3 strategies to stay profitable in an Amazon dominated world
The first thing that you, as a small or medium-sized ecommerce entrepreneur need to do is to accept your standing or reputation compared to Amazon. Let’s accept that Amazon has much, much deeper pockets than you, can generate publicity at every nook and corner of the globe which you probably cannot and it will stay a giant. But Amazon also offers products that are real cheap and customers love that. Amazon can afford to sell cheap but you cannot. If you attempt to sell products at cheaper rates, you will soon be running an unviable business. In that case, will you be able to attract customers? The key is to offer unique quality products that are not available anywhere else and offer expert guidance so that you develop a loyal client base. Even if you are unable to offer a unique product (that is always a difficult proposition), you can position yourself as a product expert. Clients give a lot of credibility and importance to products promoted by experts.
Here are 3 strategies to stay profitable in an Amazon-dominated world.
Sell unique products
It is not easy to offer niche or unique products that customers want but it could be a great way to stay profitable and prevent Amazon from poaching customers. The logic is simple — your product is unique, offers value and is available only with you. So, you do not have to offer cheap rates to stay in the race. Dan Andrews of www.ModernCatDesigns.com did exactly that. Dan and his business partner Ian Schoen hated the quality, prices and design of existing cat furniture products in the market. So, they decided to make their own. Dan and Ian offered products that were qualitatively superior to existing products. Now, Modern Cat Designs earn annual average revenue of $ 1, 20,000. Since they do not sell in marketplaces, they do not need to split profit. To make sure that the profit margins stayed healthy, Dan and Ian set strict price guidelines for their dealers. So, the formula is: offer a unique product, avoid selling them at marketplaces and have strict pricing guidelines.
Establish your expertise
More output and product variety are two of Amazon’s business model pillars. Simply put, Amazon sells huge number of products cheaply and yet makes profits because of economies of scale. However, the large number of disparate products makes it impossible for Amazon to offer deep expertise and guidance on the products. When you browse Amazon’s product catalog, all that you see are some basic information on the products. You can develop a laser-focus on a niche product and develop deep expertise in it. As you go on developing expertise, offer high-quality content to your product target-audience. Offer on your ecommerce website video tutorials, user manuals, blogs, tips, guidance and anything else that your target audience may find useful. There are two benefits to this approach: one, customers view you as an expert on your product line and tend to rely on your expertise for guidance and troubleshooting; two, you are viewed as an expert can offer a high-quality product. In fact, you can combine this strategy with the above strategy to create a highly-successful ecommerce business.
Connect with customers’ values
Customers generally favorably view entrepreneurs committed to a social cause. In fact, the biggest advantage of championing a social cause or value is that your credibility or presence gets a massive uplift and you stand out. Take for example the case of www.hipcycle.com. Andrew Sell, the owner of www.hipcycle.com, sells bowls made from bike sprockets and made out of bike sprockets and light fixtures from computer waste. Andrew has already got a lot of admirers who are also his customers.