Taking the fight to Amazon
We’ll start off by clearly stating… you can’t beat Amazon at its own game. At this stage they’re simply too big and powerful, they’re able to buy stock in huge quantities and provide the slickest possible service to their millions of customers. Many companies have tried to compete with them on price and simply depleted their own profits in the process. Not to worry though, there’s more than one way to skin a £78,000,000,000 online retailer.
It’s no secret that deep pockets are their biggest advantage, as well as a worldwide distribution network and a stock holding that can only be described as gargantuan. It’s this that allows them to operate in negative margins when necessary, effectively forcing competitors out of the market by undercutting them with prices below cost. Now, this would be a massive issue if price was the only factor that drives consumer behaviour, however, there are several strategies that can keep retailers and wholesalers competitive.
Create an aspirational, community-driven brand
Price isn’t everything and there are plenty of consumers who are willing to pay more money for a brand they deem to be aspirational. At present, Amazon doesn’t operate much within the luxury market, instead opting for the budget-friendly products they’re renowned for. Creating a brand that exists in the ‘affordable luxury’ space with a strong community spirit will ensure you stay far from the clutches of Amazon’s reach.
Focus on niche over mass market
Amazon’s entire business model is based on mass-market efficiency and economies of scale, by catering to niche audiences you can remove yourself from that market altogether. The added advantage of this is that it’s often easier to target a niche audience and foster a sense of community, something that’s rarely possible when providing products for the masses.
Sole distribution deals
Securing the sole distribution rights for a brand is a sure fire way to ensure you can differentiate and compete against Amazon. People are loyal to brands, so by ensuring you are the only wholesaler who has the rights to distribute a set of products will mean that you aren’t in direct competition with the online giant. However, they can compete with similar products so it’s important that the brand you own the rights to is strong enough, has a unique USP or is of superior quality.
Amazon’s stack ‘em high, sell ‘em low approach means they’re in no position to offer product personalisation, which is increasingly popular nowadays. Sure, they have the data, but it simply doesn’t fit with their mass-market business model. Clothing and furniture are just two of the markets where consumers are demanding the ability to add their own personalised touch. It’s a trend that’s in its early stages, but one that’s showing signs of picking up the pace as companies begin to provide increasingly personalised products and services.
These are just four ideas for ensuring your business continues to thrive in an ever-changing marketplace. The strategy that you adopt should be tailored to your business and make use of your natural strengths and advantages. Keep fighting the good fight!
Does your business need help in the e-war against giant multinationals, such as Amazon? Workhouse can use our knowledge of the B2B wholesale sector to help boost profits in the modern world.
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