Is there a way for small and mid-size merchants to compete with mega-retailers online?
As Amazon has become the retail superstar, it can seem almost impossible to compete. Just look at Walmart, which certainly tried and is facing $1 billion in losses after the fact. In order to be truly competitive with Amazon, small companies need more than just good prices; they need a next-gen solution that’s a step above what Amazon offers (not to mention, we might add, one that includes ways to support customer loyalty and recurring revenue).
A major reason for Amazon’s dominance is that it is able to exert control over both its end users (customers) and its suppliers (merchants). That makes Amazon, according to Stratechery’s Ben Thompson, an Aggregator. These companies that are able to control both supply (merchants) and demand (users), are incredibly powerful. But not, as it turns out, invulnerable.
The way to combat Aggregators, according to Thompson, is through a platform. Platforms differ from aggregators because they facilitatethe relationship between third party suppliers and buyers, instead of controlling it.
Shopify is not an obvious competitor to Amazon or other big e-tailers. Logistically, when consumers log onto Shopify.com, there’s nothing for them to buy. The main difference is that third party merchants use Shopify’s platform to sell their goods, but they must build all of their customer relationships themselves.
But Shopify (along with partners like Ordergroove) is increasingly able to allow merchants to offer the same level of customer experience as Amazon. Website hosting, inventory management, POS systems… the list of features merchants can offer using Shopify’s platform goes on and on. And the recent launch of the Shopify Fulfillment Network means it can handle last-mile deliveries with the same level of 2-day convenience as Amazon – a crucial step for mid-size retailers looking to own their customer relationship.
Those mid-size merchants won’t succeed just catching customers’ attention by offering the lowest deals or popping up on Amazon’s search page – they have to work on retaining direct relationships with their customers and making them come back. And now, when they combine Shopify’s suite of offerings with Ordergroove’s ability to power subscription services and other recurring revenue tactics, they finally have the tools to compete with the 800-pound smiley-faced gorilla.
Midsized merchants don’t have to despair as giants like Amazon reign supreme. They just have to hone their Relationship Commerce tactics and make sure they’re offering the personal, recurring offerings that their customers crave.