Yes, Amazon is everyone’s competitor

by | Feb 7, 2017

“We don’t consider Amazon to be a competitor.” Recently, I was in a meeting with a major national retailer where they said this in regards to their retail competition.

Unfortunately, this statement simply is no longer true for any retailer. With the exception of store brands and some fashion items, practically every product retailers typically carry can be found in Amazon’s inventory. And consumers can order those items and have them delivered — for free for Prime subscribers — within two days.

Frankly, if your store sells any products that Amazon carries (which is virtually everyone), Amazon is a competitor. In fact, since Amazon has surpassed Google as the default search engine for shopping, it may be your biggest competitor.

The Amazon effect

Think of it this way: When a new movie comes out, its biggest competitor is not necessarily another movie, it’s television. Rather than stand in line and sit in a crowded theater, people can sit at home and wait for content to be delivered to them.

So it goes with retail stores versus Amazon in the quest for more customers. If customers had to choose between driving across town to find a product that may or may not be in the store, as opposed to ordering it on their laptop and waiting for it to arrive, they would pick the path of least resistance.

With Amazon, customers can bypass the trip to the store, forgo the quest for parking, avoid the “maddening crowd” and skip waiting in line at the checkout. They click a few buttons, and go about their day, having saved themselves a few hours of time.

Amazon is also cutting into brick-and-mortar store sales as well. They have opened three bookstores around the country and have three more in the works. The company opened 30 pop-up electronics stores during 2015 to 2016, with plans to have upwards of 100 by the end of 2017. Amazon Go and Amazon Fresh are competing with grocery stores.

Bottom line: Amazon is coming for retailers on every front, whether your company realizes it or not.

But retailers can still compete, if they start considering Amazon one of their biggest competitors, rather than the similar store down the street. If they focus their efforts on local online shoppers, they can begin re-capturing some of those sales that might have otherwise gone to the online giant.

Heck, the phrase “if you can’t beat them, join them” also applies here. Through a program called Amazon Marketplace, many retailers (and suppliers and manufacturers) have chosen to create their own storefronts on Amazon.com to sell their products. Not only does Amazon Marketplace offer another sales channel to take advantage of, but setting up camp right in the heart of “enemy territory” puts you in a position to collect some of those sales that you’re missing out on.

Buy online, pick-up in store

One way for brick-and-mortar retailers to compete is with buy online, pick up in store (BOPIS). This “reverse showrooming” has become incredibly popular and local customers love it when it’s done right. These are shoppers who don’t want to wait two days for delivery but they also don’t want to go on a great excursion to search for their items, only to discover they’re out of stock.

BOPIS represents the best of both worlds — online ordering, fast delivery — to customers, even if it means driving to pick up the order themselves. At least, this way they know they’re receiving the product on the same day, and that the journey to the store is going to be worth it.

For this to work, inventory accuracy is extremely important. You need to be able to show exactly what’s in the store and local warehouses, and be able to set it aside immediately for the customer, so it doesn’t sell out before they get there.

It may also require some revamping of your in-store operations as well. Not only do customers want a streamlined online experience, they would like a streamlined in-store experience as well. They paid online in part to avoid standing in line, so don’t make them actually stand in line when they pick up their order. Have a special designated area, in addition to the traditional customer service desk, for BOPIS orders so they can get in and out quickly.

If you would like to integrate your system with Amazon.com or to improve the inventory accuracy for your online store and warehouse operations, please visit the SPS Commerce website.

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Brandon Pierre

Senior Director for Customer Success - Community & Analytics at SPS Commerce at SPS Commerce
As a Senior Director for Customer Success at SPS, Brandon Pierre’s team works alongside many retailers and suppliers to develop strategies that involve technology along with the people and process around it to address their merchandising and supply chain business objectives. With more than 15 years in the buying organizations including large and small, he has experienced first-hand the opportunities of the digital era and how technology can transform the consumer experience through improved retailer and supplier connections.
Brandon Pierre