E-commerce

5 top ways smaller retailers can defeat Amazon

Beth VanStory, a partner and CMO with Chief Outsiders, lists out five specific strategies that small to mid-size retailers can adopt to beat Amazon. It's all about multiple go-to-market channels.

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April 6, 2021 by Beth VanStory — Partner & CMO, Chief Outsiders

A recent survey by Chief Outsiders reveals many chief marketing officers believe retailers will increasingly use direct-to-consumer to challenge Amazon's dominance. But while DTC can be effective, companies must look at multiple go-to-market channels in order to be successful. With the right approach, tools, and technology, retailers can find success. Here are the top five strategies to consider:

1. Know and understand customers to better serve them
Collect, analyze and use customer data for product development, segmenting customers and developing messages and ads. The better a business knows its customers, the more it knows how to meet their needs and connect with them.

Google Analytics alone can offer critical insights into shopping patterns, browsing behavior and some basic demographics. Armed with this information, businesses can create lookalike targets and concentrate acquisition efforts on people who are similar to the ideal customer.

More advanced predictive analytics and AI tools can provide deeper insights into customers and facilitate highly personalized customer experiences. Companies like coveo help retailers deliver intuitive search, relevant recommendations, and behavior-based personalization all along the shopping journey.

Artificial Intelligence via chatbots is also enabling companies to provide 24/7 customer service economically. Companies that enable an easy transition to chatting with a human, provide a better experience. While this approach may not be practical for low-cost items, it may be well worth the investment for higher ticket items and luxury items where service is of high importance.

2. Improve retention and loyalty efforts
Speaking of customers, too many companies overlook a critical source of future sales: existing and past customers. Retention marketing can be a far more cost-effective means of growing revenue than acquiring new customers.

One of the most important aspects of retention marketing is empowering the customer to choose how often and what you communicate to them. Automatically enrolling new customers into a too-frequent email cadence is a sure-fire way to drive up unsubscribes. Instead, ask for permission once they complete their order. Then, personalize your communications based on shopping and buying behavior.

3. Make it easy for customers to buy
Another way to compete more evenly with Amazon is to offer flexible shipping options and the ability to calculate shipping costs early in the checkout process. Also consider offering free shipping on larger orders.

Accepting a variety of payment options can help win customers as well. Companies like Klarna and Afterpay offer buy now, pay later (BNPL) services which have become popular with consumers even in lower ticket businesses such as cosmetics. The BNPL companies have directory listings and deal offers on their websites which can be additional ways to build awareness among non, or as I like to think of them -- not yet customers.

4. Explore new marketplaces and platforms
Some companies tried selling on Amazon, but found the fees greatly impacted profitability and the operating requirements were too hard to meet. Seeing an opportunity, creators of
companies like Shop Where I Live and Brooklyn-based, Cinch Market are creating marketplace platforms to support small, local retailers. Shop Where I Live's unique model relies on support from local organizations such as Chambers of Commerce, vs. charging the retailers. Their positioning is Shop. Find. Buy. Local.

5. Go all-in on social
Don't make social media strategy sit on the back burner. eMarketer estimated social commerce buyers grew from 63.9 million in 2019 to 80.1 million and 2020 and thinks that there will be 90.4 social commerce buyers in 2021. They also estimated sales through social channels in the U.S. reached $23.3 billion in 2020.

According to research from Instagram, over 200 million Instagrammers visit a business profile site daily and 60 percent say they find out about new products on Instagram. And, of course, the darling of the year, TikTok, and its plethora of instant celebrity influencers is something retailers will do well to try and understand and leverage.

Bottom line
For retailers looking to thrive outside the shadow of the e-commerce giant's dominance, they must be thoughtful about DTC and other consumer-friendly options and how to best implement them. It's not enough to simply say "let's do direct to consumers," but instead, it's how a business adopts DTC and leverages consumer-friendly new technologies that will make all the difference between success and failure.

Beth VanStory is a partner and CMO with Chief Outsiders