5 Ways Small Retailers Overcome the Amazon Effect

Here’s How to Overcome the Amazon Effect

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In the last six months, 83% of U.S. consumers (and 90% of millennials) made a purchase on Amazon, according to a recent BigCommerce survey. In fact, 49% of all online spending in the U.S. takes place on Amazon, accounting for about 5% of all U.S. retail sales.

There’s seemingly no stopping Amazon in its continued domination of retail. What’s a small retailer to do? If you can’t beat ‘em, join ‘em — or copy ‘em — BigCommerce’s report concludes. Here’s what the survey discovered about consumers’ shopping behaviors on Amazon and how a small business can compete.

Tips on Overcoming the Amazon Effect

Focus on Convenience

Some shoppers are still using Amazon to find the rock-bottom lowest prices. But this is less common than it used to be. Shoppers in the survey say they no longer consider price the primary reason to purchase on Amazon as opposed to somewhere else. For 28% of respondents, convenience is the key factor.

Amazon Prime membership gives shoppers the convenience of free two-day delivery on their purchases. As the number of Prime members keeps growing (last year Amazon surpassed 100 million Prime members worldwide), more and more consumers have come to expect that all retailers — not just those selling on the Amazon marketplace — will offer a similar level of convenience.

Asked what they like least about shopping online, 18% of survey respondents cite shipping costs, while 15% say waiting for the product to arrive is the worst part of the e-commerce process.

How can you incorporate elements of the Amazon experience? Try offering consumers the option to buy online and pick up in store. That way, there’s no shipping cost, and customers can get their products faster.

Consider Making Amazon your Partner

The vision of Amazon as an 800-pound gorilla stealing sales from small retailers is outdated. Actually, Amazon’s 2018 Small Business Impact Report shows 50% of products purchased on Amazon’s marketplace are from third-party sellers. Last year, more than 20,000 of those third-party sellers had sales of more than $1 million.

Rather than a competitor, Amazon can be an alternate sales channel for your business. Some 22% of consumers have visited a brand’s website before buying the brand’s product on Amazon. If a shopper goes to your site but then buys your product on Amazon, shouldn’t they be buying it from you via Amazon?

Use Amazon to Drive Traffic to your Website

Three in 10 consumers in the BigCommerce survey have discovered a brand on Amazon before ultimately purchasing it on the brand’s own website. That’s one more way that having a presence in Amazon’s marketplace can serve as marketing for your business.

Use Amazon to Drive Traffic to your Brick-and-Mortar Store

When asked about their shopping behaviors prior to making a purchase in a brick-and-mortar retail store, 32% of shoppers say they have found a brand on Amazon and then purchased it at a physical store. Why would this happen? Not being able to see, touch or try merchandise is shoppers’ number-one complaint about online shopping, BigCommerce found. Consumers who learn about your products on Amazon might want to check out the merchandise before committing to a purchase.

Remember Physical Stores Still Matter

Despite continuing growth in e-commerce, some 87% of all retail shopping in the U.S. still takes place offline. Consumers spend more in brick-and-mortar locations than online. On average, survey respondents spend 69% of their discretionary income each month in-store.

In fact, retailers with both an e-commerce website and a brick-and-mortar location have an edge over Amazon, as this combination of online and offline options gives consumers the greatest range of choices in how they try and buy products.

In addition, retailers with both physical and digital outlets have more opportunity to benefit from returns. Half of shoppers who return a product purchased online do so by mail. But among those who visit a brick-and-mortar store to return an item purchased online, more than two-thirds browse or shop in that store after making the return. Allowing offline returns of online purchases gives your retail business the best of both worlds.

How to overcome the Amazon effect? As this survey suggests, the best way to do so is to stop fighting Amazon and instead embrace what it can offer your business.

Image: Depositphotos.com

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Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.