Retailers cannot ignore the force that is Amazon – they’re the 800lb gorilla in the room that everyone is trying not to stare at. Amazon has been a game changer in the world of ecommerce, convincing everyday people to buy nearly everything through their platform and, consequently, becoming synonymous with online shopping. It’s easy to criticize Amazon and the negative impact it has had on many retailers, especially brick and mortar. However, what is often neglected is the tremendous opportunity that Amazon has created for retailers – they’ve blown open the door for ecommerce on a global scale.
If you are wondering how you can best capitalize on this opportunity and make significant headway against Amazon, here are some key things to consider.
Amazon has helped create a massive global opportunity for those who embrace it
In the current consumer market, research firm Forrester reports cross border ecommerce will outpace domestic growth between 2017 and 2022, with a compound annual growth rate of 17%. Any retailers not yet capitalizing on the enormous international opportunity are only putting themselves at a greater disadvantage as their domestic markets hurtle towards saturation.
Today’s global consumers have an enormous appetite for buying across borders, with $115.47 billion in cross border ecommerce sales in China alone, and want access to brands they see on social media and other outlets. In many markets, even mature ones, Amazon is not providing a great customer experience for international consumers. For example, Amazon UK does not ship all its products to the Republic of Ireland, such as flagship products Echo Show and Fire TV. Frustrated Amazon shoppers around the world are still resorting to parcel forwarding services to receive their goods, which can be both tiresome, convoluted, and expensive. Retailers that can provide quality merchandise with ease, accessibility, and direct shipping to the shopper’s door will win sales, hands down.
Undoubtedly, this demand represents a tremendous growth opportunity for brands that can bridge the cross border customer experience gap through a direct-to-consumer channel.
Make Amazon’s cross border weaknesses your strengths
Amazon has largely set the tone and pace for online shopper expectations in the U.S., but they are not best in class in everything they do as it pertains to their cross border offering. It’s possible to not only match their performance, but exceed it in many respects.
Firstly, you can have a distinct advantage if you offer expedited delivery options at low or no cost to the customer, managed with a shipping strategy that includes automation, a mix of regional carriers and worldwide shipping hubs. Retailers that successfully interlace these elements together will be better able to meet their customers’ expectations, at lower costs.
Secondly, including duties and taxes in the product price can lead to higher conversions, and better customer satisfaction. Amazon doesn’t do this – their checkout adds duties and taxes as a line item in the cart. Amazon charges an Import Fees Deposit in the final stage of the checkout, which “is an estimation of the taxes and duties that may apply and isn’t an actual calculation”. This means Amazon shoppers are not only paying more than they expected on cross border purchases, but an estimated cost which may be more than the true cost of these fees (Amazon says they’ll refund shoppers the difference within 60 days… but is that good enough for your customer?).
Additionally, shoppers want to pay in their own currency, with their preferred payment method. According to a recent survey, around 50% of online shoppers will cancel a purchase if their preferred payment method is not available. So, by localizing for a shopper in China who wants Alipay or WePay, or a shopper in Germany who only use SOFORT, for example, you can provide a superior cross border experience.
Lastly, returns play a major role in customer satisfaction so retailers need to consider offering a convenient, consumer friendly returns process with a clear returns policy, easy instructions, and printable labels. This is an area Amazon is still lagging far behind on from a cross border perspective.
You can give your cross border shoppers a more unique shopping experience than Amazon
We live in an experience driven world and the Amazon experience is still quite transactional. It is no surprise that the fastest growing brands, during Amazon’s meteoric rise, invested heavily in making the shopping experience for their consumers a special one.
Think about providing live chat, easy navigation, country specific promotions and video content to drive deeper engagement with your customer. Use packaging as a means to reinforce your brand. If you are a global brand with stores in multiple countries, consider enabling ship from store and return to store to further align the online and offline experience.
Additionally, membership programs are key as more and more customers want to be rewarded for their loyalty and experience a more frictionless online purchasing experience. Invest in extending these programs to your global audience will serve as a key differentiator and ensure long term brand loyalty.
Take necessary measures to protect your brand from Amazon
Shopper experience and customer data has never been more vital to survival in the current online retail climate and eliminating personalized service from a business model is counter-intuitive to brand protection. If you maintain your brand’s independence away from the Amazon model, you retain complete visibility and quality control over your biggest asset, your consumer.
Selling on Amazon is appealing to many brands because they believe that is where the shoppers are, but what happens when Amazon’s own private labels make it harder for shoppers to buy your products?
In the last year alone, Amazon has launched 41 private label brands in various sub-categories and leverages them by assessing other brands’ best sellers then marketing its own private label products against them.
Retailers should be on alert when items from brands like Levi’s rank second highest Best Sellers in a category behind Amazon’s private label brands. To reiterate: Amazon is the greatest threat to apparel brands… on Amazon. Beware that Amazon may prioritize their own products over yours.
According to L2 research from Prime Day, what should have been a goldmine for online retailers, Amazon’s Fashion landing page exclusively featured their own private label products.
“Amazon’s private label brands were the main beneficiaries of Prime Day, suggesting that in the future there will be fewer opportunities for legacy brands to capitalize on busy Amazon shopping days,” L2 said in its report.
If you are already on Amazon, then make sure to avoid placing your key unique items on the marketplace so they don’t poach customers from you. Selling low level SKUs will ensure your best items are not at risk and you can protect your brand. If you’re not on Amazon, don’t sell what Amazon sells – have a point of differentiation and avoid directly competing with their model.
When it comes to cross border ecommerce, Amazon isn’t the 800lb gorilla in the room. They excel at domestic ecommerce, but lag behind with their international offering, specifically with merchandise access, shipping, duties and taxes, returns, and customer satisfaction. This gap is your opportunity. Right now is the time for your brand to get serious about cross border ecommerce
Ahmed Naiem is Chief Commercial Officer with eShopWorld