How can retailers compete with Amazon? This was the topic during a conversation I had with former Governor of Colorado, and now Senator, John Hickenlooper just last year. “…Amazon has got a monopoly. If you want to sell widgets in the United States online, you’ve got to be on Amazon, there’s no other choice.” But is he right?
As I explained during the interview, some of today’s most loved product companies in the last few years grew without Amazon. Warby Parker, for example, saw 500% growth with a one billion dollar valuation. Allbirds hit a 1.4 billion dollar evaluation in just two years, and Rothy’s posted more than 140 million in revenue. These examples are certainly standouts, but they aren’t alone by a long shot.
Shopify’s Data: Small Biz Is Coming For Amazon
On Black Friday, Shopify, the company that processes payments for independent retailers, processed 2.4 billion dollars of sales, up 75% from last year. On Cyber Monday, they processed 5.1 billion in sales, up 76% from last year. By contrast, independent businesses selling on Amazon amounted to $4.8 billion in sales from Black Friday through Cyber Monday, up 60% from last year according to CNBC. Amazon is still ahead, but individual small businesses are quickly catching up, as predicted.
To fully understand how retailers can compete with Amazon, think mastery.
How can retailers compete with Amazon?
The best way for a retailer to compete with Amazon is to truly focus on a hands-on, highly personal experience a large company like Amazon can’t match. Amazon is a fantastic jack of all trades, but they’re a master of none. So, retailers can find an opening by becoming the master. This is how retailers and small business entrepreneurs like Ashley Wilkerson, founder of Selfie WRLD are winning in the Amazon, Target and Wal-Mart era.
Consumers can find anything they want in the world with a few keystrokes on their laptops or a few taps on their phones. But do you know what they can’t do? They can’t ask questions they don’t know to ask, they can’t know what websites are reliable, and they can’t have an enjoyable experience. Amazon is only useful when a consumer knows specifically what they want, and this is the key advantage for small independent retailers.
The perfect illustration for this is when I was building a new podcast studio, upgrading from my simple USB microphone. I had no idea where to even start. No idea what questions to ask. I had no idea which microphone to buy or which soundboard to buy. I was lost on how to set my compressor or gate settings. I had zero knowledge on how to set a mix-minus, or how to connect cables the right way. The thought of having to research made me dizzy.
I reached out to a few local AV companies and was met with nice, but untrained hourly employees with zero experience. Reluctantly, I started an internet wild goose chase. Countless hours later, and added stress, I finally made my purchases on… Amazon. But here’s the kicker: I’m not happy with my decisions.
How can retailers compete with Amazon or any big box retailer for that matter? They could have helped me when I needed it. Winning retailers seem to do four things quite well.
- Solve a problem
- Educate the consumer
- Listen to needs
- Link customers to a community that can help.
Successful retailers SOLVE customer problems
Customers have complex problems, but most of the time they end up settling on a solution that isn’t ideal. How many products do you have that do the job, but aren’t worth telling anyone about? How many times do those you buy from bring more frustration into your life, rather than simplifying your life? If you’re honest, I’d wager most companies you do business with are below average, or at best: average.
Despite the prevalence of online tea companies, I choose to use Gong Fu tea for this very reason. Every time I have a bizarre question about various teas and their benefits, they know. All their staff is obsessed with tea and it makes me confident I’ve made the right decision. Being the easy choice is how retailers can compete with Amazon.
Successful retailers EDUCATE customers through mastery
Customers want to do business with masters of their craft. We can all look up information on the internet, and we’ve all bought that random online product that broke or provided a crappy experience. If a retailer’s employees don’t have any specialized knowledge and aren’t well trained, the establishment is no better than Amazon. Customers want to know about quality, sustainability, health, industry trends, niche info, etc. So, give it to them.
Despite having plenty of kitchen supply stores at my fingertips, I often go to Kitchen Collage for this very reason. They answered questions I didn’t even know how to ask. They make me a smarter consumer, and educate me on the differences between knives, cutting boards, coffee makers, and Le Creuset cookware! I can waste my time doing a Google search, or just ask them.
Successful retailers LISTEN to customers’ unique and geographic needs.
Customers’ needs aren’t the same community to community. There are colder communities, hotter communities, fast-paced communities, slow communities, high-crime communities, low-crime communities, weird communities, rural communities, populated communities, etc. Those who are sensitive to their own community’s unique interests, truly understand how retailers can compete with Amazon.
Consider a local T-Shirt shop that started in Des Moines and expanded to Iowa. They print hilarious “inside joke” T-Shirts about Iowa, Iowa towns, and they are extremely fast to jump on new trends, in many cases the day news breaks. According to the Business Record, they pull in 4.3 million annually. They’re pro listeners.
Successful retailers LINK customers to a community
I’m not talking about digital communities or Facebook groups, I’m talking about real communities. I’m talking about introducing customers to other customers that can help them. “Oh, you should meet.” I’m talking about throwing events in your space and inviting guest speakers.
I think again of Kitchen Collage who, despite their small space, teach cooking classes for their community, amongst other classes like wine tastings. They bring in experts in their field, customers meet like-minded folks, and learn how to use various kitchen items, all for purchase. Genius! Not buying products from them, which I have done before, fills me with guilt.
How retailers can compete with Amazon
Small businesses and entrepreneurs used to understand the value of creating relationships with customers and making an enjoyable experience with personalized service. With the advent of big box stores, however, many lost their way, focusing on the mass-quantity models that made Target, Wal-Mart and Amazon famous. As BonTon, Macy’s, and JC Penney have demonstrated, the quantity over quality model is difficult to maintain, even for publicly traded beasts.
Texas real estate developer Ari Rastegar explains that brick and mortar is having its moment right now. The biggest experiential retail segments he sees growing are breweries and athletic companies.
How can retailers compete with Amazon, Target, Costco, Sams Club, Mills Fleet Farm, Bomgaars, Wal-Mart and all these? As they destroy each other, you can pick up their customers. Solve customer problems, Educate them through mastery, Listen to customer’s needs, and Link them to a community. This is how entrepreneurs are taking on Amazon and winning.
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Updated: August 21st, 2021