2 Reasons Why Retailers Need to Leverage Amazon
How can small and midsized merchants succeed in an Amazon.com-first world?
Wow, I get this question a lot! With Amazon Prime Day having passed and the retail giant putting almost $3 billion in sales on the board, this is definitely a hot topic and one I don’t see going away anytime soon.
The answer to that question? Understand where you create value, but, more importantly, you need to capture that value for yourself.
Yes, that’s a little abstract on its own, but allow me to pull it apart into two digestible bits that almost every merchant can use.
1. Amazon is better than you at many things, but not everything.
The 800-pound gorilla is still a pretty horrible place to go for inspiration, value-added service and overall discovery. I've yet to meet a person who has told me they love browsing Amazon’s website when they don’t know exactly what they’re looking for.
Walk into a Main Street retailer and an employee will help you find what you're looking for, even if you don’t know what that is specifically. With all of Amazon’s engineering and algorithms, it still hasn’t mastered this. Sure, sometimes book recommendations are pretty spot on, but the rest of the catalog recommendations often miss the mark.
2. Amazon is still the place you go when you know exactly what you’re looking for.
Amazon creates value by having a giant customer base that's ready to shop. Merchants can create a lot of value for consumers by being that source of inspiration, helping them discover new products that add value to their day-to-day lives.
Amazon is a Wave, Ride it!
Knowing where you can create value for consumers is only a small part of the battle. It doesn’t matter how great your product is or how amazing you are at curating products if all of the attention is being captured by Amazon.
All merchants need to master capturing more of the value they create. With the cost of technology dropping exponentially in recent years, there's no excuse for the average merchant to not be better equipped. Retailers are spending more marketing dollars to acquire customers, but are they spending effectively? When they do get a customer, what are they doing to keep that customer engaged with their brand?
I know what Amazon does — it's front and center in my inbox. Amazon invests heavily into capturing the most value (aka sales) from their customers over time, not just that first order. It knows what each customer is worth, and it goes deep into maximizing that lifetime value. Are you?
I almost always advise merchants to use Amazon’s marketplace as a point of channel leverage. This doesn't mean that Amazon should be your only sales channel — that’s just asking for problems!
Using Amazon as channel leverage means riding its noisy waves. When Amazon runs Prime Day, be there. Get in front of its customers with your brand so that those customers don’t just see Amazon … or worse, your competitors.
Even though the customers Amazon sells your products to are its customers, that doesn’t mean there isn’t great value for you to capture there, too. Are you offering those customers extended warranty or additional services for the products they buy on Amazon? Are you wowing those customers with extra service?
Matthew Bertulli is the co-founder and CEO of Demac Media, a company that helps midsized and enterprise merchants grow and optimize their e-commerce businesses.