4 minute read

What is the recipe to take on Amazon?

I read an interesting article (in German) which explains how with the growth of Amazon here in Germany has triggered a boom in other businesses trying to build their own marketplaces and it got me to thinking as I'm waiting for my morning coffee to cool to a drinkable temperature.

We saw it in the UK with Tesco, who eventually opted against trying to take on Amazon in the world of eCommerce. 

In Germany however, companies such as Real and Galeria are seeing success in on-boarding third-party retailers to their already successful online shops. Real & Galeria (the result of the merger between Germany's most prominent high-street department stores, Karstadt & Galeria Kaufhof) have taken advantage of the large amount of traffic they receive to make an attractive marketplace option for retailers in Germany, and consumers are certainly noticing these new options for purchasing goods online.

We've seen similar moves from La Redoute in France (who went from being a heritage-catalogue to an exclusive online marketplace) and Walmart in the US, who have each expanded their established business models to take on Amazon in their respective countries.

Of course, anyone who's ever attended a key-note speech at an eCommerce event will have seen this drawing before:

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This is Jeff Bezo's "Fly-wheel", which shows the foundations of Amazon's obsession with the customer experience, and how this becomes a key component of a successful business - don't take my word for it; I think Jeff might've been on to something here...

As Amazon faces growing resentment from consumers citing environmental concerns, working conditions, questionable tax policies and Amazon's "we can do what we want" attitude, I can't personally seeing it taking a lot for an average-Joe consumer to begin purchasing their products elsewhere. So far, it seems that the only thing stopping them from doing so is a reduced product-offering (and potentially the next-day shipping).

Have the other big-fish finally caught on that the best way to take on Amazon is to make the customer experience central to the business? Will opening the digital doors to other retailers (at the risk of cannibalising their own sales), and thus improving the product selection be enough to start clawing back some of that market-share in Amazon-dominated countries, and is it enough to rely on consumers' growing wariness for Amazon, and desire to support business from within their own country?

So what's the process to take on Amazon?

  1. It seems that (unlike Jeff), you're going to need to begin with a large, established business (preferably with a strong brand in your domestic market) in order to get traffic - you're starting this process almost 20 years late, after all!
  2. Assuming that the traffic is there, you need to increase the product offering, perhaps focusing on a particular category to become "like Amazon, for {Category}" (see: Chewy.com). You can either do this by investing a lot in new stock, or by opening the doors to would-be "competitors", to offer them a platform to market their products to your buyers.
  3. Figure out how to compete with Amazon's logistical prowess. Actually, just find a company which already has... Fortunately for those of us in the eCommerce business (and unfortunately for the environment), Amazon Prime has revolutionised our expectations about online shopping. "Delivery in 3-4 days? No thanks - I'll apply that 'Prime' filter!". Fortunately, the logistics industry have been working hard to figure out how to offer next-day shipping speeds to compete with Prime and there are generally pretty affordable solutions to this now, even for smaller retailers.
  4. Provide stellar customer service, and make sure that you can keep both buyers & sellers happy when playing mediator between the two. Many consumers won't realise they're buying from a third-party and will attribute their buying experience directly with your brand. It's therefore important that in step-2, you're careful about how you open your digital doors, and to whom.
  5. Make it easy for retailers to start selling on your new platform. Allowing third-parties onto your established website is one thing, but convincing retailers that it's worth the investment of their time to on-board is something entirely different - even if you already have traffic! Will you offer a competitive commission rate, an on-boarding service, or other incentives to get new retailers to offer their products on your platform?

In theory, it's actually not that difficult. In practise, building a stable, user-friendly marketplace is the first hurdle, the second is encouraging retailers to sell there.

Companies such as Mirakl are now emerging, designed specifically to help build a marketplace, allowing an established businesses to convert from being a simple webshop, to a fully fledged marketplace (see: Best Buy, GoSport), although many prefer to do this process internally (see: Galeria) for a more unique solution.

Taking advantage of this shift, from the retailer perspective:

For online-retailers, there is a growing number of potential sales channels, so it's hard to know which ones are worth taking advantage of (first), and how to do so. Despite the obvious appeal in becoming less reliant on Amazon as a sales channel, it's unrealistic to expect other marketplaces to be able to generate close to what Amazon brings in in sales until they grow in their own way, so you might have to go through the process of launching on these new channels with nothing more than faith that their corporate teams have a decent marketing campaign planned to drive consumers away from Amazon and to these fledgling channels.

Of course, if the marketplace has taken the step of offering an integration to your listing software (such as Linnworks or ChannelAdvisor), they've removed a major barrier, but you must still decide if you want to learn an entirely new process for another new sales channel.

Despite retailers and (new) marketplaces working towards the same goal, they're also entirely reliant upon each other. This Catch 22 (more sellers => more products => more consumers => more sales => more sellers) is the main issue that the would-be Amazon competitors are facing, and encouraging retailers to invest their time in launching on a new channel is a tough sell, but one which we all stand to benefit from.

Time for a quick sales pitch:

Our goal is to make it easier for retailers to expand into new marketplaces by removing the data-processing requirements to sell on multiple channels.

eCommeleon allows retailers to efficiently create product data which matches specific marketplace requirements.

What this means in practice, and in the context of this article is that we offer one solution which will allow you to create product listing data for each channel you want to sell on. Of course, you can use eCommeleon for the established channels such as Amazon & eBay (and many more), but as we grow, we're integrating new marketplaces, a process which takes us mere days, rather than months.

This means that if you discover a new channel you'd like to sell on but don't know how to efficiently adapt your entire inventory to yet another set of marketplace valid-values & required formats, we have the solution.

What does this mean for eCommerce?

Well hopefully it means that we (in the larger sense; retailers, consumers, the world) become less-reliant upon the behemoth that is Amazon. As it becomes easier to efficiently sell products across more channels, the consumer will finally have more options to support the online business that they want to.

The traditional high-street is finally going digital, and it's a good thing.

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