To Amazon or not to Amazon. That is the question. While Hamlet had bigger things on his mind than e-commerce his timeless musings still find relevance here in the digital age as more and more companies face the reality that is Amazon’s market dominance. Jeff Bezos’s baby raked in some $72 billion in sales last year with the next biggest online retailer (that would be WalMart) taking in a paltry (by comparison) $13 billion (source: eMarketer). If you are a small to mid-sized business how do you compete with something like that? And – maybe more to the point – should you compete with something like that?
J.K. Rowling for one believes the downside of selling through Amazon outweighs the upside which is why she pulled her Harry Potter ebooks from Amazon and created her own online retailer called PotterMore. The Rowling example is instructive in more than one way. First it demonstrates that not everyone is drinking the Amazon Kool-Aid and second it points out the difference between J.K. Rowling and most other people. She is Britain’s wealthiest woman and a cultural phenomenon. If she wants to set up a site competing with Amazon no one can stop her. Small to mid-sized retailers however simply don’t have that kind of clout.
Why People Like Amazon
At its most basic the rise of Amazon represents a significant shift in consumer sentiments from brand loyalty to platform loyalty. (Not that platform loyalty necessarily negates brand loyalty; indeed most people stick with the brands they know and trust when buying through Amazon.) What Amazon provides is a one-stop-shop where they get competitive prices and (drum roll please) free shipping and returns. That may not seem like much but to a vast majority of consumers free shipping and returns seal the deal. Without it, they’re shopping elsewhere.
More Amazonian Pros and Cons
Besides free shipping and returns Amazon has another big plus: traffic. Millions of people shop Amazon.com every day. In addition if you are able to offer the most competitive price on your product you’ll find yourself a winner of the Amazon “buy box” and then the sky’s the limit. The volume of sales you’ll likely receive once that happens will more than make up for frugal margins and Amazon commissions. The downside is that you don’t control the platform, risk cutting into direct sales with their more generous margins and, if you offer a luxury brand, may wind up hurting your brand’s image by selling through such a bourgeois platform.
What about Alternative Platforms?
Websites like Jet and Etsy have a proven track record but nowhere near the visibility or traffic of Amazon. If you are the aforementioned luxury retailer you may want to consider Shoptique, Spring or Lyst. These online marketplaces target high-end consumers and strive to create an engaging experience. You might also consider a two pronged attack where you sell some products through Amazon but reserve a number to offer exclusively through direct sales.
The Value of Being Unique
The success of any “our site” strategy rests largely on whether you can offer customers something they can’t get elsewhere. You’ll also need to communicate in a clear and effective way the value of your unique products. If you can do that and your product strikes a chord with a certain demographic then you may never have to bite the bullet and move to the Amazon marketplace.
And when to create your own ecommerce site
Depending on your business type, you may want to create your own ecommerce site sooner or later, no matter how little revenue it brings. However, it might also be possible that your product category is not supported by Amazon or some of the other large platforms. Anthony Russell from the premium retailing site FineCigars.com.au shares about their view, “To be honest, we would have liked it if we could sell through sites like Amazon and Ebay. Sadly, most big platforms do not support tobacco and nicotine-based products. As a result, we have always put maximum effort towards growing our own ecommerce platform. It worked well for us – we are now the leading online shop for premium cigars in Australia.”
Things to Keep in Mind When Creating Your Own Site
- The site should be easy to use.
- It should offer products not available anywhere else.
- It should be visually engaging in a way a site like Amazon is not.
- It should load fast. No excuses. Slow loading = lost customers.
- Checkout should be simple and trouble free.
- It be mobile friendly.
The decision to join or forego Amazon will often come down to 2 things: the level of your ambition and whether or not you have something unique to offer. If you are looking to carve out your own niche with a distinctive product you’ll likely want to eschew online marketplaces like Amazon. On the other hand if you’re simply looking for a living plus a bit more Amazon may be the answer.