E-commerce expert Alexander Graf explains how to avoid becoming a logistics company for Amazon or Alibaba.
In late April, Amazon told Wall Street it had recorded a record quarter with sales up 44%, hitting $108.5 billion. If it were a standalone state, Amazon would now be in the top 25 countries worldwide by GDP.
It’s notable that Amazon isn’t actually a retailer at all. A large contributor to that impressive bottom line is its ‘Fulfilled By Amazon (FBA)’ service, with non-Amazon retailers representing around 60% of all sales on the platform. Amazon is a kind of logistics company—and one that wants to have everything in stock at any given time. If the customer journey begins at its online door, then the customer immediately stops searching for a product or brand the way they traditionally used to do when we shopped from physical shops or at the first generation of online retailers.
Shopping by stars and reviews
If customers have a specific problem or need they want to address, such as the need for a giant TV, a tennis racquet and a new pair of trainers, they now search for that ‘solution’. And the way to meet that particular requirement is not by being guided by a brand anymore, but by stars and reviews. Whenever a retailer sells via Amazon or via Alibaba, they become a logistics company offering a product on someone else’s platform for the best price. Reduced to that ignoble function, it doesn’t make sense to think of hot and cold funnels or customer journeys. In this new, tough world of e-commerce, retailers need to instead become the hot destination for specific customer concerns. If you don’t own customer access online, then you are at risk of becoming merely a contributor to Amazon or Douglas or the Hut Group’s bottom lines. The brand has no perceived value anymore, because the brand has been replaced by the quantity of stars and the number of user reviews.
The lesson here is that owning that customer access is all important. And the ownership of customer access only can be done by superior customer experience. This is controlled by how you’re selling, not by what you’re selling, and 90% of that is due to approachable personalisation. You as a retailer are better in rolling out new features than anyone else; you’re able to talk to the customer on Messenger, WhatsApp, Telegram, Signal etc.; you’re able to offer individual prices or provide individual coupons that are completely tailored to my unique needs.
The non-standard, personal touch
Clearly, there’s a delivery angle here. If it’s not about the ‘what’ you are selling anymore and only about the ‘how’, then legacy monolithic systems that do not flex with your business will not be a good fit. This level of personalisation requires a modern, agile tech infrastructure. These monolithic systems make assumptions about your business model before bringing any e-commerce campaign to life. They are systems suited to environments where planning is key, but right now, rapid adaptation is the best policy.
Amazon will continue to do amazingly well. It’s the absolute global leader at a particular sort of corporate selling. But in Jeff Bezos’ own words, “Third-party sellers are kicking our first-party butt. Badly.”
The real way to beat Amazon is to think and be different. Your customers are the ones who refuse to buy from Amazon for ethical reasons, for example. Or they are consumers who want greener, more differentiated, more organic or better sourced products. This is the market that Amazon can’t help, and your company should.
About the Author
Alexander Graf is Co-Founder & Co-CEO of Berlin-based marketplace experts Spryker and author of The E-Commerce Book.