Small Australian retailers need to figure out what they can ‘uniquely own’ on Amazon and not waste their time on products that won’t win them the Buy Box, according to Brent Bellm, the CEO of ecommerce solutions provider BigCommerce.
Bellm described Amazon as the “best online retailer we’ve ever seen”, adding that the company is “extraordinarily good at all aspects”, from pricing and SEO through to customer service, user experience and user-generated content (“look at all their product reviews”).
He told Dynamic Business that while it will be difficult for the very large retailers, online and off, to “beat” Amazon in Australia (“in most cases, they’ll lose market share and sales”), this doesn’t mean the smaller ones will be losers.
“It’s useful to consider the US Amazon experience,” he explained. “The 2016 Internet Retailer analysis found that average ecommerce growth amongst America’s top 1000 online retailers was 14.5%; however, Amazon – at number one – grew at around 23%, double the rate of number two through one thousand. In other words, the 999 biggest retailers after Amazon grew meaningfully slower than the average, while Amazon grew meaningfully faster.
“This has given rise to the false narrative in the US that everybody is suffering, that small retailers are getting beat up just as badly as the large ones. That’s simply not true. We have more than 50,000 merchants globally, most of which are SMEs, with more than 30,000 in the US. When we look at same-store sales amongst our US merchants, they’ve been growing 20% year-on-year – much better than the average.
“There are two main reasons for this. Firstly, by virtue of being small, they tend to sell goods that are niche and, frankly, they do a better job serving than larger, volume sales-focused retailers. Secondly, many have embraced Amazon and eBay as additional sales channels. SMEs that sell through Amazon and their own branded websites typically make about a third of their sales through Amazon, meaning they’re still making two-thirds through their own site. The bottom line is that it’s the big guys who are existentially threatened by Amazon. Jeff Bezos has basically told them ‘your gross margin is my opportunity’.”
Despite saying small Australian retailers “shouldn’t be fearful of Amazon”, Bellm said they need to be strategic about how they embrace the ecommerce platform.
“There’s no one-size-fit-all approach,” he said. “Amongst our merchants on Amazon, only 20% sell everything that they stock on their own website through Amazon – it’s rare. The majority have different strategies for each channel. Some develop unique offerings specifically for Amazon so they don’t have to compete for the Buy Box on an item that ten others sell or that has six alternatives.
“Meanwhile, others focus on discount and liquidation – they don’t compete for the Buy Box on everything but when the know they can win the Buy Box (i.e. they’ve got deep inventory and they’re willing to sell for less), they’ll really go for it. There are also those who use tactics, such as inserts in packing, to convince customers who they acquire on Amazon to make subsequent purchases through their own website.
Bellm identified three strategies that would help small Australian e-tailers thrive in the Amazon Marketplace and otherwise boost its ecommerce performance:
- Build a community around your brand: “Partner with people who are enthusiastic about your brand, including what you sell, and have them blog about your products with a link back to your site in exchange for an affiliate fee for sales generated. You’ll get SEO authority and site traffic, and the enthusiasm you tap into… well, Amazon will have a hard time copying that.”
- Use Instagram if relevant to your brand: “Some of our customers who leverage Instagram get more purchases based on their Instagram posts and their customer email-outs than they do form any other source – i.e. direct to site, SEM, you name it. Of course, you have to have the right kind of brand and your posts have to be engaging”.
- Look very closely at what people sell on the US site: “Head to Amazon.com and figure out who in the US sells what you do or something similar, then look at each of the products you carry and figure out which ones you can own uniquely on Amazon. If you’re the only one selling what you do, because its unique to your brand, you need to get on Amazon right away. If there are multiple people selling the same thing as you, you need to figure out which items you can win the Buy Box on and which ones you can’t. If you’re selling the same thing as six other marketplace sellers on Amazon – or selling the same thing Amazon itself sells – and they would undercut what you would sell for, you’re not going to win the Buy Box – you’re wasting your time.”