Written by Ben Crudo, CEO of Diff, originally published by Digital Commerce 360. Link to article here.
This year’s ShopTalk conference in Las Vegas — one of the biggest retail gatherings of the year — drew the usual slate of commerce giants, from Macy’s to Walmart to Nordstrom. But all anyone wanted to talk about was (surprise, surprise) Amazon.
From small online merchants to legacy brick-and-mortar brands came the same questions. Is it really viable to sell via your own e-commerce site these days, when Amazon commands so much market share? Or is it better to just sell through Amazon, capitalizing on its unprecedented reach?
The right answer: Yes … to both.
When it comes to Amazon, it’s no longer a matter of beat ’em or join ’em. In a rapidly changing retail landscape, the surest bet might just be to hitch your wagon to the Internet’s fastest rising star while also building your own online identity. Here’s why the best course is the middle course.
The Double-edged Sword of Amazon
It’s simply impossible to ignore the impact of Amazon: it accounts for fully 43% of all online sales. The company today is like the Walmart of 15 years ago. It’s everywhere — the definitive first stop for consumers on the Internet looking to discover new products. As a smaller retailer, or even a wholesaler, you want to be there.
But there are obvious trade-offs. For starters, a lot of customers are loyalists and will only shop on Amazon, so your presence on the site isn’t necessarily building any loyalty for your own brand over the long run. At the same time, Amazon has no loyalty to you, or your product line.
Like the Walmarts of the world, it’s a middleman. Partnering means you have a presence in the shop, but it’s no guarantee you’ll get premium, or even favourable, placement on the virtual shelf. Your product could easily wind up on page four of the search results, where only the most determined of shoppers will find you.
In short, by putting all your eggs in Amazon’s basket, you give up the considerable advantages that go along with being a retailer in the first place — the opportunity to control your branding, tell your story and forge a direct relationship with your customers.
Toys R Us is the perfect cautionary tale here. Back in 2000, the toy company signed 10-year deal as the exclusive toy vendor for Amazon, but by 2004, other toy vendors had flooded the site. Not only did Toys R Us lose its competitive advantage, relying on Amazon for its e-commerce operations meant the company failed to establish its own online identity. So when its Amazon sales started to plummet, Toys R Us had no established fall-back where customers could connect with the brand — arguably setting the stage for its current financial woes. Fast forward to 2018, and the once-venerable brand is yet another casualty on the old-guard retail scrap heap.
The Advantages of Selling on Your Own Turf
While Amazon promises vast exposure and discoverability for brands, it’s simply not set up to deliver a memorable retail experience — the kind that builds loyalty and long-term relationships. Consumers today expect a trove of information on products they’re curious about and unique experiences when interacting with their favourite brands — whether in person or online. That’s where having your own site is crucial.
If Amazon is the appetizer, a place for shoppers to gain a first taste of your brand, your own online store is the five-course meal. But to capitalize on the potential, it’s critical your site be more than a stagnant listing of inventory and a checkout — essentially duplicating what Amazon offers.
Instead, it needs to be a real destination.The best retail sites do many things well, and all at once. They showcase your brand identity, offer extended inventory, enable direct interaction with the consumer and gather invaluable data on customer shopping habits. Most importantly, these sites are engineered to drive sustained traffic not just online but in-store, as well.
One company that’s killing it in this regard is Aldo. While other mall staples have been struggling, the Canadian shoe retailer has won accolades for its responsive online strategy that doubled the brand’s online sales when it launched a few years ago and increased conversion rates in its more than 2,000 physical locations. The crown jewel? A mobile app that can ping customers about products they were looking at online when they happen to walk past a store. Pretty cool.
But even if you don’t have a presence in every mall in the country, setting up your own e-commerce site is vital in giving your brand a personality. This can be particularly advantageous for small retailers, and even wholesalers, such as South Shore Furniture, another Quebec-based company that had been selling under the radar through Amazon for years.
When they were looking for an online makeover, it was quickly discovered South Shore’s biggest selling feature was their exceptional customer service, something third-party vendors almost never excel at. Setting up an online store humanized the company, and emphasized its ability to go the extra mile — like the time they sent a fully assembled crib to a mom who went into labour two weeks early — and, importantly, created a direct access point for consumers who previously could only find them in big department stores.
They still sell to their retail partners, but now they have a sales stream that belongs solely to them, which is vital in a retail landscape where the only constant is change.
With all the ink being spilled on Amazon right now, it’s easy to see it as the only way forward. But owning your own e-commerce channel — as well as your identity and your connection with your consumers — is crucial to ensuring that you’ve got a strong, loyal base to work from. Amazon may be poised to dominate the online marketplace for years to come, but for retailers the best future-proofing is a strategy that puts control in your hands, whether you choose to beat ‘em or join ‘em.