A recent article in these columnsdiscussed the response a small business has to take to compete effectively against the Amazon steamroller. It isn’t price certainly and it isn’t selection. The answer is customer experience and trust.
Now it’s one thing to read about theory but another matter to put it in to practice. I’ve been witness to a retailer doing exactly that, and who happens to be a CEDF client. I’m not going to name him to allow his business to stay confidential, although he’s very forthcoming and helpful to his industry colleagues and even competitors outside his market which includes locations in two of Connecticut’s wealthier communities.
You might think this makes his business easy but it actually means there’s more competition because he customers all have enough money to shop where they want and to demand the instant gratification of next-day online fulfillment, whether through Amazon or any other source that fills the order.
Here’s how he goes up against the giant.
First, my client epitomizes the idea of excellent face-to-face service emphasized by the article’s author. His staff are at your side and available when needed on the sales floor and they are knowledgeable about the products and genuinely happy to be of assistance. Naturally, they can’t always fulfill every request because there are limits to what a local store can carry. But they know the logical substitutes and they are willing to bring inventory from the other location on request.
The second element of the Triplet is an online presence. But it is just enough of an online effort to be in the race without exhausting precious resources trying to out-Amazon Amazon. What’s important to my client is to provide an adequate informational substitute for being in-store when the local customer can’t conveniently make it there-- Maybe because of a snowstorm, or just because they are shopping off hours from home in pajamas. So he uses a product feed from an industry service to populate his website with a catalog of what he carries. But instead of trying to build a nationwide customer base and get beat every time by you know who, he offers local delivery in a manner that particularly appeals to his time-impoverished customers.
The third part of the Triplet is targeted volume but premium price. This means pricing your goods to recognize the value of the in-person, personal shopping assistance but never gouging your customer. The crucial point is too always generate enough gross profit to support the bricks and mortar that makes face-to-face service possible.
And as a sweetener, it helps that he has pretty decent selection too.
Networking is an an oversimplified concept that to some people means shaking a lot of hands, exchanging a lot of business cards and meeting more friendly faces for banal chat at an event. Networking is promoted as the ticket to sales success for growing a B2B enterprise and is widely misunderstood as a hunting ground for prospects. Not so.
And this article goes further, philosophically, in exploring whether simply meeting people should be the objective. The author, an attorney and college professor, thinks instead it should be serving. His explanation creates one of those light bulb moments where one might realize that much of what one has been chasing after, perhaps for years, was really a waste. That explains why you might have a stack of business cards of people who won't call you back. And yes, it's true the best, most productive, most long-lasting relationships are related to serving others.
Millions of people love Amazon for the instant gratification, the almost universal selection and the typically good pricing the platform offers. Uncountable others, including current and former Amazon merchants or hometown businesses who feel the giant has squashed their formerly prosperous Main Street or online businesses, think Amazon is the devil.
Here at CEDF, I’ve served two clients as a business advisor who rode a roller coaster of excitement and then despair over their relationship and Amazon’s opacity, inequitable policies and kafkaesque behavior. Without dwelling on the technical details of their frustrations, one walked away from literally millions in future purchase orders in order to protect the pricing integrity for its hard-won conventional channel partners. Another fought product diversion abetted by the colossus, and later came to the realization that when selling direct to Amazon, the purchase orders the leviathan was placing were being outpaced by returns from other Amazon warehouses. On a net basis, Amazon owed the client money and it wasn’t paying too fast.
Now these may be exceptional circumstances. But there is enough written in the business press to make it clear that an Amazon relationship can make or break a business and not everyone is happy.
As an aside, when I’ve made presentations for SCORE about getting one’s business on the internet, few people in the audience realize that two-thirds of the sales on Amazon are from independent sellers.
Many entrepreneurs feel their brand, which they may have sacrificed for and nurtured for years, represents the soul of their company. How much would you sell your soul for? This article explains the little-known Amazon Accelerator program which can boost a merchant’s visibility beyond your wildest dreams, but with a catch. Amazon can buy your brand on 60-days notice for $10,000. Would you take that bargain?
It’s often taken on authority that the right way to sell is to develop a consultative approach that makes you a trusted advisor to your customer. They won’t be able to bear using a competitor because of all of the warm and fuzzy advantages you bring to the relationship. It’s pretty well demonstrated that this is true.
But this article credibly explains why this goal is so often unreachable and that training provided to sales team members doesn’t stick long enough to make a difference. The problem is not with the sales staff or the training but the organizational culture. The author explains why talking a great game about being consultative with customers doesn’t stand a chance with so much of the work environment rewards the transactional approach.
Transactional selling can work too. But it makes it easier for customers to simply scurry away when they can use the internet to buy somewhere else and save a nickel. So unless you can build a transactional, high-volume, low-margin selling machine that beats all of your bigger competitors doing the same, it’s time to take a proper look at what is really required when we talk about serving customers and becoming an advisor.
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