissuaded many a would-be eCommerce entrepreneur.
The good news is that there are steps you can take in order to give yourself the best shot at competing with Amazon. Here are some things you can do to give your fledgling eCommerce business the very best chance to succeed:
Private Label or Branded eCommerce
Most eCommerce companies today are still utilizing dropshipping as their primary business. Margins are quickly eroding, however, since so many people are getting into this industry and there are fewer and fewer opportunities to capitalize on a product (or series of products) and maintain profitability.
The most successful and enduring eCommerce companies have already transitioned to private label or branded eCommerce.
Branded eCommerce means that you are selling products with your brand. You are effectively requesting the manufacturer to inscribe your logo onto the products they create, which you will in turn sell through your website.
This technique is very useful, because without it there is no way to build true brand loyalty. If you have a content-rich and inviting website, and you have no difficulty in acquiring visitors, why not build your brand? This way, if you are selling towels and washcloths (for instance), your customers will come to associate these purchases with your company.
The alternative to this is if you are, in fact, manufacturing your own products. This is particularly powerful, as you will be able to control all aspects of production.
The main benefits of private label eCommerce are that you will be able to control your price and your profits. You’ll also be able to build a relationship with the manufacturer, which will enable you to set your own production schedule. The only downsides are that you will be at the mercy of this same manufacturer, and you will have the chance to learn first-hand that building a brand is a lengthy and resource-consuming process.
These cons, however, are dwarfed by the pros. If you are looking to create an eCommerce business that can truly compete with Amazon over the long haul, you’d be making a mistake by resorting to dropshipping.
Build a Lifestyle
To give you an idea of how this works: let’s say you want to start a business in which you sell wooden sunglasses. If you were to go on Amazon right now, you would almost assuredly be able to find these sunglasses at a price against which it would be nearly impossible to compete.
To a customer, however, this is an Amazon pair of sunglasses. There is minimal brand exposure. It’s just a wooden pair of sunglasses bought from Amazon.
So you decide that if you can’t compete with Amazon on price (you can’t), you can compete with them in prestige and appeal (you can). You decide to create a website that appeals to your target demographics. Your eco-conscious consumers are going to love the fact that wood is biodegradable, and that your sunglasses are sustainable. Your active customers are going to love that fact that if your sunglasses fall off while surfing, paddle boarding, or kayaking, that they will not be lost: they’ll simply float and wait for you to scoop them up. And you might even win more customers over by partnering with a wildlife conservation organization that donates a percentage of the profits (accounting for the price differential with Amazon) for each pair of sunglasses sold.
Now put yourself in the position of the customer. Is a customer going to shop solely on price? Or are you going to win them on lifestyle and messaging? The reality is that everybody is different. Not everybody shops solely on price, and not everybody shops solely with companies that share their values. But Amazon is too big at this point to reflect each individual products’ values. You, however, are not too big, and you should take advantage of your size by offering a lifestyle in accordance with your brand.
Now, if you managed to get that customer to visit your site instead of Amazon, you might be able to win them over.
Ensure Trust and Safety
We live in an era in which user data protection and customer-centric terms of service are commonplace. You can’t afford to let your eCommerce company appear as less trustworthy and safe than your competitors, and this includes Amazon.
The good news is that ensuring trust and safety on your website involves taking only a few key steps. First, you should be sure to choose the right online shopping cart. For maximum security coupled with minimal coding expertise, you should consider going with Shopify as your hosted shopping cart solution. You can also consider going with WooCommerce if your website is based on WordPress. Alternatively, if you feel that customizability is paramount to your company, and you have a sizable enough development team, you might consider Magento.
Once you have selected your shopping cart, you’ll want to ask yourself how you will process credit card payments. You are able to use some of the biggest names in credit card processing across these platforms. Shopify has their own payment processor, but they also allow direct integration through Stripe.
Customers have grown to trust established payment processing sites like Stripe and Paypal, so if you can integrate those onto your store, you will have built and maintained trust.
It’s also vital that your terms of service (ToS) are written as customer-centrically as possible. Using ToS boilerplate templates is a good place to start, but understand that these terms seldom favor the customer.
For instance, if you sell apparel, you can expect that your highest-value customers will likely also account for a significant amount of your exchanges and returns. You need to ensure that your templates are fair to the customer. If shipping can take up to three weeks, you should not have a return policy that forces the customer to return products no later than two weeks after ordering. You may be surprised how common this mishap is, and it should come as no surprise that it can drive customers away and ruin your reputation.
Speaking of reputation, don’t shy away from “social proof”. Show reviews on your store. Demonstrate value and link to your sites and the sites of those who reviewed you. But this is extremely important: don’t force something that isn’t there. Showcasing that you only have one or two total reviews will do more harm than good in most cases. Having over a hundred five-star reviews will also hurt you – customers understand that ratings like these are likely inflated. In fact, the optimal review readout is 4.2-4.5 stars out of 5.
Most importantly, though, just keep the customer’s and their right to privacy at the front of your mind. You might not be able to offer a more secure workflow than Amazon, but you’ll at least be competitive.
One of the things that makes Amazon such a dominant force in the eCommerce world is the way they handle order fulfillment. Put simply, order fulfillment is everything that happens regarding the product’s shipping and handling from the time the customer places their order to the moment the order hits their doorstep.
Amazon has mastered order fulfillment to the extent that they actually sell their own fulfillment service: FBA (Fulfillment by Amazon).
Working with FBA is something that works for many eCommerce companies, especially those that are less reliant on their brand identity. However, if you want to reap the benefits of Amazon’s order fulfillment process without partnering with them via FBA, you’re in luck!
There are many fulfillment companies that will take care of all your logistical needs. The advantage here is simple: if you outsource fulfillment, you’ll be able to spend the majority of your time growing your business, developing your products, and interacting with your customers. Outsourcing fulfillment is essential once you reach a certain size – otherwise, you’ll be sacrificing your profits by creating your own in-house fulfillment operation. Once your business reaches one hundred units per month, you should already have a fulfillment partner waiting in the wings.
These techniques alone do not necessarily ensure success against Amazon. However, each of these tenets offers either an exploitable advantage over Amazon or a mandatory parallel – that is to say something your business must do to keep the pace with Amazon’s offerings.
Amazon is nigh unbeatable on price, but they are weak regarding brand identity. Private label offerings and other branded eCommerce will give you an advantage.
Amazon’s purchase environment is sterile and completely lacking in customer experience. You will have the opportunity, through your own website, to create this experience.
Amazon is a well-established brand that has earned the trust of its customers. You are not well-established, but you can easily partner with established companies and create a customer-centric ToS.
Amazon may be the among the best in fulfillment, but you can leverage the power of outsourced fulfillment by working with one of the many third party logistics companies out there that handles eCommerce fulfillment.
And if you want to learn another major tactic that can help you compete with Amazon, click here to read about offering free shipping!