I’m going to start by repeating the wise words of Stephen Covey, author of 7 Habits of Highly Effective People: Begin with the end in mind. There’s no doubt Amazon has an effect on retailers. In this post, we’ll unravel the effects Amazon has had on retailers large and small. I heard there were lots of fears around Amazon coming to Australia. Especially from the small retailers who fear they will be put out of business. The idea for this post came from a brainstorming session on how to help small retailers in Australia deal with Amazon’s launch later this year.
Begin with the End in Mind
Let’s see how this plays out with existing fears: well, going out of business is how it plays out. If you’re beginning this launch with your fears of going out of business then you’re setting yourself up for going out of business.
Let me then ask, “What do you want?”
The correct answer is: “I want to stay in business.” Not just stay in business but you want to have a flourishing business. Am I right?
So beginning with the end in mind is, “I want to have a flourishing business.”
Now you ask, “So how do we do that?”
A change of perspective is in order to answer this question. Think only of the opportunities Amazon is bringing to your business. To name a few:
- Evolve, change and expand your business
- Increase sales volume which increases revenues
- Expand your customer base (you don’t have to be a local-only business anymore)
- Streamline shipping for online customers
- Economies of scale (larger buying power, lower prices)
- As a small business you have the advantage of remaining flexible (more on this below)
Amazon coming to your country forces your business to evolve. Evolution and change is good. Homeostasis bad. If you’re not going to evolve then you are going to go out of business eventually whether or not Amazon comes to your country. Differentiate your business and your product offerings. If you don’t know where you stand in the market, analyze the types of products you carry. Are they generic? Are they unique? If they’re generic, you’ll definitely be put out of business by Amazon. Find new products. If you have access to unique products (particularly in gated categories) then you’re already one step ahead. Here’s a list of gated categories (require approval to sell).
Other viable categories can be found in niche products and specialized industries because typically, manufactures regulate distribution. If you’re a manufacture read these posts on unauthorized sellers, product life cycle on Amazon and gating. If you’re not already regulating distribution, I highly recommend doing that now, before Amazon emerges in your marketplace.
Begin with the End in Mind: Next Steps
- Sign up for Amazon launch alerts here.
- Open a store. We’ll be running workshops at the end of July in Sydney, Melbourne and Brisbane to coincide with the Amazon launch but in short:
- Create a seller account
- Add products
- Ship to Amazon fulfillment centers
- Manage inventory
- Provide excellent customer service
- Adapt and evolve with the 3rd party platform
Remember: Small businesses have the advantage of remaining flexible.
What I mean by this is, the types of businesses quickly and dramatically affected by Amazon’s US launch were the large retail chains.
Why larger retailers are first affected:
- Because they can’t change as fast as smaller businesses.
- “Good artists borrow, great artists steal”
I’m going to go far out on this one but I promise I’ll bring it back. Come with me. Do you remember when Steve Jobs quoted Picasso in a 90’s interview? You can watch the clip here. Amazon encompasses both the “good” and “great” artists in this quote.
How Amazon Borrows
Large retailers only carry products that move quickly, it’s part of their business model. Products that don’t move are DC’d and replaced with products that move. Amazon understands this. So they borrow and copy products carried by large retailers. Amazon copies because the products are already proven to work.
How Amazon Steals
When Amazon learns, through consumer behavior, which products sell quickly they start manufacturing their own versions. Here’s a link to all Amazon manufactured products: Amazon basics.
Your position is advantageous
In conclusion, your position as a small business is advantageous. Small businesses have the ability to observe Amazon and how it functions before they’re affected. Typically, small business don’t carry all the “proven” products like Amazon and the larger retailers. Thus automatically differentiating your store from Amazon’s. Stay flexible, stay agile, differentiate. Use the platform, observe the trends and your path to evolution will unravel. Know that you have time and you wont feel the effects of Amazon immediately.
In addition to the above, think of Amazon as a learning, growing human being. Amazon is alive; it observes, adapts and grows. It learns from consumer, supplier, competitor and seller behaviors. It’ll make rules, change the rules and then it will break the rules.
Always remember to begin with the end in mind. Ask yourself, “What do I want?”