How Small Companies Can Compete With Amazon

Small Companies Can Compete with Amazon

The Amazon Effect — the idea that Amazon’s growth is normalizing e-commerce sales across all sectors of the economy, for all businesses — has long been reality for most retailers. Brick-and-mortar stores that didn’t sell online a decade ago have opened e-commerce sites. Those that were online have evolved into ever more slick, easy-to-use, mobile-responsive websites. For many sellers, e-commerce sales is just commerce.

Next, there’s been a secondary Amazon effect: Hundreds of thousands of companies now sell their products on Amazon itself, not just on their private websites. Amazon takes a cut of their profits. And if brick-and-mortar retailers choose not to list on Amazon, dozens of imitators will spring up to sell similar products to loyal Amazon buyers.

E-commerce business is more homogenous than ever. Amazon has standardized the buying process. It normalized free, two-day shipping. As Amazon makes strategic moves into the shipping market, it will force UPS, FedEx and other legacy carriers to meet its standards there, too, purely because of its size and market impact.

Walmart, Target and other huge big-box retailers are trying to compete with Amazon in this space. Small businesses simply don’t have the resources to do that. They cannot catch up with the world’s largest retailers in terms of scale or scope, or even in terms of proprietary technology.

But small businesses can make sure they stand out from the crowd — by selling their passion for their products and by delivering consistent, high-quality service.

How To Keep Customers Happy

Small businesses often have better relationships with their customers than big businesses do, simply because each customer matters more. Winning and keeping a single customer means a lot more to a locally owned manufacturer than to a multi-billion-dollar corporation.

But small businesses may also have a much harder time pleasing their customers. According to a survey from SealedAir, about 50 percent of U.S. e-commerce customers say they’ve had a bad delivery experience from an online order. Of those, 70 percent considered buying from another source.

Amazon and Walmart can handle some customer attrition. After all, they’re gaining new customers by the hour. Small businesses usually aren’t, and losing customers hurts more.

The trouble is, it’s also harder for small businesses to meet delivery expectations. They have less leverage with carriers and tend to pay higher per-parcel rates. Small and mid-sized companies have smaller contracts than big ones, which often means they’re considered less important — and carriers are less likely to go out of their ways to satisfy them.

Small businesses must face these competing pressures knowing that reliable, on-time delivery can be the difference between retaining customers and losing them. Customers expect two-day delivery, if not next-day or same-day delivery. Free shipping is becoming an industry service standard.

Further, customers expect carriers to actually fulfill those expectations — they want packages on time and money-back guarantees for missed deliveries. They expect packages to be protected against theft and damage. Remember, most customers don’t distinguish between shippers and carriers: They identify their experience with the seller, not whether the seller uses FedEx or UPS.

Finally, they expect packages to be easy to open and easy to dispose of, ideally in recyclable or environmentally conscious packaging. This is one thing shippers do have control over — and it’s an easy way to make their brands stand out.

How To Personalize The Delivery Experience

When your customer actually opens the box containing your product, it’s the last time they’ll face your brand in a way that you can control. After the email newsletters, the website, checkout and payment processes and actually receiving the product, it’s in buyers’ hands.

Small customization touches in packaging can entice return customers, especially if they feel the packaging is personalized to them. Many subscription box services include notes to buyers about the meals, clothes or items contained inside. Some shippers opt for colorful tissue paper or branded stickers. Others include small free samples of other products, hoping to drive future purchases.

While this requires more effort — which can lead to greater expenses — most large e-commerce retailers won’t go to the trouble of customizing their packages. Almost every Walmart buyer is going to shop at Walmart again; big-box retailers simply don’t need to leave that strong final impression.

If you decide to pursue a customized packaging strategy, make sure it doesn’t cause the box to bulge. That can push your parcels over a carrier size limit and lead to big surprise surcharges.

How Small Brick-and-Mortar Stores Can Maximize Resources

Small business owners and employees of retail stores know that every minute is valuable. You need to maximize your business resources by working faster and smarter, while investing more energy and money than your larger competitors into customer acquisition and retention.

Shipping is an area where many small businesses could be saving significant sums of money. Many carrier invoices contain hundreds of dollars in refund opportunities, if managers have time to spot them and file the necessary claims. (Most don’t.) Invoice audits can also catch inefficiencies, like declared value insurance you don’t need.

Once you develop a habit of auditing your invoices, you can revisit the contract that determines those rates. Where are you consistently spending high sums on accessorial fees and surcharges? Do your price floors make sense? Is your rate fair compared to your competitors?

These questions are beyond the scope of many supply chain managers — leaders who are already stretched thin and, frankly, who probably deserve a raise. That’s where Reveel comes in.

Our expert consultants can run a 45-point invoice audit for you, highlighting unnecessary spending and unclaimed refunds. We can also lift the veil on carrier pricing strategies and help you strategize for your next contract negotiation. We’re invested in your success because we don’t get paid if you don’t save money — and we consistently help our clients save more than 15 percent on their overall shipping spend.

Reach out today for a free invoice audit, and start working with a trusted partner who can help small or medium-sized businesses chart a course in the Amazon age.

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