Building Sustainable B-to-C Retail Success in the Age of Amazon
2020 was an incredibly successful year for Amazon.com. Home-based working and buying gave the e-commerce giant more market share and sales volume than ever, with sales up 44 percent, hitting $108.5 billion. That’s equivalent wealth to that of a small nation. If Jeff Bezos was president of such a country, it would register as the 25th richest in the world’s top 25.
However, there’s an interesting e-commerce component to Amazon’s success that often gets overlooked: the contribution of its third-party sellers. With over a million new sellers in its Fulfilled by Amazon (FBA) service, non-Amazon sellers account for around 60 percent of all Amazon’s e-commerce sales. In Jeff Bezos’ own words, “Third-party sellers are kicking our first-party butt. Badly.”
Brand Usurped by Stars and Reviews
Increasingly, the customer journey starts with a platform like Amazon. The customer no longer searches for a product or brand the way consumers traditionally used to do, at physical shops or by doing some general research via Google. Amazon’s strong sales figures suggest customers increasingly buy directly from the online retailer, ignoring brands’ own online presence.
How this happened: purchasing is now viewed as problem resolution. On the site, a choice of similar products is presented, and consumers select the retailer that offers the best price and availability. Customer needs are not being influenced by a brand anymore, as they make a shopping selection based on stars and reviews as well as to solve a particular retail need. In this scenario, the retailer’s function is to be a convenient warehouse supplier.
Whenever a retailer sells via Amazon or Alibaba, it becomes nothing more than a logistics company offering a commodity for the best price. In this model, it no longer makes any sense for the standard brick-and-mortar company or online retailer to think of hot and cold funnels or customer journeys. In this new retail reality, the classic retailer has lost its entire traditional retailing function.
Taking Ownership of Customer Access
Retailers need to carve out space for themselves. They need to become the favored destination for specific or niche retail requirements. Think about customers who demand greener, more differentiated, more organic, or better-sourced products. They're the market that Amazon can’t help, and you should!
And the pivot has to be to own access to that customer. The ownership of customer access only can be done by superior customer experience. You need to be better at rolling out new features than anyone else; better able to talk to the customer on Messenger, WhatsApp, Telegram, Signal, etc.; able to give out individual prices or individual coupons that are unique to the customer.
Clearly, there’s an innovation angle here. If it’s not about “what” you're selling anymore and only about “how,” then legacy monolithic systems that don't flex with your business will not suit you well. This level of personalization requires a modern, agile tech infrastructure. Monolithic systems make assumptions about your business model before bringing any e-commerce campaign to life. They were never meant for rapid innovation or adaption in the face of changing circumstances, and that’s an imperative right now.
Unless you want to be a supplier in Amazon’s logistics chain, you need a different and highly personalized approach for B-to-C retail success. The positive news is that retailers are doing this every day. After all, it’s innovate or die … and go to Amazon supply chain “Heaven.”
Alexander Graf is co-founder and co-CEO of Berlin-based marketplace experts Spryker and author of "The E-Commerce Book."
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Alexander Graf is Co-Founder & Co-CEO of Berlin-based marketplace experts Spryker and author of the bestselling book, "The E-Commerce Book."