When Amazon hits the Nordics: What should online shops do?

Posted: 19. December 2018-Likes: 0-Comments: 0-Categories: Ikke kategoriseret
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When Amazon hits the Nordics: What should online shops do? 

Soon e-commerce giant Amazon will enter the Nordic e-commerce market, which forces online shops to ask themselves whether they want to cooperate or compete with Amazon, as not taking the necessary precautions might kill their business.

There have been many rumours svarming when Amazon will enter the Nordics. Nobody knows a date, and the grand 2018 opening rumour did not turn out to happen. The latest news in this Amazon-entering-the-Nordics-story is that Amazon has established a company in Sweden that focuses on sales to businesses.

Whether the grand opening will be early or late 2019, Nordic online shops can use the wait time to prepare which way to go: cooperate or compete with Amazon. This article presents the pros and cons and what to be aware of when cooperating, as well how to strengthen your competitiveness against Amazon.

Cooperate with Amazon and get access to millions of potential customers

As you may know Amazon does not only sell their own products but enable third-party sellers to sell new or used products at Amazon marketplace alongside Amazon’s own products. Which means that you as an online shop can expand your sales channels by also selling your products on Amazon.

Pros:

  • Get access to the hundred millions of customers, who shop at Amazon.
  • It is easy to get started with selling your products at Amazon.
  • You can choose to let Amazon fulfill your orders as well as provide customer service to your customers, which releases resources you can use on marketing, customers etc.
  • Statistics show that online shoppers increasingly use marketplaces like Amazon, Ebay, Alibaba and Wish for their online shopping.

Cons:

  • It’ harder to get loyal customers on Amazon, as you can’t get access to all the data about your customers, as they are Amazon’s customers first.
  • There are a lot of competition from other sellers on Amazon, why you must evaluate the potential of your product before going on Amazon.
  • You must pay fees to Amazon to sell on their platform.
  • You let Amazon get control of some of your business.
  • You let a competitor (Amazon) gain insight into your sales data.
  • Risk of getting fake bad reviews on your products.

Tips and what to be aware of when selling on Amazon
First and foremost, you must evaluate if the products you sell are suitable for Amazon. A good idea is to search Amazon to see if others sell your products at more competitive terms than you are capable of. It makes sense for brands to use Amazon as a strategic partner, as Amazon opens up to giant customer base, which can be hard to reach by yourself. It might not make as much sense for a regular retailer to sell on Amazon, as chances are that your products are already being sold on Amazon. It can also be a good idea, that the products you choose to sell on Amazon have a low return rate, as it can be costly to get Amazon to handle your returns.

Checklist for selling on Amazon:

  1. Make sure that your products are to be found on the right searches and filters on Amazon.
  2. Provide better product information than competitors.
  3. Encourage your customers to leave a review after they have purchased your products.
  4. If Amazon fulfills your orders, be aware that you have to prove that your inventory has been delivered at an Amazon warehouse and you have to make sure that your inventory lives up to Amazon’s guidelines for receiving inventory.
  5. If you sell to several European markets through Amazon, be aware that Amazon can move your inventory from one warehouse to another and let you pay the shipping costs.

 

Compete with Amazon and exploit their weaknesses

Amazon is good at a lot of things such as speed, variety and price, but they have their weaknesses like everyone else, which you can take advantage of and compete with on your terms. Moreover, keeping your warehouse and delivery routines as smooth as possible will improve your competitiveness. The list below features areas where you can differentiate yourself and increase your competitiveness against Amazon.

1. Create a unique universe
Create an engaging experience and unique universe around your products, which your customer can immerse in and interact through multiple channels such as website, social media, offline etc.

2. Help your customers
Provide extra value and service to your customers when they search for products on your website through a chatbot or customer assistant, that can help your customer find what they are looking for.

3. Consider a physical location
Consider investing in a physical location that allows your customers to see, feel, try and buy your products. The physical location is also great for pick of on online orders as well as returns.

4. Create successful sales campaigns
Run sales campaigns. It can be hard to run effective sales campaigns on Amazon, as others might buy you products and sell again on Amazon for a slightly higher prize.

5. Outstanding customer service
Offer outstanding customer service through e.g. FAQ’s, chatbot, e-mail, hotline and trained employees.

6. Trimmed and organized warehouse
Optimize your warehouse in order to handle your orders faster.

7. Attractive delivery terms
Offer multiple delivery options that are convenient to your customers e.g. fast delivery, home delivery, delivery to parcel locker etc.

8. Exclusive delivery experience
Make the delivery experience personal and exclusive by including a handwritten greeting or small gifts like candy, magazines, product samples and discount coupons.

9. Inspect your shipping costs
Gain control of your shipping costs, negotiate freight rates with your carriers and keep an eye on whether you are being billed correctly by carriers.

10. Be careful if you want to compete on price
If you want to compete on price with Amazon, be careful to only pick those of your products, which determines customers’ perception of whether you are able compete on price, so you don’t undermine your own business.

11. Attractive return terms
Make it as hassle-free as possible for your customers to return products through easy-to-find returns information on your website, providing customers with return packaging and prepaid return labels, a long return window (30 days or more) and instant refunds.

12. Offer a customer loyalty programme
Consider offering a loyalty programme to your customers like Amazon Prime. This way you increase interaction with your customers and create benefits for them, which can prevent your customers from shopping at Amazon.

So, which way will you go? Each way leads to great possibilities if done wisely. Remember, Amazon or not, it is always important to make the necessary considerations and decisions regarding your competitiveness. Brace yourself.

Stay tuned, next in this Amazon series we will take a deeper look into the best of both worlds: how to sell on Amazon and still run a successful online shop on the side.

Text by: Consignor, news@consignor.com

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