Since its inception in 1994, Amazon.com has grown from a small online bookseller to an online retail juggernaut. In the second quarter of 2019, Amazon facilitated $63.4 billion in sales of everything from telescopes to toothpaste. It’s a ubiquitous part of the American business landscape, and that can either work for or against a small business owner.
In Lendio’s American Dream Survey of more than 2,000 small business owners, it was clear that many viewed Amazon as a threat to their bottom line. In fact, two out of three small business owners said they view large corporations, such as Amazon and Google, as having a negative impact on growth opportunities.
Yet even as these large companies grow, two-thirds of small businesses are, as well. How can that be if conglomerates are pulling away business?
If you can’t beat them, join them
Many small retailers have found that they don’t have to out-Amazon Amazon in order to win—they have to work with them. According to Amazon itself, small- and medium-sized businesses accounted for $2 billion in sales during the most recent Prime Day. Close to half of all annual Amazon sales are those of small businesses. And the benefits aren’t limited to increased sales; companies are also seeing a boost in social media exposure and engagement.
Just this week Amazon announced a new Small Business Awards program aimed at celebrating small businesses with Amazon seller or vendor accounts. According to the press release, Amazon intends to invest more than $15 billion this year to help third-party sellers grow through the Amazon platform. “We want to see small businesses across the country thriving like never before. We are committed to helping them harness the power of online sales, reach new customers, and provide fantastic selection, value and convenience,” says Nicholas Denissen, Amazon Vice President of Small Business.
The advantage of small retailers has always been the ability to provide a customer experience that’s unmatchable at a large scale. Amazon says its working to help small companies “operate at Amazon speed and scale” by taking a large portion of the logistics off their plate, according to Joel Sider, Amazon’s Sr. Manager, Communications. The company’s global fulfillment network stores, picks, packs, and ships orders, freeing up small retailers to focus on customers and business strategy.
One such example is the brand Hope & Henry, which sells organic cotton clothing. Harnessing Amazon’s services, the brand is able to keep prices low while sharing profit with clothing makers overseas. The business got its start on Amazon, using the platform to tell its brand story and build a customer base. It is now expanding into brick and mortar stores.
Can Amazon ease the fear of conglomerates?
While Amazon aims to help more small businesses leverage its platform, business owners are still wary. Lendio’s American Dream Survey respondents are far more concerned about conglomerates than about the state of the economy, money issues or their own brand’s ability to attract and keep new customers. Many small businesses feel like they’re up against an unbeatable rival in Amazon with its one-click ordering and now, one-day shipping for Prime members.
For this reason, Amazon is ramping up efforts to encourage small and medium-sized businesses to partner with the brand. The company recently announced it has launched 150 tools and services since the beginning of the year, all aimed at helping independent small and medium-sized businesses grow their online sales. Last year Amazon Storefronts launched to help customers shop exclusively from U.S.-based small businesses.
“As retail and digital business evolves, small and medium-sized businesses embracing digital transformation are nearly twice as likely to see double digit revenue growth,” says Shari Lava, Research Director, Small and Medium Business at IDC.
Small business owners must peel back the layers of what they feel they’re up against when it comes to remaining competitive in today’s economy. Your small business has a huge advantage in offering customers unique experiences, time and attention, all of which are gifts in the digital age. Even if you join forces with Amazon as an independent third-party seller, there’s still an opportunity to let your brand personality shine. Add a handwritten note card to each order (there’s technology to automate this process), tell your unique story through an Amazon Storefront page or include a special sample for new customers to ensure you stand out from the crowd.
Focus on what matters most
Whether you join forces with Amazon or not, I recommend small business owners focus on the fundamentals in order to best compete in any space.
- Make customer service your top priority. Tech can help, through positive e-commerce experiences and more. Tech is also making marketing simpler, faster and more affordable. After all, if the customer doesn’t know your small business exists, how can they support it?
- Keep cash flow in check. Monitoring cash flow, forecasting and financial management in general are some of the toughest issues faced by small business owners. Too many don’t know to ask for help, how to set boundaries for clients or even how to start with forecasting. When applied strategically, debt can actually come in handy here, by creating flexibility and the opportunity to increase revenue.
- Ensure your business is prepared for unexpected expenses or a quick downturn in sales. Whether through disciplined saving, a business line of credit or a business credit card, I recommend having a six month reserve in place.
The most successful small retailers don’t fret over every big Amazon announcement, and the other two-thirds of business owners needn’t either. It doesn’t matter whether you’re selling organic skin care products or pet supplies, stay focused on the fundamentals to keep your business primed for growth.
read more at http://www.forbes.com/retail/ by Brock Blake, Contributor