How to Thrive in the Age of Amazon: A Guide to Building Digitally Native Vertical Brands

Retailers online and offline are struggling to compete in the age of Amazon, the behemoth that, in its most recent quarter, racked up $43.7 billion in sales.

Amazon.com has changed the game, no doubt. However, you can compete, survive and even thrive in this new era if you can create one or more digitally native brands focused on vertical commerce. What does that mean? Basically, you have to define your brand’s specialized niche, then use the tech tools now available to super serve that audience online and, eventually, offline.

It requires a fundamental rethinking of what it means to be a retailer. You need to pursue a set of guiding principles that harness the internet’s power to connect to and serve empowered, informed customers in a unique way that keeps them coming back.

Do it right, and the potential payoff can be huge, particularly as more shopping moves online, or is done through “omnichannel” brands that also offer physical stores woven tightly into the overall experience.

Worldwide, retail e-commerce sales are expected to pass $2.3 trillion this year, and $4 trillion by 2020, according to eMarketer. Forrester Research projects that U.S. online sales will hit $523 billion by 2020, up more than 50 percent from 2015’s $335 billion.

Yes, a large share of those online sales will go to Amazon and modernizing traditional brands such as Wal-Mart. That still leaves plenty on the table, especially if your company can fully adapt to the demands of becoming a digital native brand focused on a specific vertical.

Because of the internet, social and mobile communications, businesses are no longer bound by geography or even financing. The opportunity now is to build a business for a definitive group of people and their specific interests, no matter where they exist.
This means that the next great brands will be born online, as it provides a universal platform for personal relationships with unambiguous customers. Brands can now launch in a fraction of the time, and at a fraction of the cost than it took before.

Ultimately, you’re adapting your business to the realities the world has presented, taking advantage of new opportunities. In doing so, you’re listening to online consumers who are saying clearly what they want:

• “Make it easy for me.” Sign-up, shopping, purchasing, delivery and especially returns need to be as pain-free as possible.
• “Make it for me.” Technology and deep data make mass customization easier than ever. Good thing, because now your customers expect products that are fine tuned to specifically delight them.
• “I want an experience.” Not only should shopping be easy, it should be a unique journey through your brand's story and its mission. People buy products from companies that believe what they believe. How are you sharing that experience across your site, with third parties and throughout social media?“
• "I am informed.” With the internet, your customers can always comparison shop and go somewhere else in a couple of clicks. How are you providing unique, exclusive and distinctive products they want, for prices they’ll pay, in an experience they enjoy?

How Retailers Can Compete in the Age of Amazon

So, what are the traits of a digitally native vertical commerce brand? What allows your brand the chance to thrive among the online giants?

Five core factors are common to the most successful digital native vertical brands. Partly these factors are about being unique, partly they're about being focused, and partly they're about controlling your own destiny. Without them, however, you risk being just more roadkill on the digital highway.

1. Agile customer acquisition: Can you efficiently reach and register the customers you need? Are you rapidly iterating with the marketing tools you use, rolling out the next, better message? Are you making it easy for visitors to become customers?
2. A maniacal focus on customer experience and customer intimacy: Once you’ve connected with a potential customer, how are you making your products and their experience unique, easy and customized to their preferences?
3. A mastery of digital communication: How are you leveraging digital platforms — e.g., social media posts, online advertising, native content, compelling websites, etc. — to tell your brand’s story? What’s the narrative?
4. Build loyalty and predictability with data and personalization: Online sites generate a lot of data. Smart sites use that data to improve their products, save money by limiting unwanted product, and build membership and loyalty programs that add real value to people’s lives.
5. The brand controls distribution: You should own the relationship and the logistics of getting your products to your customers. You should also be creating products that are uniquely yours. Otherwise, you risk becoming an undifferentiated commodity, competing solely on price. Customers will forgive, a bit, hiccups in your service if you offer unique products and experiences. Without those, you lose to a better customer experience at Amazon or Wal-Mart.

Avoiding inundation by Amazon’s river of commerce isn’t a simple thing. However, if you create a digitally savvy brand serving a clearly defined vertical, and use these approaches, you can build a successful online presence. Furthermore, it can translate offline too into the omnichannel retailer of the future.

Shawn Gold is corporate marketing officer for TechStyle, a California-based subscription fashion company whose brands include JustFab, Fabletics and Shoedazzle.