Eight ways retailers can stand out from the “murky middle” and turn Amazon’s arrival into an opportunity

Some of our Australian retail industry is running scared from Amazon and they shouldn’t be.  

In fact, I think we’re sitting on some of the best opportunities Australian retailers have seen in quite a long time.

But retailers’ success depends on if they can ignore the hype, focus on their own strategies, develop a sense of purpose, and most importantly, build a community of followers that will be loyal no matter what.

The primal fear is this: that Amazon’s discounts will disrupt retailers. It’s a bit shocking that pending initial public offerings like Officeworks’ have been affected by this unfounded belief.

Let’s clear a couple of things up:

1. Amazon isn’t hungry for retail space. It’s hungry for data and only hits scale when it builds bundled offers and services its engines of e-commerce and web engine growth;
2. It’s a Prime game I’ve spoken before about how Amazon itself says Prime memberships are one of its core pillars, and that Amazon’s international sales are too concentrated in Germany, the UK and Japan. In fact, if Amazon do eventually build past a local Marketplace offer to their full offer, you can count on at least a three to seven-year establishment period;
3. Amazon doesn’t want to undercut people to death. About 50% of Amazon’s retail revenue is mostly from resellers’ with a margin added on top. Amazon is a platform. It doesn’t set the price, and it just takes a cut — just like Apple with app publishing.

That’s not to say retailers shouldn’t change — not at all. In fact, last year was the first time more e-commerce transactions started on Amazon than started on Google. If that’s not change you should be prepared for, then what is?

Retail has always been about the adaption and survival of the fittest. The current transformational change started 20 years ago when e-commerce hit some scale growth, and now it’s happening on a larger scale as the physical footprint becomes less of a deciding factor in your success then your ability to harness data and information.

Now, the winds are changing. Amazon is becoming just as important an e-commerce platform for small businesses as Google was 15 years ago. Understanding its search engine and recommendation algorithm is hard work.

But those who survive always manage to put in the work.

For a business with cramped margins, no digital strategy and an old-school understanding of digital commerce, then Amazon’s entry seems like a threat. It’s hard to stand out from the murky middle.

But for those who are adaptable, those who can change to the times, this is a great opportunity. And not in the least because Amazon will make it easier for people to find you.

Here are some business fitness tips to help you on your “Amazon fit journey”.

1. Develop a laser-like focus on the customer

Sound like hype or consultant talk? Go back to the Jeff Bezos’ letter to Amazon shareholders in 1997 and his reference to customer centricity. Now fast-forward to today and see the journey from focus to clear deep understanding and transparency on every point of every customer journey — customised, relevant and inviting,

2. Worry about your own game

You can’t constantly hope to compete if you’re worried about Amazon chomping on your territory. Keep an eye out, sure, but you should be focused on building your own business as best you can instead of changing your core proposition based on what another business may or may not do.

Retail is changing. It requires focus to navigate it with differentiation of offer, and passionate resilience,

3. Build your own community

You shouldn’t rely on Amazon’s customers. Instead, you should build a community of your own based on a brand vision that people can identify with. Then, they’ll buy no matter where you sell — including on Amazon.

4. Move from product focus to “interaction before transaction” — and quickly

“Don’t sell a customer a bike, show them how to ride”. Be solutions focused, think of your value add, and don’t just compete on product and price. Play a smarter fitter game and build your loyalist community.

5. Collaboration and go the last mile

Think partnerships and building your retail ecosystem. Don’t be part of the customer journey, be the full journey, or Amazon or other competitors will. 

6. Amazon thinks with data, so should you

If you’re a retail business, you need to make sure you’re compiling data, and then using that information to predict trends and insights for your customers. Make no mistake, Amazon knows a heap of information about a lot of things. But you have a great opportunity to deep-dive into your customers’ habits and beliefs as well before they can.

Understand your customers, then push that understanding into clever marketing and hitting the right customer with the right information at the right time. This will mean, for some, investing in business information systems (and we are classically capital underspent over the years). 

7. Stores are the bastion — just make them more interesting and dynamic

Physical stores are experience centers. Places where people can go and feel a product, be inspired, excited, motivated, informed and switched on.

A boring same-old, same-old just won’t cut it. Note to retailers — please think your distribution strategy and perhaps consider flagship statements. Just closing stores to rely on online will open you up to heavy Amazon-like competition in time.

8. Establish your business story

If you don’t have a unique offering, then Amazon’s entry isn’t going to be so much of a death knell as a missed opportunity.

What are you about? Freedom for your customer? Enjoyment? Community? Social justice? This so much more than “brand”, and about the fundamental story at the heart of whatever it is you’re doing. That’s what will attach your customers to your product, not your physical store or your online availability. It’s what you’re about at your core.

Our world is changing quickly and Amazon is helping change it. In a fast-paced world, it’s a breath of fresh air to have consistency and making a solid business story can help consumers identify you.

So, make sure you do, because that core will make you easier to find, and easier to buy from — whether that’s on your own site, on Amazon, or somewhere else entirely.

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