You Can Bemoan that Amazon is Taking Over the World, or You Could Do What This Company Did Instead
Smart retailers have decided to ride the coattails of Amazon to profitability and success.
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Forty four cents of every dollar spent on e-commerce in the United States goes straight to Amazon. Amazon has risen to the top while pursuing a vision that goes far beyond just being a retail behemoth. CEO Jeff Bezos intends for Amazon to become the key structural element in commerce itself, and it is certainly headed in that direction. By the end of 2016, fifty-five percent of shoppers were bypassing Google and going directly to Amazon, an increase of fifteen percent in only two years.
While many retailers bemoan that Amazon has so much power -- sometimes deciding to compete directly with its own third-party sellers or to charge fees for the warehousing and shipping services that give them a higher ranking than that of non-participating sellers, smart retailers have decided to ride the coattails of this giant to profitability and success.
One of the success stories is Specialist ID, a Miami-based seller of ID badge holders that has gone from being a brilliantly simple idea hatched in a dorm room to being featured among the Inc. 5000 fastest-growing companies four years running. Mike Barnhill, co-owner and vice president of the company founded by his brother Patrick in 2001, says it's growing at a rate of about 60 percent annually, and that whenever it seems ready to plateau, "we discover a dozen new opportunities. I don't think there is any shortage of opportunities as long as you know your industry, know your customer, and are willing to pivot when needed."
That means knowing your way around Amazon, and with Specialist ID being a top seller there, Barnhill has some important insights about how to make Amazon work for your business:
Start with something you know and care about.
The Barnhills and Specialist ID are where they are because they really know ID badge holders and are always learning. Mike says if you're "in the car or shower or lifting weights or going for a jog or washing dishes, you should be learning."
If you live and breathe your product, you'll be the person with the vital knowledge, from choosing the right keywords to closing the sale. You need passion for both e-commerce and your product, and if you are missing the e-commerce expertise, partner with someone who does.
This is a quick changing landscape. Embrace it.
Remember that to Amazon, the customer is number one.
The customer is the most important thing to Amazon, and you should make use of that in designing and launching your products.
"Our first big hit on Amazon came because we had a product that customers always needed 'yesterday,'" Barnhill says. "Amazon Prime would get it to them quickly at a fraction of the cost we would pay to send second-day UPS, so we decided to send hundreds into Amazon to ship for us with Prime, and the sales spiked."
Where customers are concerned, you'll need to roll with the punches. Barnhill says the toughest thing for new sellers is dealing with the negative feelings that come from having an unhappy customer.
"If you want to have a successful business, take their criticism with grace and do whatever you can to make them happy," Barnhill says. "Getting over the feeling of being wronged is essential if you want to grow your customer base."
Specialist ID coordinated its best interests with Amazon's interest in serving the customer, and came out a winner.
Go deep into a category and really innovate.
Fortunes are waiting to be made in products that are not even sold on Amazon yet. Learn your industry and your market inside and out so you can spot the next great product rather than copying someone else's product on Amazon and having a price war that drives your price down. Deep knowledge and innovation give you control of your own destiny.
Along with this goes making yourself hard to copy. Eventually someone could find a way to do what you're doing, at lower cost, but the harder you are to imitate, the harder it is for them to do that to you.
While even Specialist ID has competitors, their products continue to be highlighted by Amazon as best-sellers because the focus has always been on creating the best, most durable product in the marketplace. Just take a look at their thousands of positive customer reviews.
Be prepared to make a serious investment.
With Amazon, storage and fulfillment fees are a part of life, and advertising with pay-per-click is now essential for a listing to really take off. Barnhill warns that you'll need to factor in customer returns and any oversize or overweight fees, even on smaller items.
Amazon favors those who can play the long game. Be prepared for some short-term investment in money and detail-consciousness in order to reap long-term benefits.
The best way to fail on Amazon is to cut corners. Strive for excellence in product quality, customer service, and presentation. Again, Amazon is a long-game proposition, and you want to build trust in your brand and have that trust compound over time.
Putting it all together.
Barnhill says that some of his fiercest competitors have disappeared almost overnight, while new ones keep appearing because "it has never been easier to start a business."
Amazon brings the challenge of changing policies about reviews, keywords, and product launches, plus occasional glitches in the system. The pace of change is formidable, which means new types of problems arise all the time. But the key is to know your field and emphasize quality.
"It's the same with any other industry these days," Barnhill says. "Just keep swimming."