Competing Or Cooperating with Amazon

Amazon is the current king of online retailing — and it has now opened some retail bookstores. There are many reasons why it is so successful: innovation, technology, customer service, product assortment, Amazon Prime, and a lot more. Although numerous retailers have been adversely affected by Amazon, there are ways to compete or partner with Amazon.
As Helen Schmid, who leads E-Commerce and Digital Marketing at (a startup luxury lingerie retailer) reports for the Harvard Business Review:
“As an online marketing executive, my job has never been more challenging. The shift from brand loyalty to platform loyalty has forced specialized online retail companies like my own to ask, How can I keep my customers loyal? Do I sell my products on my own Web site, or do I sell them through Amazon or another third party platform? If I try to do both, how do I pull that off?”
“Selling through Amazon is extremely tempting for a simple, logical reason: you don’t have to pay for digital marketing to drive traffic to Amazon. The volume is bigger than any marketer can dream.  Amazon Marketplace vendors simply need to offer the most competitive price on a product to win the coveted Amazon ‘Buy Box.’ Buy Box winners take all of the sales volume without any marketing spend required, making up for margin loss and commission to Amazon.”
“There are downsides to relying too much on Amazon. First, there’s the risk of having too much of your revenue coming from a platform you don’t control. There’s also the risk that if you offer all your products on Amazon, you’ll cannibalize your own direct sales (and lose those higher margins). Finally, for high-end brands, Amazon’s site does not offer luxury customers a distinctive experience.
For a discussion by Schmid on a number of options to weigh in deciding how to market an online business, click the image.


This entry was posted in Online Retailing, Part 1: Overview/Planning, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 5: Managing a Retail Business, Part 6: Merchandise Management and Pricing, Social Media and Retailing and tagged , , , , , , , . Bookmark the permalink.

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