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Amazon – Threat or Opportunity?

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couple of months ago Amazon announced its arrival in Australia, striking fear into the hearts of many local online retailers. It was an aggressive strategic move described by one commentator as a “doomsday scenario” as far as small, independent businesses were concerned.

The convenience, low prices and cheap (and sometimes even free) delivery is the stuff that many independent retailers’ nightmares are made of.

But what about Scandinavia though? Are we safe? Should we be worried?

Of course, the truth is that even though the retail giant hasn’t set up operations in these shores yet, it doesn’t mean that retailers are sleeping well at night.

Mainly, the issue here seems twofold.

First of all, Amazon has shown some early signs of moving to Scandinavian markets, as this article suggests. Secondly, Scandinavian online shoppers are already particularly fond of buying from other EU countries (last year 50% of online purchases in Finland were from abroad), so it is with good reason that retailers, including many of our clients, are worried.

Naturally, you shouldn’t waste your time trying to compete head-on against Amazon in terms of price or product selection. Unless you’re being bankrolled by Warren Buffet or Bill Gates. In that case, please go ahead and carry on doing what you were doing. For anyone else, taking this route would probably be as delusional as starting a new search engine from scratch and taking on Google for domination of the search market.

Instead, ecommerce merchants can do well by leveraging Amazon as one of the most important affiliate & paid acquisition channels.

Amazon needs to be part of

your eCommerce SEM Strategy

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ore than 50% percent of shoppers in the US start their online shopping journey with Amazon; less than 30% start with Google. (https://www.bloomberg.com/news/articles/2016-09-27/more-than-50-of-shoppers-turn-first-to-amazon-in-product-search)

Amazon is a prominent search engine. Treat it as one. Amazon needs to be in your search engine marketing strategy.

Even if your full product range is not optimal to be sold through there, Amazon’s link out advertising can be very effective (https://advertising.amazon.com/linkout) to reach those shoppers who start their shopping journey on Amazon.

And even if, for some reason, you can’t sell your product line through Amazon as it is, you could always consider selling certain parts, certain brand or product from a particular category for the purposes of testing demand or pricing strategy, brand building or driving additional volume to certain niches.

Lean Market & Demand Research

through Amazon

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We have found that Amazon can be incredibly useful if you need to do market research before expanding to new markets. For example, instead of building a local presence in Germany through traditional market research, you could use Amazon.de to first test the demand and competition in this market. Also, importantly, with this approach you can get direct feedback from real customers, which enables you to make smarter decisions regarding your product and pricing strategy before rolling out your entire product line.

Fast Setup

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A Shopify, Amazon & Google Shopping stack opens up amazing opportunities to test your new market, brand, product demand and competition. Start small and experiment with different possibilities and proofs of concepts.

Conveniently, Shopify now integrates out-of-the box syncing and selling via Amazon. For Magento there are multiple extensions to make integration between your online shop and Amazon simple and easy.

Even for those platforms which do not support syncing with Amazon, there are fairly easy solutions. One example would be Google Shopping product feeds. Feeds built for Google Shopping from your platform can be utilised straight away for syncing your product data to Amazon

(https://www.amazon.com/gp/help/customer/display.html?ie=UTF8&nodeId=201019700)

Highly manageable

Sales Channel

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mazon is a great channel to get lots of visibility fast, and this is where you can utilise it for acute campaigning for parts of your catalog. Let’s say you have an overstock of particular items. Instead of spending your media budget on AdWords, why not push those products via your Amazon Seller Account?

This way you might get rid of that excess stock with a few mouse clicks with minimal risk. Yes, Amazon commissions are on the heavier side, but if you need to get rid of products fast and are able to price those items attractively, Amazon may be your best bet in terms of fast visibility to a broad audience in order to get those products moving.

Focus on the brand

and customer experience

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hen it comes to actually competing in your niche against other retailers on Amazon, there is one important area where you need to lead, and that is providing the best customer experience possible. This is one of the many reasons why Accolade focuses on the lifestyle sector. Amazon as a global marketplace is not well placed to compete on niche level branding or community building. What we do with our lifestyle businesses is that we focus on building communities and providing amazing service that leads to engaged brand fans with great customer lifetime value.

Amazon is great for buying mass produced products cheaply. If you take surfing or diving gear, for instance, a price sensitive scuba diver who just wants to purchase a new diving mask will probably buy one from Amazon, especially if that’s where she starts her shopping journey.

However, there is a strong likelihood that someone considering his or her first big purchase before a beginners’ scuba course would turn to a specialist retailer where they can get personal service with personal, tailored advice.

Once you get the beginner diver satisfied by providing a great customer experience, it’s more likely she will return your store as the first touchpoint of the shopping journey, especially if you nurture the relationship with a loyalty program that gives value that neither competitors nor Amazon can offer.

Conclusion

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uilding and maintaining a successful online business is possible even with the presence of Amazon and other giants. The way we see it, we think that Amazon should be part of a merchant’s marketing and sales mix alongside Google, Facebook and Affiliate Networks. The main thing is to focus on not just providing the best price, but to narrow down your niche and focusing on doing what you do best.

Today it would make no sense to start selling PC parts from Finland into the UK with price as the main selling point. But when you have your niche narrowed down and your USPs worked out, Amazon can actually provide exciting opportunities in terms of providing additional sales volume, or as a tool for researching demand, product and pricing strategies and testing new potential markets.

In other words, you may not be able to beat Amazon at their own game, but you can succeed by doing what you do best with bit of assistance from Jeff Bezos and his gang of 350 000 Amazonians.

Get in touch with us if you are interested in learning how to utilise Amazon in your marketing and sales strategy.

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