How Retailers Can Best Compete With Amazon
Jeff Bezos, CEO of Amazon.com, would probably take offense to the title of this article. Why? Because as Bezos says, “Do not be competitor focused; be customer focused.”
He’s right. It’s more important for retailers to focus on making their own customers happy. You don’t simply compete with Amazon by competing with Amazon, but rather by providing your customers with compelling reasons why they should shop with you instead of Amazon. (See more in my Amazon Effect video.)
So why should consumers shop with you? The specific answers will differ for each retailer since each defines its own unique retail strategy, technology solutions and supply chain capabilities. The overall concepts of strategy, technology and supply chain will be the same for all retailers, however.
Now, the key question essentially becomes the following: How can retailers compete with Amazon by defining their unique positioning on these three concepts and present a compelling reason for consumers to shop with them?
1. Strategy: This is about the right operations strategy. Each retailer needs to uniquely define how it’s going to compete with Amazon for their customers’ attention by addressing what I like to call the four pillars of retail success:
- great prices;
- awesome selection;
- best-in-class convenience; and
- personalized experiences.
Each brand must define a compelling strategy in which consumers will select them over Amazon based on offering better prices, selection, convenience and/or experience.
2. Technology: This involves enabling your operations strategy to work effectively and efficiently. Traditional ERP-type technologies drive operations from store sales and/or sourced products. This isn’t only inadequate, it’s inefficient.
No retailer is satisfied with its sales forecasting, merchandise planning and allocation methods. Consequently, excessive inventory expenses and working capital — along with high store out-of-stocks and fulfillment lead times — are limiting margins and upsetting consumers.