I recently read a fascinating article in Fast Company about Amazons CEO, Jeff Bezos, whom they dubbed King Bezos and for good reason. Amazon has accumulated 209 million active customers and $61 billion in annual sales (which is quadruple what it was four years ago). And with his plans to improve Amazons already impressive shipping speeds and to spread into local markets where he can offer same-day delivery, King Bezos has his competitors shaking in their boots.
As Amazon ramps up to lead the next round of retail innovation, companies all over the globe have a choice to make: will they be part of this tidal wave of advancement or pulled under by its force? I believe that for any company that has a product suited to sell on the internet, Amazon represents an opportunity. Its simply a matter of knowing how to take advantage of it. To illustrate my point, let me paint for you three scenarios:
1. Not currently selling on Amazon
If you are not yet selling on Amazon, what are you waiting for? Amazons greatest appeal to sellers is its reach and sustained growth. In the second quarter of 2013 Amazon reached 215 million active users and net sales increased 22% over the same period in 2012. You just cant dispute those numbers. And if you think you are doing just fine with Google AdWords, think again. According to the Fast Company article, 30% of all product searches are done on Amazon compared to only 13% on Google, meaning people think of Amazon first when they are looking to purchase a product. If you want to be found, you need to be where the buyers are searching.
Of course, no sales channel is perfect. Margins are slim on Amazon and sellers are little more than suppliers as their brands are not at all showcased on its website. However, Amazon is still a great way to broaden your exposure and acquire new customers. I once worked with a company who utilized Amazon solely as a marketing tactic. Their strategy was to lure customers in by placing their products on Amazon. Once they captured their attention, they marketed their own web store to try to get those customers to buy directly from them so they could increase their margins. Finally, if they mustered up enough regional demand in a particular area, they would open a physical store.
Whether or not you buy into that strategy, there is no doubt that Amazon can help customers find you and it can move product. With Cyber Monday quickly approaching, those are facts you should take seriously. Last year, Amazon customers ordered 26.5 million items on Cyber Monday, which translates to a record-breaking 306 items per second. Those orders represented a 42% increase in sales over the previous years Cyber Monday tally. If you want to be where the shoppers are, you will want your product on Amazon for Cyber Monday.
2. Existing Sellers and Amazon Integration
For those of you who are already selling on Amazon, your challenge is to do it better than you are doing it today. Like most sellers, your margins are likely being squeezed between Amazons seller fees and price pressure from your competitors. Improving the efficiency of your sales processes through integration can decrease the impact of those obstacles.
One of Amazons main differentiators is its delivery speeds. This means Amazon shoppers have very high expectations for order fulfillment. To keep up with their pace you need to be able to handle increased volumes, turn your inventory faster and provide shipping information on a timely basis. The only way to do this efficiently and accurately is by integrating Amazon with the systems that process your orders and manage your inventory. Integration enables you to create exception-based workflows that coordinate order processing, fulfillment and shipping. Data moves back and forth between the systems seamlessly without common data entry errors and delays and suddenly you are able to keep up with more volume than you ever thought you could handle.
Another advantage of integration is that it lowers your costs. Manual processes are not only slow but costly. The labor required for data entry and monitoring is expensive. Replacing those resources with technology (especially cloud-based technology) gives you an almost immediate return on investment and just may lower your costs enough to eek out a little more margin.
Another cost-saving strategy for existing sellers is to use Fulfillment by Amazon (FBA). In this scenario, you sell the product and Amazon handles the picking, packing and shipping of your items. All you have to do is periodically replenish Amazons stock. In a 2013 survey, 73% of FBA respondents reported that they increased unit sales by more than 20% since joining the program. Your products also become more attractive to buyers because FBA listings can take advantage of FREE Super Saving Shipping, Amazon Prime, and Amazons customer service and returns.
3. Beyond Amazon
Lets say you are already doing all of these things. The next phase for growth is to expand your sales efforts beyond Amazon. Amazon holds a strong percentage of the market for online sales, but certainly not all of it. Research other sales channels such as eBay, your own web store, social media outlets, etc. The internet is a canvas on which you can paint your own personal merchandising plan. Figure out where your buyers are and go there.
A quick note on web stores. Your current eCommerce site could actually be preventing sales. Google and the other search engines modify their search and site listing criteria constantly. Most modern eCommerce software publishers realize this and provide customers with strategies to stay relevant and get found. In addition, a greater number of consumers are shopping with their mobile device. Pick up your smartphone and check out your own website. Is it a pleasant experience? If your eCommerce technology is more than 3 years old, the answer is probably no.
I highly encourage you to take a hard look at your web site compare it to newer technology. The features that have evolved over the last few years are exceptional. They result in nicer and more professional looking websites, more flexibility, stronger shopping carts, better marketing and promotions features, more robust search engine optimization, mobile options and an open architecture to make add-on functionality and customization an easy task. You may be surprised at how much more you can sell by simply changing your eCommerce platform.
I have worked in the retail industry for 20+ years, helped countless companies integrate their business systems with their sales channels, and seen more than a few retailers come and go. But I find Amazon, Jeff Bezos in particular, very inspiring. He has disruptive ideas that (if successful) have the potential to change the entire landscape of selling online ANYWHERE. Instead of seeing that as a threat, I think we can all learn from it and use his leadership to shape our companies into better sellers as well.