How Australian Retailers Can Combat Amazon.com
If you’re an Australian retailer you’ve no doubt heard that Amazon.com is going to be opening its doors in our region later this year. For many retailers this is a nervous time when you consider the size of Amazon globally and the financial muscle they have behind them with which to push into the Australian economy.
However, the good news is there are a number of things you can do to combat the “Amazon effect”. By modernising your eCommerce business utilising the industry-proven strategies we’ll discuss in this article, you can begin to transform your business in ways you may not have considered, opening up vast new revenue streams Amazon themselves have used to become such a success.
Start by understanding the Amazon journey
At the time of writing this article, Amazon.com is the world’s most prolific online retailer selling everything from books, to food and groceries, to cloud-based hosting services. This of course did not happen over night, Amazon’s success has come as a result of hard work, numerous smart business moves, and trial and error; just like any other successful business.
Below are some interesting facts about Amazon that begin to tell the story of this successful eCommerce retailer:
- How it all started: Amazon.com Inc. was founded July 4, 1994 in Seattle, Washington U.S.A by Jeff Bezos. Like many well know tech companies Amazon was founded out of a garage, at Jeff Bezos’ residence in Bellevue, Washington. Bezos still heads up the company today.
- Naming: Jeff Bezos wanted to call Amazon “Cadabra” (as in ‘Abracadabra,’) but reconsidered after the name was misheard as ‘cadaver.’ Relentless.com was also an early contender and still redirects to Amazon.com to this day.
- Early operations: Amazon started business as an online retailer of books, with it’s first sale, “Fluid Concepts and Creative Analogies” occurring on April 3, 1995.
- Teamwork: At Amazon, team sizes are recommended to be no larger than that which can be fed with ‘two pizzas’ to ensure cohesive team environment and collaboration.
- Working environment: Unlike many other tech-companies Amazon does not spend excessively on corporate comforts such as free lunches, and even reportedly removes light bulbs from vending machines to save power!
- Acquisitions: Amazon’s biggest acquisition to date has been online retailer Zappos.com for $1.2 Billion USD. Other acquisitions include Audible.com, IMDB, Twitch and in 2013 the Washington Herald.
- Crashes: When Amazon crashed in 2013 for 40 mins, the company lost a reported $4.8 million in revenue.
- Profitability: Amazon has for a large part of it’s tenure not been overwhelmingly profitable, this has of course come in later years posting incredible profits. In 2016 Amazon brought in $30.6 Billion in revenue with quarterly profits in excess of $850 million USD.
- Net worth: According to FactSet, Amazon’s net worth today stands at approximately $459 Billion USD.
Mirror the contributing factors to Amazon’s dominance
There are a number of contributing factors that have added to Amazon’s success across the eCommerce landscape. Although some of them may be hard to emulate (such as being first to market), there are a number of things Australian retailers can do to become more competitive and drive further sales online. After all, Amazon may be the biggest fish online, but the Internet is a much bigger pond.
Search Engine Optimisation
Amazon has made a conscious effort to rank highly in Google. They have a domain authority of 97/100 which is outstanding, with millions of incoming links and thousands of sites linking to them. Now understandably you can’t expect to compete on a domain level with Amazon, but you can compete on a page level if you’re a niche seller.
Even if you’re not be able to outrank Amazon when selling a similar product, you should be able to get on the first page of Google, possibly in the first five results, and compete on price.
Consumers online will always check a handful of prices before they make a purchase. If you can beat Amazon on price, appear in the first few results, you’ll likely to grab a handful of sales. To do so, make sure you optimise your product pages as per below:
- Include highly descriptive title tags on each page unique to the product being sold
- Provide clear product meta description tags on your pages that sell the product in under 160 characters and include the product name
- Include URL’s that include the product name in the structure with each word separated by a hyphen
- Always include descriptive body text with at least 300 words on page
- Ensure you add multiple product images with ALT text provided and appropriate file naming that includes the product name
Product range, shipping capacity and external sellers
If you haven't visited Amazon before, you can literally spend hours on the site delving through the amazing product range on offer, but many eCommerce retailers fail to realise that a large portion of the products on sale across Amazon aren’t actually housed by Amazon.
Amazon, similar to eBay, offers the ability to setup your own store, sell directly on Amazon for a fee, and gain access to the huge traffic volumes across the Amazon global network. This is a fantastic opportunity for local eCommerce retailers looking to put through sales, and something we recommend when looking to compete.
According to WebRetailer.com, the Top 100 sellers are putting through hundreds of thousands of sales each year making this a very attractive option for eCommerce retailers with a warehouse and an operation ready to support this kind of volume.
However, when it comes to shipping products, nobody does it better than Amazon.
There have been numerous documentaries on Amazon’s cutting edge investment in warehousing, robotics, product management and shipping, all which have come as a result of millions of dollars’ worth of R&D. Amazon’s goal, same day shipment in the U.S, with this likely to become a goal in time across Australia.
As shown below, this is a current map of Amazon’s U.S fulfilment centres which allow for same day-shipping for Amazon Prime customers.
What’s really interesting about the above map is what’s inside these fulfilment centres. Business Insider was lucky enough to be granted access to an Amazon warehouse on Cyber Monday last year. I encourage you to view the video on their site as it provides an amazing look at Warehouse management.
Although the scale of the automation is mind-blowing, many lessons can be learnt no matter what sie your operation when it comes to fulfilling orders and delivering shipments quickly which has become a hallmark of Amazon’s operations.
Investment in product development
Whether it’s their own branded products, web development, app development, or online marketing, Amazon has always put quality before profitability in their attempt to be #1 in the world of eCommerce.
For example, Amazon pioneered and patented 1-Click, the single-click payment system available to Amazon customers. This technology, like the majority of Amazon services is nothing short of cutting-edge and is something Amazon has spent a great deal of time developing.
Whether you’re a first-time eCommerce retailer, or an experienced seller, innovation is something you’re going to have to invest in if you’re going to boost sales.
At OSE we see a lot of customers come in looking to boost traffic to their websites, improve the quality of the offering, and optimise their service. In our experience, serious eCommerce retailers should be looking to:
- Maintain a responsive website that is regularly updated and enhanced on a daily basis
- Provide an Android and iOS version of their store for mobile users
- Look to sell goods in multiple locations online (i.e. Amazon and eBay)
- Spend time reviewing their stores’ user experience on web and mobile devices
- Offer a service that provides multiple payment methods (i.e. Credit Card, PayPal, AfterPay)
- Focus on consistently improving shipping efficiences
- Focus on building the number of pages their site has to increase the virtual size of their operation
- Utilise coupon codes as a marketing tool
- Invest heavily in email marketing infrastructure, especially developing segmented lists
- Automate everything on their sites from banner rotations, to specials, to member focussed benefits
- Provide bundling options, and
- Consider advertising packages for key sellers as a revenue stream
Utilisation of cloud-based infrastructure
Did you know one of Amazon’s fastest growing business areas is cloud hosting?
Amazon has packaged up its learnings gained developing the world’s largest eCommerce business and has rolled out this infrastructure to anyone looking to host a website or app online.
Amazon Web Services (AWS) is a massively popular cloud based hosting service sold directly by Amazon and commonly on-sold by agencies such as OSE. The benefits of AWS are many, however are firmly aimed at those looking to scale their businesses over time.
For example, if you start an eCommerce business today, chances are your traffic will be pretty low, therefore you don’t need to be spending on expensive infrastructure. However, over time as your traffic grows, you can easily boost the capability of the servers that host your website with AWS via the flick of switch. Not only this, but if you want to scale up temporarily, say around Black Friday, you can do this for a few days to handle traffic and then scale back down saving considerable cost and resources in the process.
Amazon has data centres all across the globe, meaning that if you’re a local retailer you can take advantage of services in your local currency with minimal lag time. At OSE we recommend AWS services for eCommerce retailers due to the fluctuation in sales volumes you're likely to receive around key sales times of the year.
High quality customer service is an area of business these days that customers will pay good money for. The good news is that through a combination of personalisation, use of technology, and quick response times you can win a whole lot of business online and generate a great deal of positive social media referrals.
If you’re going to become a successful eCommerce retailer, you need to have a Customer Service Strategy. This means taking time to review all the touch points in your eCommerce solution. This should include:
- Email correspondence and personalisation
- Shopping cart and payment gateway drop offs
- Use of coupon codes
- Help desk turnaround (if you have a help desk)
- Whether you provide multiple support channels (i.e. FAQ, email, Twitter)
Surveying your customers is also a vitally important part of your ongoing R&D. You can do so with tools off-site such as Survey Monkey, or on-site such as Feedback Lite, however both will generate very different responses because one is contextual (Feedback Lite) and the other following a purchase or interaction.
This data should be actioned and analysed in unison with your Google Analytics data, and if you have it, customer journey data which can be derived using services such as KISSmetrics.
Becoming the best possible eCommerce retailer you can
When it comes down to it, Amazon is a massive beast likely to have an impact on the sales of Australian retailers who do not change the way they’re doing business. If your eCommerce business is lacking in any of the areas we’ve mentioned in this article, now is the time to get smart about how you operate. With this in mind, to combat the effect of Amazon.com entering the market, eCommerce retailers need to really take a good look at what’s made Amazon such a success and begin to work on their weaknesses.
Ecommerce is a long-term game, won by those who continue to invest in themselves, back their services and innovate in ways that their customers respond to. If this sounds like you, then you’ve likely got a bright future ahead of you. If you need help achieving this goal, feel free to get in touch with OSE for a confidential discussion.