November 29 2017
Like most retailers, you’re likely losing sleep over Amazon.
The e-commerce retail giant dominates the scene, owning nearly half of the online retail market share. Amazon’s revenue continues to grow at an extraordinary rate due to its product selection, speedy delivery, low prices and increased shopping convenience.
And while the ecommerce site declares rising profits, many brick-and-mortar retailers are closing stores and declaring bankruptcy. Amazon may not be the sole reason for the current retail apocalypse, but it’s hard to ignore the fact that the company is often the first destination for consumers.
The headlines spell doom for retail, but it’s possible for you to sleep easy in the Age of Amazon. If you’re determined to stay in business in the reign of Amazon, read on for 6 ways you can survive the Amazon Jungle.
#1 Narrow your Niche
If you stock anything that’s mass produced, marketed, or discounted, it’ll be hard for you to survive Amazon because the entailer’s cheap prices knock out the competition.
On the other hand, if your products are niche, uniquely distributed or customized, you don’t have to worry about Amazon. Niche brands flourish in this age because the e-commerce giant can’t go niche or focus on individualized development.
Therefore, niche brands have little competition, barely any price wars, and a high level of customer retention that leads to high profit margins.
Online pet retailer Chewy.com went from being a startup to outselling Amazon by simply appealing to pet owners.
Similarly, Lululemon succeeds in staying afloat despite the retail carnage by focusing on selling athletic apparel to women and men.
Commenting on Lululemon’s survival, the company’s CEO Laurent Potdevin said:
“We’re in a very different playground that is differentiated by innovation, by premium product, by solving problems for the athletes. We’re actually not in the world of commodity at all.”
Having a niche is essential to surviving Amazon. It’s easier to have your own community and serve as the king of your own space than compete with Amazon.
To excel at niching, engage in customer development and focus on solving problems that are specific to your audience.
#2 Improve your shipping
When it comes to shipping, Amazon is never short of ideas. The retail giant has amassed a loyal following by offering consumers fast, free, or low cost options.
Nonetheless, retailers aren’t letting Amazon hog all the shine. Walmart recently launched 2-day free shipping without membership on purchases of $35 or more and is testing the use of drones in its warehouses to speed up its logistics process.
Even if you can’t afford cutting edge technology or free shipping, there’s no need to feel helpless. Instead, work towards ensuring customers get their items on time and at a fair price. To do this, familiarize yourself with carrier contracts and negotiate with carriers on shipping rates and discounts.
For fast delivery, partner with reliable drop shipping wholesalers or third-party warehouse and logistics providers. If you’re considering free shipping, think about the financial implication and set a threshold.
You don’t have to offer free or same day shipping, but you can create a shipping service that exceeds expectations and results in satisfaction.
#3 Personalize Customer Interactions
Amazon is famous for its ability to personalize its website for each user. Amazon is able to provide product recommendations and a curated shopping experience, using data mining and artificial intelligence algorithms.
However, for all its strengths in personalization, Amazon can’t offer one thing customers crave; human to human interactions.
That’s where you come in.
Set yourself apart from the e-commerce giant by building a relationship with your customers through personalized interactions at every touch point.
According to McKinsey, 70% of buying experiences are based on how customers feel they are being treated. So, ensure your staff is friendly and knowledgeable so they can provide the type of human-to-human interaction customers crave and will rave about to their friends, family and followers.
Ever wondered why Apple stores are always full?
It’s the experience.
The Apple store customer experience helps drive in-store sales to nearly $5000 per square foot.
Find out your customers preferences, their habits, lifestyle etc. This will help you engage with them better and deliver a tailored experience. Invest in recommendation extensions or plug-in options for your e-commerce platforms for hyper personalized online engagements with customers.
Zappos (now a unit with Amazon) went as far as delivering flowers to customers, so follow their lead and feel free to take your personalization up a notch.
#4 Brick and Mortar Isn’t Dead
Some retailers believe their physical stores give them a competitive advantage over online retailers like Amazon, and they’re right.
The ability to see and touch products as well as immediately take items home ranks highest among the reasons consumers choose to shop in-store versus online.
Consequently, Amazon’s opening of brick-and-mortar locations as part of a blended retail strategy further proves that physical stores aren’t going the way of yellow pages.
However, although brick and mortar stores are essential, the truth is, physical stores alone don’t cut it anymore for consumers. You need to give them a reason to hang out at your store.
Take a cue from Nike.
During their unveiling of their latest multi-level flagship in Soho, Nike introduced trial spaces, with extravagant running stations and a half-basketball court for customers to test new products.
While providing an amazing in-store experience is essential, the future of retail is a combination of physical stores and e-commerce. You need an Omni-channel strategy to unify your customer’s experience.
Statistics state that a strong Omni-channel strategy can help companies retain 89% of their customers versus 33% retained without such a strategy. This will require considerable initial investment, but it will ensure long term visibility for your brand.
Despite the messages of doom, physical stores have a place in Amazon’s kingdom as a form of experiential media, with the purpose of selling the idea of a brand.
#5 Rethink Your Customer Loyalty Strategy
Every business including Amazon realizes that it’s easier to retain customers than to get new ones. In recognition of the above, Amazon launched its Prime loyalty program which currently has about 80 million members – that’s 64% of households in the U.S.
The success of Amazon’s program can either make you tremble or rethink your customer loyalty strategy.
If you’re interested in building an addictive customer loyalty program, take note of these tips:
- State what you hope to gain with your loyalty program. This might sound obvious but most loyalty programs are just a me too thing.
- Find out how your customers want to be rewarded. Status, access, power, or material items. Whichever reward option you chose, make sure it’s something your customers value.
- Use a tiered system to encourage consumers to change their spending habits. In a research study, 50% of respondents said they increased their spending or changed other purchasing behavior in order to achieve a higher tier status in a rewards program.
- Get an app: Mobile apps can help boost customer loyalty and ensure retention because they keep consumers engaged with your brand. 66% of companies that saw a decrease in customer loyalty over the past year do not have a mobile app.
Structured correctly, loyalty programs can be a game changer for your brand.
#6 Build a fanatical fan base
According to Havas Media, brands with a fanatical fan base outperform the stock market by 120% and enjoy financial results that exceed those of top hedge funds.
Wondering what it takes to have a cult-like following? Here are a few tips:
- Be extraordinary: Mediocrity won’t help you win social currency. Striving for remarkable will not only set you apart from mainstream players, but it will also help you escape direct competition. For example, Telsa Model 3 has over 400,000 reservations at a deposit of $1000. For a car yet to be launched, that’s remarkable.
- Have a purpose: Consumers feel a greater affinity towards brands that project a clear purpose beyond the products or services brands offers.
Case in point, Patagonia. The outdoor clothing company’s purpose-driven environmental efforts are one of the reasons the brand has a loyal following.
- Encourage engagement: Brands that develop cult-like followings take careful steps to nurture and engage their fans. Lego allows customers to create new designs and post them on their IDEAS Projects that receive about 10,000 votes are reviewed by senior Lego staff. If the product is approved, the creator earns a percentage of the sales and is recognized as the creator on all packaging and marketing.
- Be relatable: Consumers connect with brands like they do with people. That’s why great brands personify human attributes. Converse is one brand many relate to because it symbolizes individualism, youthful rebellion and freedom.
Building a cult following isn’t easy, but it can be earned over time if consumers experience consistent positive engagements with your brand.
With Amazon in the room, retailers will continue to face an uphill battle, so if you’re planning on sticking around for a while, focus on your customer. Innovate rapidly. Think long term.
The goal is not to compete, but rather to win on your own turf.